MEDIDATA SOLUTIONS (MDSO) BEST IDEAS LONG CALL January 16, 2015 DISCLAIMER

TOM TOBIN ANDREW FREEDMAN

DISCLAIMER Hedgeye Risk Management is a registered investment advisor, registered with the State of Connecticut. Hedgeye Risk Management is not a broker dealer and does not provide investment advice for individuals. This research does not constitute an offer to sell, or a solicitation of an offer to buy any security. This research is presented without regard to individual investment preferences or risk parameters; it is general information and does not constitute specific investment advice. This presentation is based on information from sources believed to be reliable. Hedgeye Risk Management is not responsible for errors, inaccuracies or omissions of information. The opinions and conclusions contained in this report are those of Hedgeye Risk Management, and are intended solely for the use of Hedgeye Risk Management’s clients and subscribers. In reaching these opinions and conclusions, Hedgeye Risk Management and its employees have relied upon research conducted by Hedgeye Risk Management’s employees, which is based upon sources considered credible and reliable within the industry. Hedgeye Risk Management is not responsible for the validity or authenticity of the information upon which it has relied.

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HEDGEYE 2 PROCESS INVESTMENT PROCESS 1. Idea Generation - Relative and absolute performance - Valuation and sentiment - Battleground stocks and social media - Market research Fundamental 2. Fundamental - Build models and gather data - Identify Key Drivers - Filings, news, transcripts, blogs - Multiple/cash flow valuation - Management and capital allocation 3. Macro - Macro Monitor Macro - Database of over 1,000 time series data points and growing - Automatically calculates correlations and significance - Identify and track Key Drivers - Market Research - Custom surveys, product trackers and industry monitors - Field notes and Expert Calls

SOURCE: HEDGEYE HEDGEYE 4 MACRO MONITOR WHAT IS IT? • Macro Monitor is an automated, web-based database that rank orders correlations and r-squared values across 1,500+ company specific and macro related time series • Isolates relationships that matter across straight, leading and lagging periods across STRAIGHT ONLY Macro1ZMH US Knee Revenue y/y growth % vs MACRO- 1Q07-1Q14 Rank Key Sig Dir Corr Series Name - Straight multiple durations 1 168 # - 0.96 PPI - All other surgical and medical instruments y/y growth % 2 188 # = 0.93 PPI - Hospital beds and specialized hospital furniture y/y growth % 3 1848 # + 0.85 HRM US Knee Growth (Market-Share Weighted Average) 4 1846 # + 0.81 US Ortho Average Growth (Knee, Hip, Spine) 5 1856 # + 0.79 US Knee growth y/y% - Bloomberg Industrials HELPS ANSWER TOUGH QUESTIONS 6 984 # + 0.77 EC Composite PMI Output y/y growth% 7 987 # + 0.77 Eurozone Manufacturing PMI Markit Survey Ticker y/y growth% 8 1844 # + 0.76 US Surgical Average Growth (Knee, Hip, Spine, ICD) 9 1858 # + 0.76 US Hip growth y/y% - Bloomberg Industrials • What are the fundamental drivers of company, 10 841 # + 0.76 Real Personal Consumption Expenditures of Veterinary Serv For Pets 11 2868 # + 0.75 SPX Forward EV/EBITDA industry, or theme? 12 2864 # + 0.75 SPX Enterprise Value 13 989 # + 0.74 Eurozone Services PMI Markit Survey Ticker y/y growth% • What data are most relevant to fundamentals? 14 590 # + 0.74 Local Employment y/y growth % 15 906 # - 0.72 US PCE Index Dental Services SA y/y growth % 16 23 # - 0.72 CPI - Dental services y/y growth % • How does market moving data impact our 17 506 # - 0.70 Employment - Health care and social assistance y/y growth % 18 1053 # - 0.70 Bloomberg Consumer Comfort Index (45-54) stocks? 19 536 # + 0.69 Employment - Pharmaceuticals and medicines 20 688 # - 0.69 Hires Level from JOLTS Report

HEDGEYE 5 SOURCE: HEDGEYE

THESIS THESIS | ROAD TO $65+

STOCK SCREENS LONG 1 Based on performance, earnings revisions and short interest. 50% peak-to-trough stock price decline driven by missed expectations due to deal timing, guidance adjustment and fraudulent wire transfer. We view recent weakness as buying opportunity given strength in leading indicators. KEY DRIVERS UP, CONSENSUS ESTIMATES DOWN 2 Macro Monitor identified several series as two quarter leading indicators of y/y ROC in Application Services Revenue. Combined, these key drivers point to a material acceleration in application services revenue through 1Q15 at a time when consensus sales and earnings estimates have been ratcheted down. $1.5 BILLION ANNUAL REVENUE OPPORTUNITY 3 S-curve model tracking 50% market share based on 4,000 potential customers. Average product per customer of 2.4 and 12 products available. $2.5 billion incremental market opportunity based on product per customer of 6.0.

SOURCE: HEDGEYE HEDGEYE 7 BEAT & RAISE 2013 -> MISS & LOWER 2014

• Backlog and revenue growth accelerated in 2012/2013 and the stock went parabolic. • Stock peaked $68.2 on March 4, 2014 (up ~300% from 2012 closing price). • Missed estimates in 2014 largely due to deal timing. • Stock fell ~50% and short interest has tripled to 12%.

DATA SOURCE: FACTSET, HEDGEYE HEDGEYE 8 M&A SPEED BUMP VALID EXCUSE

“…I WILL NEVER GO OUT AND BLAME M&A ON ANYTHING. AND HISTORICALLY, THAT’S BEEN A POSITIVE TO NET NEUTRAL FOR US. BUT IF PEOPLE ARE IN THE MIDST OF TRYING TO PROTECT THEMSELVES AGAINST, SOMEBODY’S MAKING A RUN AT THEM, OR TRYING TO REPOSITION THEMSELVES, THEY WON’T BE AS AGGRESSIVE ABOUT TURNING ALL THE PROCESSES THEY HAVE INTERNALLY UPSIDE DOWN AND SPENDING A WHOLE BUNCH OF MONEY.” -TAREK SHERIF, CEO Q3 2014

DATA SOURCE: FACTSET, CLINICALTRAILS.GOV, HEDGEYE HEDGEYE 9

SHORTS HISTORICALLY HAVE BEEN WRONG

SHORT INTEREST NEAR ALL TIME HIGH Historically, shorts have been wrong with next 12-mo excess returns having a positive relationship to the level of short interest today. Short interest is just shy of the 12% high reached in 2012.

SOURCE: FACTSET, HEDGEYE HEDGEYE 10 CONSENSUS REVENUE ESTIMATES FALLING

4Q14 Revenue

1Q15 Revenue

SOURCE: FACTSET HEDGEYE 11 SELL SIDE POSITIVE

SOURCE: FACTSET HEDGEYE 12 USUAL LY DOESN’T MATTER…

• Little relationship exists between sell side ratings and next 12-mo excess return.

DATA SOURCE: FACTSET, HEDGEYE HEDGEYE 13 SUMMARY

Medidata Solutions, Inc. $ 46.40 Financial and Valuation Summary Investment Thesis and Snapshot FY14 ends Dec '14 4Q14:E 1Q15:E 2Q15:E 3Q15:E 4Q15:E 2015:E 2016:E 2017:E Investment Thesis Snapshot Hedgeye Sales ($MM) 100.3 106.2 103.6 104.9 115.0 429.7 508.2 612.7 1) Secular growth story based on the adoption of cloud- Consensus ($MM) 91.1 94.2 101.3 104.7 110.1 409.0 491.0 577.3 based electronic data capture and clinical trial Variance % 10.2% 12.7% 2.3% 0.2% 4.5% 5.1% 3.5% 6.1% management solutions - challenged in recent quarters by poor results due to deal timing. EBITDAO ($MM) 26.6 23.4 25.2 27.2 31.2 107.0 138.7 182.2 2) Current screening long based on performance, Consensus ($MM) 20.6 18.1 21.4 23.9 27.5 91.0 127.0 156.6 sellside rating, and short interest. Margin 26.5% 22.0% 24.3% 25.9% 27.1% 24.9% 27.3% 29.7% 3) Key Drivers predict significant backlog, revenue and EPS upside next two quarters with an R^2 of 0.95. Hedgeye EPS ($) 0.27 0.22 0.24 0.26 0.30 1.03 1.31 1.69 Earnings catalyst February 6, 2015. Consensus ($) 0.22 0.17 0.23 0.25 0.29 0.93 1.22 1.60 Business Model Description Variance % 22.2% 34.9% 4.8% 2.5% 4.7% 10.6% 7.2% 6.0% - Target market includes pharmaceutical companies, academic research centers and governments. Value in Share 50% EV/Sales 8.5x 7.5x 6.5x increased workflow efficiency and lower cost to market for new drugs. 2,000 Price $ 60.8 $ 63.6 $ 66.6 - Significant cross-sell opportunity. 12 products available, 192,938 P/E 70.0x 60.0x 50.0x average product per customer (intensity) 2.4. mHealth and wearable technology attractive long-run opportunity. Price $ 71.9 $ 78.3 $ 84.6 ####### - Subscription model provides high degree of visibility into EV/EBITDA 40.0x 35.0x 30.0x revenue base. Near 100% revenue retention. Long-term Gross and EBITDAO margins in the high 70-s and mid- Price $ 71.9 $ 82.1 $ 93.0 30s, respectively.

SOURCE: HEDGEYE, FACTSET HEDGEYE 14 KEY DRIVERS TRACKING CLINICAL TRIALS

All Clinical Trials Genomic Clinical Trials “And if I look at year-over-year, the number of study-by- study deals… has increased by well over 20%. … we just have seen the number of RFI requests go up astronomically. There's just a lot of activity.” – CEO Q1 2014

ACCELERATION IN NEW CLINICAL TRIALS THROUGH 2014 Growth in new clinical trials has been positive with an acceleration seen late 2013 through 2014. Medidata’s revenue is dependent on the # of clinical trials being conducted at any given time.

SOURCE: CLINICALTRIALS.GOV HEDGEYE 16 APPLICATION SERVICES REVENUE ROC MODEL

Key Driver(s) - NIH Award # - Subset Y/Y

- 0.87 R^2 / 2Q Lead - HRM Calculated “Annualized bookings grew - Updated Monthly 52% year-over-year for the quarter and are up 28% year- to-date over 2013.” - Clinical Trial Net Starts Subset – CEO Q3 2014 - 0.89 R^2 / 2Q Lead - HRM Calculated - Updated Monthly

- MDSO Customer Y/Y %

- 0.88 R^2 / 2Q Lead - Company Provided - Updated Quarterly

s SOURCE: COMPANY FILINGS, NIH, CLINICALTRIALS.GOV, HEDGEYE MACRO MONITOR HEDGEYE 17 CUSTOMER GROWTH ROC MODEL

Key Driver(s) - PCE: Pharm Products Y/Y %

- 0.89R^2 / 2Q Lead - HRM Calculated “We saw particularly strong - Updated Monthly new client growth in our mid- market and partner segments.”

- PCE: Prescription Drugs Y/Y % - CEO Q3 2014

- 0.88R^2 / 2Q Lead - HRM Calculated - Updated Monthly

SOURCE: COMPANY FILINGS, NIH, CLINICALTRIALS.GOV, HEDGEYE MACRO MONITOR HEDGEYE 18 CUSTOMER GROWTH Y/Y % MODEL

Key Driver(s) - Clinical Trials # Y/Y %

- 0.68R^2 / 2Q Lead - HRM Calculated - Updated Monthly

SOURCE: COMPANY FILINGS, NIH, CLINICALTRIALS.GOV, HEDGEYE MACRO MONITOR HEDGEYE 19 SUBSCRIPTION BACKLOG ROC MODEL

Key Driver(s) - Clinical Trial Net Starts Industry

- 0.97 R^2 / 2Q Lead - HRM Calculated - Updated Monthly

Monitoring

- NIH Award # - Subset Y/Y “Our deal activity for both direct and partner bids hit - 0.78 R^2 / 2Q Lead record levels in Q3, up 67% and 31% year-over-year, - HRM Calculated respectively” - Updated Monthly – CEO Q3 2014

SOURCE: COMPANY FILINGS, NIH, CLINICALTRIALS.GOV, HEDGEYE MACRO MONITOR HEDGEYE 20

SUBSCRIPTION BACKLOG Y/Y MODEL

Key Driver(s) - NIH Award $ - Subset Y/Y

- 0.82 R^2 / 2Q Lead - HRM Calculated - Updated Monthly

- Clinical Trial Net Starts “..record Q4 - 0.66 R^2 / 2Q Lead pipeline, which is up - HRM Calculated 32% year-over-year.” - Updated Monthly - CEO Q3 2014

- Clinical Trials First Received Y/Y

- 0.64 R^2 / 2Q Lead - HRM Calculated - Updated Monthly

SOURCE: COMPANY FILINGS, NIH, CLINICALTRIALS.GOV, HEDGEYE MACRO MONITOR HEDGEYE 21 SUBSCRIPTION BACKLOG

- Long-term backlog provides visibility into +80% of next 12-mo revenue

DATA SOURCE: HEDGEYE HEDGEYE 22 CLINICAL TRIAL MARKET CLINICAL TRIAL FUNDING SOURCES

. Universities . Individuals . National Institute of Health (NIH) . Industry (Pharma Companies) . U.S. Fed

DATA SOURCE: CLINICALTRIALS.GOV, HEDGEYE HEDGEYE 24 DISTRIBUTION SKEWED TOWARD BIG PHARMA

Sponsor/Collaborator Trial Count % of Total Novartis 660 2.4% GlaxoSmithKline 605 2.2% Novartis Pharmaceuticals 528 1.9% Pfizer 476 1.7% Merck Sharp & Dohme Corp. 404 1.5% Hoffmann-La Roche 381 1.4% AstraZeneca 314 1.1% Bristol-Myers Squibb 311 1.1% Bayer 300 1.1% – Opportunity in Big Pharma still exists through Celgene Corporation 262 1.0% new wins and cross-sell. CTMS and Balance Sanofi 246 0.9% growing +95% y/y as of 3Q14. Genentech, Inc. 244 0.9% Eli Lilly and Company 232 0.8% – Small-to-mid tier segment wins helpful, but Gilead Sciences 204 0.7% contribute less. Will likely have reduce price to M.D. Anderson Cancer Center 191 0.7% compete effectively which would be a drag on Boehringer Ingelheim 185 0.7% AbbVie 180 0.7% margins. Amgen 175 0.6% – International opportunity large, but immature Astellas Pharma Inc 151 0.6% Allergan 133 0.5% and difficult to quantify. ClinicalTrials.gov Janssen Research & Developme 126 0.5% represents 162 countries. Boston Scientific Corporation 122 0.4% National Cancer Institute (NCI) 118 0.4% Novo Nordisk A/S 114 0.4% Millennium Pharmaceuticals, Inc. 112 0.4% Eisai Inc. 104 0.4% Total 6,878 24.9%

SOURCE: CLINICALTRIALS.GOV, COMPANY TRANSCRIPTS, HEDGEYE HEDGEYE 25 INDUSTRY TRIALS BY PHASE & ENROLLMENT

PHASE 2 AND 3 TRIALS ARE THE MOST EXPENSIVE Former Medidata sales rep described pricing as a black box. Small Phase 1 trial can run $3k per month while larger 200 center trial can be $35k per month. Large Phase 3 deals +$1 million just for EDC.

DATA SOURCE: CLINICALTRIALS.GOV, HEDGEYE HEDGEYE 26 ECLINICAL MARKET SHARE

- Medidata is the market “We continue to be disciplined leader with approximately about our business and are careful 40% share of the eClinical about trading economics that market. have a long term impact to get deals closed early, particularly - Peak EDC market given the value generated by our adoption +90% will be a platform.” – CEO Q3 2014 headwind for RAVE growth. “Trading Economics” = Pricing - Fast growth supported by Pressure? Oracle market share losses, which is likely to continue but at slower “We continue to make pace as Oracle steps up. competitive inroads as we see a - Successfully cross-selling greater volume of trials coming new products will be from historically non-Medidata critical to their success. clients.” – CEO Q3 2014

DATA SOURCE: DISCUSSIONS WITH MAJOR COMPETITOR, COMPANY FILINGS, COMPANY TRANSCRIPTS HEDGEYE 27 TAM IS SMALLER THAN SOME THINK…

- Consensus appears to be basing TAM off all clinical 181,776 trials, assuming $80-120k received per trial. Clinical Trials Registered $16.4* Bill - Since registration of w/ClinicalTrials.gov Clinical Trials became a prerequisite for 74,163 publication in 2009, # of $6.7* Bill ACTIVE clinical trials with Listed as Active dates ending beyond analysis date ranges 40- 60k 39,802 Ending Beyond - 16-17k Clinical Trial Starts per year -> 5-7k Industry 10/31/2014 $3.5* Bill Trial Starts per year 10,396 - CliniclaTrials.gov reflects data from 162 countries Phase II-III $0.94* Bill

*Assuming average $90k per trial SOURCE: CLINICALTRIALS.GOV, HEDGEYE HEDGEYE 28 TAM IS SMALLER THAN SOME THINK…

- Anecdotal evidence suggests that MDSO is 32,559 the high cost provider by $6.1* Bill 2-4x competition. Unique Sponsors - Industry is in best position to afford and benefit from 18,825 MDSO’s services. $3.5* Bill - Assume that only 50% will Active Last 5-Years conduct clinical trials using MDSO type service.

- $0.75 mill annual revenue 7,896 opportunity given product Industry Only $1.5* Bill per customer of 2.4.

4,000 Adopt $0.75* Bill

*Assuming average $187k revenue per customer SOURCE: CLINCIALTRIALS.GOV, HEDGEYE HEDGEYE 29 CROSS-SELLING INCREASES TAM 4X

$3.3 BILL TAM ASSUMING PRODUCT PER CUSTOMER OF 6 Regression analysis shows that a 1 increase in intensity results in ~$40k incremental application services revenue per customer. 4 increase in intensity (2.4 currently) increases TAM by $2.5 bill based on ~4,000 customers.

DATA: COMPANY FILINGS, HEDGEYE HEDGEYE 30 $3.3 BILL MARKET OPPORTUNITY

~$1.5 Bill Annual Revenue Opportunity at 50% Market Share

SOURCE: COMPANY FILINGS, CLINICALTRIALS.GOV, MACRO MONITOR HEDGEYE 31 WHY AREN’T WE SHORT?

ROBUST CUSTOMER GROWTH & KEY DRIVERS UP - Market share tracking 50% of 4,000 potential customers based on best fitting adoption curve. - We believe Medidata can exceed consensus estimates in 2015. - Key Drivers pointing up give us confidence that they will beat numbers in the short-term. - We will be augmenting our long-term model with short-term key drivers that tracks activity in clinical trials and customer growth.

SOURCE: COMPANY FILINGS, NIH, CLINICALTRIALS.GOV, MACRO MONITOR HEDGEYE 32 ATTRITION IS NOT A PROBLEM

NEAR 100% REVENUE RETENTION – ENTERPRISE CLIENTS Customer attrition has averaged 10% and that is what we are modelling going forward. High switching costs is supportive of current revenue retention rates. M&A will likely be a double-edge sword.

SOURCE: COMPANY FILINGS, HEDGEYE HEDGEYE 33 PRODUCT INNOVATION (TAM WILL CHANGE)

- Cloud based platform allows them to collect and leverage over 8+ bill patient profiles from 4,000 clinical trials. - MDSO TAM will increase over time as they convert ~20% annual R&D spend into new products. - mHealth (remote patient monitoring) is an attractive long-term opportunity although it is too early to put a number on it. - Electronic patient reported outcomes (ePRO) through patient cloud and mobile devices ($150-200 mill market)

SOURCE: COMPANY PRESENTATION, DISCUSSIONS WITH COMPETITOR HEDGEYE 34 FIELD NOTES CLINICAL TRIAL DATA MANAGER CRO

• Currently has 3 Medidata Rave studies and 1 Inform • “Oracle is so large and they lack customer focus and support. Medidata is more customer friendly” • “…a lot of times [the sponsor] will let the CRO select the vendor” • “Average year long study costs $300-500k for EDC” • “It’s a 24-hour turnaround with Medidata and with Phase Forward its 48-72 hours” • “Phase I trials are usually cheaper and shorter 6-8 weeks… and they have a lot of standard pages and you don’t have to recreate the wheel. Pneumonia trial is going to be less costly versus oncology. Phase III tends to run (Oncology) anywhere from 6-months to 2-years” • “[EDC] not viewed as a commodity, absolutely critical”

SOURCE: COMPANY FILINGS, CLINICALTRIALS.GOV, MACRO MONITOR HEDGEYE 36 FORMER MEDIDATA SALESPERSON • “Oracle and Phase Forward is still bad…. There is a bit of resurgence and think that’s Oracle strategy is to compete on price. Not going to lose that much more share” • “Big phase III trial can be million bucks just for the EDC, and the IWR is another 20%” • “…reached the age of peak EDC, and the whole driver to the suites. We had non- Rave bonuses and incentives. [Management] always afraid EDC would become commoditized and right at that tipping point” • Customer not price sensitive – “I don’t want the cheapest brain surgeon” • “BioClinica does a better job at marketing the suite than Medidata does… and are a factor of 2x cheaper. Medidata prices on number of site locations and trials” • “VP of Biometrics and VP of Clinical signs the contracts” • “Very successful with CRO channel” • “Mid-market just as a big [as big pharma]. Intermune, Pharmacyclic, Seattle Genetics may do $1.5-4.0 million depending on number of clinical trials.”

SOURCE: COMPANY FILINGS, CLINICALTRIALS.GOV, MACRO MONITOR HEDGEYE 37 VP PRODUCT DEVELOPMENT - COMPETITOR • “…Medidata has made it difficult for new entrants to come in. EDC market is still going to be relevant and is still growing” • “Commercial partnerships and relationships with CROs is absolutely critical” • “People pay a premium not just for the product but for professional services” • “Either [Medidata] diversifies their products or cross-sell into existing. They have a huge customer base and they can begin to sell more product into those companies, and that is their next growth opportunity” • “Both Medidata and Oracle are taking an aggressive stance in Asia and trying to cement their share” • “15-16 growth rates Asia-Pacific. Hearing people quote figures of 19% growth in Clinical Trials in China. U.S. drove 30% of all trials 5-6 years ago and that has declined to 20% today. Growth in trials in the region are growing exponentially” • “Emerging market is strong, but quite immature. Desperate to learn about centralization. Fast growth still 5-6 years out.” • “E-Clinical market is going to approach $4.5-5.0 bill over next 5-years, which would indicate the market is growing at around 25-30%. EDC would be growing much slower” • “Open-source is legitimate, there are no regulatory obstacles in adopting that” SOURCE: COMPANY FILINGS, CLINICALTRIALS.GOV, MACRO MONITOR HEDGEYE 38 VALUATION HISTORICAL MULTIPLES

SOURCE: FACTSET HEDGEYE 40 EV/SALES MULTIPLE MODEL

Key Driver(s) - App Service Revenue Y/Y ROC

- 0.97 R^2 / 2Q Lead - HRM Calculated - Updated Quarterly

- Model results in 12x EV/Sales multiple by 3Q15 or 100% y/y increase from 3Q14

- Model based on absolute EV/Sales (0.89 R^2) is more conservative and results in 8.1x EV/Sales multiple by 3Q15

SOURCE: COMPANY FILINGS, FACTSET, HEDGEYE HEDGEYE 41 BACKLOG LEADS STOCK PRICE 2 QUARTERS

- Backlog leads stock price by 2 quarters (R^2 = 0.82). - Forecasting stock price based on backlog model suggests +80% upside. - EV/Sales multiple model corroborates backlog valuation model.

SOURCE: COMPANY FILINGS, HEDGEYE HEDGEYE 42 VALUATION TABLE - EV/SALES

NTM EV/SALES $ - 5.5x 6.5x 7.5x 8.5x 9.5x 10.5x 11.5x $ 380 $ 32.93 $ 39.69 $ 46.44 $ 53.20 $ 59.96 $ 66.72 $ 73.47 $ 400 $ 34.89 $ 42.00 $ 49.11 $ 56.23 $ 63.34 $ 70.45 $ 77.57 $ 420 $ 36.85 $ 44.31 $ 51.78 $ 59.25 $ 66.72 $ 74.19 $ 81.66 $ 430 $ 37.82 $ 45.47 $ 53.12 $ 60.77 $ 68.41 $ 76.06 $ 83.71 $ 450 $ 39.78 $ 47.78 $ 55.79 $ 63.79 $ 71.79 $ 79.80 $ 87.80

HRM '15 Sales $ 470 $ 41.74 $ 50.10 $ 58.46 $ 66.82 $ 75.17 $ 83.53 $ 91.89 $ 490 $ 43.70 $ 52.41 $ 61.13 $ 69.84 $ 78.56 $ 87.27 $ 95.99

BEAR BASE BULL -29% 31% 107%

SOURCE: HEDGEYE HEDGEYE 43 VALUATION TABLE – EV/EBITDA

NTM EV/EBITDA #REF! 32.5x 35.0x 37.5x 40.0x 42.5x 45.0x 47.5x $ 62 $ 31.61 $ 34.37 $ 37.12 $ 39.88 $ 42.64 $ 45.40 $ 48.15 $ 77 $ 40.28 $ 43.71 $ 47.13 $ 50.56 $ 53.98 $ 57.41 $ 60.83 $ 92 $ 48.96 $ 53.05 $ 57.14 $ 61.23 $ 65.33 $ 69.42 $ 73.51 $ 107 $ 57.63 $ 62.39 $ 67.15 $ 71.91 $ 76.67 $ 81.43 $ 86.19 $ 122 $ 66.31 $ 71.74 $ 77.16 $ 82.59 $ 88.02 $ 93.44 $ 98.87

HRM '15 EBITDA $ 137 $ 74.98 $ 81.08 $ 87.17 $ 93.27 $ 99.36 $ 105.45 $ 111.55 $ 152 $ 83.66 $ 90.42 $ 97.18 $ 103.94 $ 110.70 $ 117.46 $ 124.23

BEAR BASE BULL -32% 55% 168%

SOURCE: HEDGEYE HEDGEYE 44 VALUATION TABLE – P/E

NTM P/E $ 46.40 55x 60x 65x 70x 75x 80x 85x $ 0.73 $ 40.01 $ 43.64 $ 47.28 $ 50.92 $ 54.55 $ 58.19 $ 61.83 $ 0.83 $ 45.51 $ 49.64 $ 53.78 $ 57.92 $ 62.05 $ 66.19 $ 70.33 $ 0.93 $ 51.01 $ 55.64 $ 60.28 $ 64.92 $ 69.55 $ 74.19 $ 78.83 $ 1.03 $ 56.51 $ 61.64 $ 66.78 $ 71.92 $ 77.05 $ 82.19 $ 87.33 $ 1.13 $ 62.01 $ 67.64 $ 73.28 $ 78.92 $ 84.55 $ 90.19 $ 95.83 HRM '15 EPS $ 1.23 $ 67.51 $ 73.64 $ 79.78 $ 85.92 $ 92.05 $ 98.19 $ 104.33 $ 1.33 $ 73.01 $ 79.64 $ 86.28 $ 92.92 $ 99.55 $ 106.19 $ 112.83

BEAR BASE BULL -14% 55% 143%

SOURCE: HEDGEYE HEDGEYE 45 RISKS CUSTOMER ACQUISITION COSTS

MAINTAIN LINEAR COST TREND Increasing customer acquisition cost will be an early sign that company is reaching saturation in current market. We will be monitoring the slope of the trend closely as well as the incremental revenue benefit per $ spend.

SOURCE: COMPANY FILINGS, HEDGEYE HEDGEYE 47 INSUFFICIENT TAM

32,559 Unique Sponsors $6.1* Bill

18,825 Active Last 5-Yea r s $3.5* Bill

7,896 Industry Only $1.5* Bill

4,000 Adopt $0.75* Mill ?

TAM MAY BE SMALLER THAN WE THINK High frequency Key Drivers will help mitigate this risk in near term.

SOURCE: COMPANY FILINGS, HEDGEYE HEDGEYE 48 SLOWDOWN IN CLINICAL TRIALS

TRACKING THE DATA… We are actively monitoring the # of clinical trials registered as well as award activity at NIH. We process the data on a weekly basis and analyze monthly.

SOURCE: CLINICALTRIALS.GOV, HEDGEYE HEDGEYE 49 INCREASED COMPETITION

MEDIDATA IS A MARKET LEADER IN SHARE AND PRICE Number of smaller competitors with less comprehensive offerings are undercutting Medidata on price by more than half. Medidata has been actively displacing Oracle and is a trend that is likely to continue.

SOURCE: GOOGLE IMAGES, COMPANY WEBSITES HEDGEYE 50 M&A

- M&A activity can disrupt capital allocation and vendor decisions of both the target and acquirer. - Medidata customer being acquired by a company using a competing system is a real risk.

SOURCE: FACTSET HEDGEYE 51 CATALYSTS CATALYST CALENDAR

Date Event

February ’15 Hedgeye Key Driver Update

February ‘15 4Q14 Earnings (Not formally announced – Reported 2/6 Last Year)

March ‘15 Hedgeye Key Driver Update

SOURCE: HEDGEYE HEDGEYE 53 CONCLUSION THESIS | ROAD TO $65+

SOURCE: HEDGEYE HEDGEYE 55 Q&A FOR MORE INFORMATION CONTACT: [email protected] 203.562.6500