UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For The Fiscal Year Ended December 31, ~~2013~~2014

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

COMMISSION FILE NUMBER: 333-187931

777 E. Eisenhower Parkway

Ann Arbor, Michigan 48108

(Address of registrants' principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (734) 913-3000

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer (as defined in Rule 405 of the Securities Act). Yes ¨ No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Act. Yes ¨þ No þ¨

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ ¨ No ¨

The registrants are voluntary filers and have filed all reports that would have been required to have been filed by the registrants during the preceding 12 months had they been subject to such filing requirements

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ Accelerated Filer ¨ Non-accelerated filer þ smaller reporting company ¨

(do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

The aggregate market value of Truven Holding Corporation and Truven Health Analytics Inc. common stock held by non-affiliates were each $0 as of December 31, ~~2013~~2014.

As of December 31, ~~2013~~2014, there was one outstanding share of each of the registrants.

DOCUMENTS INCORPORATED BY REFERENCE-None

TABLE OF CONTENTS

			Page
Part I.
	Item 1	Business	1
	Item 1A	Risk Factors	11
	Item 1B	Unresolved Staff Comments	2928
	Item 2	Properties	2928
	Item 3	Legal Proceedings	2928
	Item 4	Mine Safety Disclosure	3029
Part II.
	Item 5	Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	30
	Item 6	Selected Financial Data	30
	Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
	Item 7A	Quantitative and Qualitative Disclosures About Market Risk	6067
	Item 8	Financial Statements and Supplementary Data	6168
	Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	6168
	Item 9A	Controls and Procedures	6168
	Item 9B	Other Information	6270
Part III.
	Item 10	Directors, Executive Officers and Corporate Governance	6371
	Item 11	Executive Compensation	6675
	Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	7079
	Item 13	Certain Relationships and Related Transactions, and Director Independence	7080
	Item 14	Principal Accountant Fees and Services	7281
Part IV.
	Item 15	Exhibits and Financial Statement Schedules	7383
		Exhibits	7484
		Signatures	7787

NOTE ON FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (the "Annual Report") contains certain “forward-looking statements” (as defined in Section 27A of the U.S. Securities Act of 1933, as amended, or the “Securities Act,” and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, or the “Exchange Act”) that reflect our expectations regarding our future growth, results of operations, performance and business prospects and opportunities. Words such as “anticipates,” “believes,” “plans,” “expects,” “intends,” “aims,” “estimates,” “projects,” “targets,” “can,” “could,” “may,” “should,” “will,” “would,” and similar expressions have been used to identify these forward-looking statements, but are not the exclusive means of identifying these statements. For purposes of this Annual Report , any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. These statements reflect our current beliefs and expectations and are based on information currently available to us. As such, no assurance can be given that our future growth, results of operations, performance and business prospects and opportunities covered by such forward-looking statements will be achieved. We have no intention or obligation to update or revise these forward-looking statements to reflect new events, information or circumstances.

Such forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

A number of important factors could cause our actual results to differ materially from those indicated by such forward-looking statements, including those described under the heading “Risk Factors” in Part I, Item 1A. herein and elsewhere in this Annual Report.

Definition of Terms

Unless otherwise indicated or the context otherwise requires, references in this report to:


•	the term “Holdings LLC” refers to VCPH Holdings LLC, a Delaware limited liability company;

• the terms “~~the~~ Company”, ~~“Truven Holding”,~~ "we", "us", ~~"our"~~ and "~~Parent~~our" refer to Truven Holding Corp., aand ~~Delaware~~Truven ~~corporation~~Health ~~that~~Analytics isInc., ~~directly~~together ~~owned~~with bytheir ~~Holdings LLC~~subsidiaries;


•	the terms “Truven Holding” and "Parent" refers to Truven Holding Corp., a Delaware corporation that is directly owned by Holdings LLC and that is the direct parent of Truven;


•	the term “TRHI” refers to Thomson Reuters (Healthcare) Inc., a Delaware corporation, which, upon consummation of the Merger, became a direct wholly-owned subsidiary of VCPH Holding Corp. (now known as Truven Holding) and subsequently changed its name to Truven Health Analytics Inc.;

• the terms “Thomson Reuters Healthcare” and “Predecessor” refer to TRHI, together with certain other assets and liabilities of the Thomson Reuters Healthcare business prior to and including the date of the closing of the Prior Acquisition on June 6, 2012;

• the term “Wolverine” refers to Wolverine Healthcare Analytics, Inc., a Delaware corporation and an affiliate of The Veritas Capital Fund IV, L.P., a private equity fund managed by Veritas Capital, which was formed on May 16, 2012 as a direct wholly-owned subsidiary of VCPH Holding Corp. (now known as Truven Holding) and, upon consummation of the Prior Acquisition, merged with and into TRHI, with TRHI surviving the Merger as a direct wholly-owned subsidiary of VCPH Holding Corp. (now known as Truven Holding) and subsequently changing its name to Truven Health Analytics Inc.;

• the terms “Truven” and the “Issuer” refer to Truven Health Analytics Inc., a Delaware corporation and a direct wholly-owned subsidiary of Truven Holding, and its subsidiaries;

• the term “Prior Acquisition” refers to the acquisition by Wolverine of 100% of the equity interests of TRHI and certain assets and liabilities of the Thomson Reuters Healthcare business, pursuant to the Stock and Asset Purchase Agreement, dated as of April 23, 2012, which VCPH Holding Corp. (now known as Truven Holding) entered into with the Stock Seller and Thomson Reuters Global Resources and subsequently assigned to Wolverine on May 24, 2012, and which closed on June 6, 2012;

• the term “Merger” refers to the merger upon the closing of the Prior Acquisition, whereby Wolverine (which was formed solely for the purpose of completing the Prior Acquisition) merged with and into TRHI, with TRHI surviving the Merger as a direct wholly-owned subsidiary of VCPH Holding Corp. (now known as Truven Holding) and subsequently changing its name to Truven Health Analytics Inc.;


•	the term “Stock Seller” refers to Thomson Reuters U.S. Inc.;


•	the terms “Sponsor” and “Veritas Capital” refers to Veritas Capital Fund Management, L.L.C.;


•	the terms “Thomson Reuters” and the “Predecessor Parent” refers to Thomson Reuters Corporation;

• the term “Stock and Asset Purchase Agreement” ~~refer~~refers to the Stock and Asset Purchase Agreement among VCPH Holding Corp., the Stock Seller and Thomson Reuters Global Resources, dated as of April 23, 2012, which VCPH Holding Corp. assigned to Wolverine on May 24, 2012;

• the term “Predecessor Period” refers to all periods prior to and including the date of the closing of the Prior Acquisition on June 6, 2012; ~~and~~


•	the term “Successor” refers to Truven Holding, on a consolidated basis with its subsidiaries;

• the term “Successor Period” refers to all periods from inception of Truven Holding (April 20, 2012 to - December 31, 2012), which includes all periods after the closing of the Prior Acquisition on June 6, 2012.

• the term "Notes" refers to refers to the 10.625% Senior Notes.;

• the term "Senior Credit Facility" refers to the Term Loan Facility and Revolving Credit Facility from syndicate of banks and other financial institutions.;


•	the term "Old Notes" refers to the 10.625% Senior Notes, Series A, issued in a private offering under an indenture, dated June 6, 2012, and which were exchanged for the Exchange Notes (as defined below);


•	the term "Exchange Notes" refers to the 10.625% Senior Notes, Series B, registered under the Securities Act 1933;


•	the term "Additional Notes" refers to the 10.625% Senior Notes, [Series A], issued in connection with the JWA Transaction and the HBE Transaction;


•	the term "Simpler" refers to Simpler Consulting, LLC. and certain of its affiliated entities and persons, which was acquired by certain wholly-owned subsidiaries of the Company on April 11, 2014;

•

the term "Simpler Transaction" refers to the transactions under the Purchase Agreement dated April 11, 2014, whereby Truven acquired all of the outstanding equity of Simpler in exchange for a purchase price of $81.1 million, including a preliminary working capital adjustment of $1.1 million, and the issuance by Holdings LLC, the direct parent of the Company, of $3.7 million of equity interests to Simpler;


•	the term "JWA" refers to Joan Wellman and Associates, Inc. which was acquired by the Company on October 31, 2014;


•	the term "JWA Transaction" refers to transactions under the Purchase Agreement dated October 31, 2014, whereby Truven indirectly acquired all of the outstanding equity of JWA in exchange for a cash purchase price of $15.3 million, including a $1.2 working capital adjustment and $0.1 million holdback payment;


•	the term "HBE" refers to HBE Solutions, LLC which was acquired by certain wholly-owned subsidiaries of the Company on November 12, 2014; and


•	the term "HBE Transaction" refers to the November 12, 2014 transactions under the Purchase Agreement dated November 5, 2014, whereby Truven indirectly acquired all of the outstanding equity of HBE in exchange for a cash purchase price of $17.6 million, including a negative working capital adjustment of $2.4 million.

iii

PART I

ITEM 1 - BUSINESS

Overview

We ~~improve~~are ~~the~~a leading analytics company focused on improving quality and ~~decrease~~decreasing ~~the~~costs ~~cost~~across ofthe healthcare ~~through~~industry. Through the better use of analytics and data~~. Positioned~~, atwe ~~the~~enable ~~center~~our ofclients ~~the~~to ~~convergence~~reduce ofcosts, manage risk, ~~and~~improve ~~care~~operational ~~management~~performance, ~~Truven~~enhance ~~Health~~patient ~~Analytics~~outcomes isand ~~helping~~increase ~~the~~transparency. ~~industry~~We ~~transform~~combine ~~into~~our ~~the~~analytic ~~integrated~~expertise, ~~sustainable~~information ~~healthcare~~assets ~~system~~and ~~that~~technology isservices ~~demanded~~to byoffer ~~consumers,~~our ~~business~~clients data insights and analytical solutions. Furthermore, we increase the value of our analytical solutions with performance improvement and ~~government~~analytic consulting expertise.

~~Serving~~Our ~~users~~platform ~~across~~delivers a wide range of analytics solutions and services. These solutions and services leverage our extensive experience in the healthcare ~~system~~industry, ~~including~~are ~~both~~responsive ~~payers~~to growing market needs and ~~providers,~~are ~~our~~often embedded in customer operations. Our analytics solutions ~~and~~include ~~services~~population ~~enable~~heath ~~clients~~and tocost ~~reduce~~analysis, ~~costs~~provider performance management, ~~manage~~payment ~~risk~~integrity, ~~improve~~patient ~~clinical~~care and ~~operational~~research ~~performance,~~solutions. ~~and~~Our ~~enhance~~services ~~the~~include ~~effectiveness~~analytic consulting, ~~coordination~~research and ~~transparency~~data ~~of healthcare delivery~~management.

WePositioned ~~are~~at ~~one of~~ the ~~largest~~convergence ~~independent healthcare analytics solutions and services providers. Our clients consist~~ of ~~key~~risk ~~constituents in the U.S. healthcare system, including federal government agencies, state government agencies, employers~~ and ~~health~~care ~~plans~~management, ~~hospitals,~~Truven ~~clinicians~~is ~~and~~helping ~~life sciences companies. Through more than 30 years of operating history, we have advanced~~ the ~~science of healthcare analytics, built proprietary analytic methods, and assembled analytic content assets that consist of information from across the healthcare~~ industry totransform ~~create~~into an ~~extensive~~integrated, ~~compilation~~sustainable ~~of national~~ healthcare ~~utilization,~~system ~~performance,~~that ~~quality,~~is ~~and~~demanded ~~cost~~by ~~data. Our content assets include some of the most significant aggregated data assets in the industry~~consumers, ~~such~~business ~~as one of the largest~~ and most representative collections of commercially insured patient data, some of the largest databases of operational benchmarks and clinical performance data for hospitals and one of the most comprehensive databases of evidence-based clinical decision support contentgovernment. ~~With~~In ~~these analytic capabilities and assets, we are focused on creating tangible value across our customer base for 2013~~2014:

• We informed decision-‑making on the health benefits for 1one in 3three Americans;

•Our Wesolutions ~~served~~helped ~~over~~improve 8care quality and efficiency in more than 4,~~500~~000 ~~customers~~hospitals ~~across~~in ~~all~~the United States and more than 1,800 healthcare ~~constituencies~~facilities internationally;

• We ~~had~~provided ~~clients~~analytics insolutions ~~all~~impacting 50more ~~states~~than ~~and~~50% inof 83Medicaid ~~countries internationally~~beneficiaries;

• We ~~helped~~provided ~~manage~~payment ~~healthcare~~integrity ~~cost,~~solutions ~~quality,~~to ~~and~~24 ~~access,~~state ~~and prevent fraud in the~~ Medicaid ~~programs~~agencies into 30reduce ~~states,~~fraud ~~impacting~~and ~~more than 50% of Medicaid beneficiaries~~abuse;

• Our consumer cost transparency solution reached 20approximately 28 million consumers, providing critical information to make personal healthcare choices and reduce costs; and

• Our ~~population~~data ~~health~~assets ~~solutions~~totaled ~~helped~~4.5 ~~over~~petabytes 18of ~~million~~data ~~individuals~~including ~~make~~approximately ~~provider~~30 billion ~~care~~claims ~~decisions~~records on over 214 million de‑identified patient lives.

• We ~~provided~~provide our analytic solutions ~~that~~and ~~help~~service ~~improve~~offerings ~~care~~across ~~quality~~the full spectrum of healthcare constituents, including state and ~~efficiency~~federal ingovernment agencies, hospitals, health systems, employers, health plans, life sciences companies and consumers. In 2014, our customer base included more than 460% of Fortune 100 companies; over 125 health plans,~~000~~ ~~hospitals~~third‑party inadministrators (“TPAs”) and related organizations; federal government agencies, such as the Centers for Medicare & Medicaid Services (“CMS”), the Department of Veterans Affairs (“VA”), and the Department of Defense (“DOD”); 31 state Medicaid agencies; over 4,000 U.S. hospitals; and ~~more~~each ~~than~~of 1the top 25 global life sciences companies based on revenue. We believe our solutions are critical to our clients’ decision‑making as demonstrated by our long‑term customer relationships,~~800~~ ~~healthcare~~multi‑year ~~facilities~~contracts ~~internationally~~and high customer retention. The average length of our relationship with our top 20 clients measured by 2014 revenue is approximately 13 years.

•Through more than 40 years of operating history, we have developed one of the most sophisticated data integration and analytics technology platforms within the healthcare industry. Our ~~database~~platform ~~contained~~combines 3healthcare ~~petabytes~~utilization, performance, clinical quality and cost data with our proprietary analytic methodologies that transform the large, complex quantities of data into actionable insights. We developed our technology and data operations to aggregate and integrate disparate data streams, ~~including~~allowing 20us ~~billion~~to build longitudinal views of patient health. Our platform integrates our client data ~~records~~with onour ~~nearly~~analytics ~~200~~solutions, ~~million~~which ~~de-identified~~helps our clients better understand performance trends, create better programs, engage consumers and improve patient ~~lives~~outcomes and financial performance.

• We managed data from 1,000 different sources in 3,500 unique formats each year

• We reviewed over 500,000 articles from over 10,000 journals

Our technology and data operations have been developed to harmonize disparate data streams through our rigorous and efficient data processing capacity. We continually refresh and transform this large and complex quantity of data into coherent and actionable information that enables our analytics solutions and services.

We leverage our deep industry domain expertise and integrate our analytics and content assets to deliver solutions and services that are designed to help our clients make better decisions, analyze data more effectively, and deliver healthcare more efficiently and with higher quality. The major solution platforms and services we provide for our clients include population health and cost analysis solutions, hospital performance management solutions, patient care solutions, research solutions, and payment integrity and compliance solutions. In each solution area, we augment our value proposition with highly tailored services offered either as an integral part of a recurring contract or as a separate but often repeated service engagement. Examples of our separate data driven services offerings include research activities carried out on behalf of government agencies, advisory work for hospitals in areas like bundled payments and audit, compliance and pharmacy benefit services on behalf of employers.

WeThe ~~provide our analytics solution and service offerings across the full spectrum of~~ healthcare ~~constituents.~~industry ~~For~~is ~~2013~~experiencing ~~our~~transformational ~~diversified~~change ~~customer~~driven ~~base~~by ~~included~~intense ~~more~~cost ~~than~~pressures, ~~40%~~a ofchanging ~~Fortune~~regulatory ~~100 companies; over 125 health plans~~environment, ~~third-party~~new ~~administrators~~payment ~~(“TPAs”)~~ and ~~related~~delivery ~~organizations,~~models ~~including~~and ~~most~~innovation ofin ~~the~~therapies ~~top~~and ~~10 U~~treatments.S. ~~health~~In ~~plans~~this ~~based~~new onhealthcare ~~enrollment;~~paradigm, 30we ~~state~~enable ~~agencies;~~our ~~managers~~clients into ~~over~~analyze ~~1,850~~data ~~hospitals~~more ineffectively, ~~the~~improve ~~United~~decision ~~States; clinicians in 3~~making,~~500~~ ~~U.S. hospitals;~~ and ~~nearly~~deliver ~~all~~higher ofquality, ~~the~~more ~~top~~efficient ~~25 life sciences companies based on revenue~~healthcare. We believe ~~our~~that ~~solutions~~a ~~drive~~powerful ~~substantial~~component ~~value for these clients resulting in long-term relationships as evidenced by an 89% and 88% customer retention rate (defined as the proportion~~ of ~~the~~our ~~bank~~value ofproposition ~~business~~is at the ~~start~~breadth ~~of the year that is carried forward via renewals~~ and ~~continuing~~depth ~~multi-year contracts) in 2013 and 2012, respectively, as well as average tenure~~ of ~~the~~data ~~top 20 clients in each customer channel of over 11 years. In 2013~~ and ~~2012,~~analytics ~~87%~~we ~~and~~provide ~~86%~~to ofhelp our ~~revenues~~clients ~~were~~address ~~“subscription-based”~~their ~~(which~~fundamental wequestions ~~define~~in asthe ~~data~~changing ~~and~~healthcare ~~analytics revenue, a significant portion of which is recurring under multi-year contracts)~~environment.

~~Corporate~~Formerly ~~history~~the ~~and~~healthcare ~~information~~business of Thomson Reuters, we were acquired by Veritas Capital on June 6, 2012. In partnership with Veritas, management has made substantial investments in our business. Since the Prior Acquisition we have:

~~Formerly~~Completed ~~the~~our ~~Healthcare~~separation ~~business~~from of Thomson Reuters, weand ~~were~~made ~~acquired~~an byincremental ~~Veritas~~investment ~~Capital~~of onmore ~~June~~than 6,$30 million ~~2012. Since the acquisition, we have completed the transition~~ to aestablish ~~fully~~our standalone ~~entity~~data ~~and~~center ~~have~~operations ~~invested in technology~~ and inimprove ~~the build-out of~~ our ~~data~~technology infrastructure, inenabling ~~data~~more ~~centers~~flexible ~~wholly~~and ~~separate~~efficient ~~from~~deployment ~~Thomson~~of ~~Reuters to facilitate~~ our ~~strategy and customer delivery. We have focused the business to support targeted growth through investments to drive expanded strategy, positioning, and go-to-market execution.~~solutions;

~~Truven~~Reorganized ~~Health~~our ~~Analytics~~go‑to‑market ~~Inc.~~strategy isfrom aoperating ~~Delaware~~in ~~corporation.~~six ~~Our~~channels ~~principal~~to ~~executive~~two ~~offices~~focused ~~are~~segments, ~~located~~Government atand ~~777 E. Eisenhower Parkway~~Commercial, ~~Ann~~allowing ~~Arbor,~~us ~~Michigan~~to ~~48108.~~focus ~~Our~~on ~~telephone~~the ~~number~~unique atneeds ~~that~~of ~~address~~our iscustomers ~~(734) 913-3000.~~in ~~Our~~each ~~corporate~~of ~~website~~these ~~address~~two isdistinct ~~www.truvenhealth.com.~~markets ~~The website~~ and ~~the~~organize ~~information~~our ~~contained~~internal onresources ~~the~~to ~~website~~more doeffectively ~~not~~capture ~~constitute~~these ~~a part of this Annual Report.~~ opportunities;

~~Industry~~Enhanced ~~Opportunity~~our market positioning to emphasize our analytic power, our global perspective across healthcare and our ability to combine our solutions and services for data‑driven transformation;

~~According~~Completed to the ~~Centers~~acquisition ~~for~~of ~~Medicare~~Simpler ~~and~~on ~~Medicaid Services (“CMS”)~~April 11, ~~total U.S. health expenditures reached $2.8 trillion or 17.2% of GDP in 2012~~2014, ~~representing~~adding acomplementary ~~3.7%~~provider ~~increase~~"Lean" ~~over~~consulting ~~the~~services ~~previous~~to ~~year. U.S.~~our ~~healthcare~~leading ~~spending~~analytics ~~has~~capabilities ~~risen 2.4% points faster than GDP since 1970~~ and ~~the~~deepening ~~trend~~our ~~shows~~relationships ~~little~~with ~~sign~~senior ofleadership ~~slowing. Further,~~across ~~according to 2013 data from the World Health Organization, U.S.~~ healthcare ~~spending~~systems; as a percentage of GDP in 2010, at 17.6%, far exceeded that of any other member country of the Organization for Economic Co-operation and Development. For comparison, the next highest percentage was the Netherlands at 12.1%.

~~CMS~~Completed ~~projects that average health spending will grow by 5.8% annually from 2012 to 2022, outpacing average annual growth in~~ the ~~overall~~acquisition ~~economy~~of ~~by 1.0%. By 2022~~JWA, ~~national~~which ~~health~~provides ~~spending~~"Lean" ishealthcare ~~expected~~consulting toservices ~~reach~~on ~~19.9%~~October ~~of GDP. Compounding the fundamental problem of unsustainable costs are the clinical and operational complexity~~31, ~~waste~~2014; ~~and payment inefficiencies within the U.S. healthcare system.~~

WeCompleted ~~estimate~~the ~~that~~acquisition ~~wasteful spending accounts for $600 billion to $850 billion~~ of ~~annual U.S. healthcare expenditures~~HBE, ~~which~~a ~~represents~~leading ~~nearly~~provider ~~one-third~~ of ~~total~~stakeholder ~~healthcare~~information ~~spending~~that inis ~~the~~essential ~~United States. This wasteful spending includes medical errors, fraud and abuse, avoidable care and payments~~ for ~~services~~life ~~with~~sciences nocompanies ~~evidence that they contribute~~ to ~~better~~gain ~~health~~drug ~~outcomes. Constituents look to a range of programs and solutions in transparency~~approval, ~~quality and cost management~~reimbursement, and ~~payment integrity to reduce waste~~adoption, all of which fundamentally require aggregating and analyzing data from multiple sources. This requires ever more sophisticated analytic tools and solutions that not only interpret historical trends, but predict the impact of program changes and interventions on ~~future~~November cost and quality. It also requires that hospitals and clinicians provide greater transparency through quality and outcomes measurement to justify their costs while simultaneously finding more cost-effective ways to deliver evidence-based care. Finally12, ~~life~~2014; ~~sciences companies are increasingly required to demonstrate relative cost-effectiveness of new therapies in order to receive reimbursement.~~and

~~The~~Improved ~~Health~~our ~~Information~~offshore ~~Technology~~capabilities, ~~for~~nearly ~~Economic~~doubling ~~and Clinical Health (“HITECH”) Act (2009) earmarked over $20 billion for~~ the ~~implementation~~number of ~~healthcare~~direct ~~information~~employees ~~technology~~in byour ~~physicians~~Indian ~~and~~subsidiary ~~hospitals, including incentive payments and penalties~~ to ~~encourage~~over ~~doctors~~200 ~~and~~since ~~hospitals~~it towas ~~use~~established ~~healthcare~~following information technology and electronically exchange patients’ health information. Under HITECH, doctors and hospitals must implement electronic medical record systems and meet certain “meaningful use” criteria, including the ~~provision~~Prior ~~of specified data elements, in order to achieve full reimbursement~~Acquisition. ~~The increasing use of healthcare information technology is generating new electronic~~

We believe that these strategic initiatives have enhanced our competitive position and will enable us to address a broader set of customer opportunities.

Our business model provides substantial revenue visibility. The majority of our subscriptions have multi‑year terms and include services such as implementation, training, data integration and analytics consulting. The scope of a subscription often grows over time as modules, licenses and services are added to meet a client’s growing needs. An increasingly broad range of analytic consulting, research, data management and performance improvement services are also sold as projects, which are often multi‑year and can expand, extend and repeat over time.

Through more than 40 years of operating history, we have developed one of the most sophisticated analytics technology platforms within the healthcare industry, combining our data assets, analytic capabilities, proprietary methods and value‑added services. Our 4.5 petabytes of online data represents a collection of some of the most comprehensive data assets in the industry, such as one of the largest collections of commercially insured patient data, one of the largest databases of operational benchmarks and clinical performance data for hospitals and one of the most comprehensive databases of evidence‑based clinical decision support content. We employ proprietary and industry standard analytic methods including classifications, groupers, measures, projections, predictive models and other statistical and big data techniques. Our data assets, coupled with our proprietary methods, form the foundation of our analytics solutions. In addition to our analytics solutions, we provide services such as analytics consulting and research, strategic consulting and advisory services, and data warehousing and management. We believe the complementary nature of our analytics solutions and services offerings enhances our value proposition to our clients.

~~clinical~~We ~~data~~believe that ~~can~~our platform would be ~~shared~~difficult for others to ~~improve~~replicate ~~care~~in ~~processes~~breadth, depth and ~~mined~~quality. ~~for~~Clients ~~greater~~continuously ~~insights~~contribute ~~into~~new ~~effective~~information ~~patient~~to ~~care~~our ~~patterns. At~~existing ~~the~~databases, ~~same~~allowing ~~time~~us to refresh and enrich our content, ~~CMS~~databases ~~has~~and ~~continued~~analytics. ~~implementation~~Our oftechnology ~~hospital~~and ~~value-based~~data ~~purchasing~~operations ~~requirements~~aggregate inand ~~the~~integrate ~~fiscal~~disparate ~~year~~data ~~2014~~streams, ~~which~~including ~~assess~~financial, ~~hospital~~administrative ~~performance~~and ~~based~~clinical oninformation, ~~the~~allowing ~~achievement~~us ofto abuild ~~distinct~~more ~~set~~valuable oflongitudinal ~~quality~~views ~~and~~of a patient’s ~~satisfaction~~health. ~~measurement~~We continuously integrate our client’s data, ~~tying~~with ~~reimbursement~~our toanalytics ~~actual~~solutions, ~~performance. Our~~which ~~analytic~~enhances ~~tools~~the ~~are~~value ~~being~~of ~~used~~our insights and leads to ~~measure~~self‑ ~~clinical~~reinforcing ~~outcomes~~customer relationships and ~~quality~~increased ofclient ~~care,~~tenure. ~~which~~We isbelieve at the ~~core~~dynamic nature of ~~the~~our ~~effort~~processes and customer relationships continues to ~~improve~~enhance ~~care~~our ~~effectiveness~~competitive ~~and,~~position ~~ultimately,~~in tothe ~~decrease~~markets ~~healthcare~~we ~~costs~~serve.

~~Mandated~~Our bygrowth the Patient Protection and Affordable Care Act (2010), in an effort to provide higher quality care at lower costs, healthcare delivery is expected to be focused increasingly on pay-for-performance models as opposed to the historical fee-for-service model. As part of these new payment models, providers need new tools to measure and track patient populations and deliver the highest quality care at the lowest cost. In addition, there has been, and continues to be, a shift of healthcare cost responsibility to the consumer. Individuals are being required to take on increased financial responsibility for their healthcare as well as for the overall management of their health. High deductible health plans and health savings accounts, which shift a significant burden of cost to patients, are increasing as an offering by employers, and consumers are increasingly being drawn in to these plans. As a result, consumers desire information such as how much hospital procedures or visits to doctors’ offices will cost. As these new payment models take hold, we believe that government, health plans and employers need new tools, such as those offered by Truven, to measure care effectiveness, arm consumers with data regarding the cost and quality of care, and to design proactive benefits programs to encourage health and wellness.strategy

~~These~~We ~~industry~~believe ~~dynamics,~~we ~~underscored~~are bywell ~~increasing~~positioned ~~demand~~ for ~~value~~continued ~~received~~growth ~~from~~across the ~~U.S.~~markets ~~healthcare system, are creating powerful drivers for change~~ and ~~are~~customers ~~resulting~~we ~~in new models for healthcare delivery, payment and provider reimbursement~~serve. ~~Addressing~~Our ~~these~~strategy ~~cost challenges and industry changes has resulted in accelerated demand~~ for ~~sophisticated~~achieving ~~analytic~~growth ~~tools~~includes: and methodologies, applied across clinical, administrative, and claims data, that enable constituents to measure and manage the value of the healthcare services that they are purchasing and delivering.

~~Business~~Expand ~~Strategy~~our existing client relationships. We have built a large and loyal customer base as represented by the nearly 13 year average tenure of our top 20 clients. We believe the length of our key client relationships highlights the value we provide to our clients and creates a platform to expand and grow our client relationships over time. With many of our customers, a subscription that begins with the successful implementation of a core solution leads to profitable follow‑on sales of additional modules, consulting services, data management services and new solutions. We believe that there is a significant opportunity for growth through cross‑sales into our current customer base, since many of our clients are currently utilizing only a subset of our applicable solutions and services. Also of importance, our clients continually add data to our database, which in turn, makes our data assets even more valuable to existing and potential new customers. We believe this self‑ reinforcing aspect of our client relationships helps us to retain our clients and drive deeper penetration of our solutions across our customer base.

~~Focusing~~Enhance ~~intently~~our oncustomized ~~the~~services ~~nation’s~~and ~~healthcare~~solutions. We ~~priorities,~~are weimplementing ~~provide~~a ~~clients~~strategy ato ~~global~~deliver ~~healthcare~~our ~~perspective,~~capabilities ~~leveraging~~to ~~insights~~clients ~~across~~through ~~domains~~tailored toservices ~~deliver~~that ~~comprehensive,~~meet ~~coordinated~~their evolving, ~~independent~~complex ~~and~~needs. ~~holistic~~For ~~solutions~~example, in order to ~~more~~further ~~than~~leverage ~~8,500~~our ~~customers~~significant ~~across~~experience ~~healthcare~~in ~~constituencies. We~~creating ~~integrate~~and ~~the~~managing ~~expertise~~healthcare ofdatabases ~~over~~that ~~500~~are ~~data~~embedded ~~science,~~in ~~clinical~~our solutions, ~~and~~we ~~healthcare~~are ~~management~~increasingly ~~experts~~engaged ~~with~~in ~~our~~defining, ~~proprietary~~implementing ~~analytic~~and ~~capabilities~~operating ~~and~~custom data ~~assets~~warehouses tofor ~~enable~~several ~~predictive~~clients. ~~and~~We ~~real-time~~are ~~analytics,~~also ~~utilizing~~increasingly ~~multiple~~applying ~~data~~our ~~sources~~analytic tools and ~~integrating~~methods directly ~~into~~to ~~user~~our ~~workflows. Our~~client’s ~~independence~~data ~~and~~as ~~dedication~~an analytic consulting service to ~~healthcare~~enable ~~analytics~~client ~~are~~analysis ~~key~~and ~~differentiators~~decision asmaking ~~many~~through oftheir ~~our~~proprietary ~~clients~~systems ~~rely~~and onprocesses. ~~our~~We ~~objectivity~~have ~~and~~expanded ~~credibility~~our ability to ~~make~~deliver ~~important strategic~~tailored, ~~financial~~client specific solutions, ~~clinical~~which ~~and~~we ~~operational~~believe ~~decisions.~~enhances Weour ~~believe~~relevance ~~that~~to wecustomers ~~are~~and ~~focused~~expands ~~to:~~our addressable market.

•Increase ~~Deliver~~the ~~exceptional,~~scope ~~tangible~~of ~~value to~~ our ~~customers~~government services. To Weaccelerate ~~believe~~growth ~~that~~in ~~our~~federal ~~unique~~and ~~combination~~state ofmarkets, ~~healthcare~~we ~~domain~~have ~~expertise,~~invested ~~analytic~~in ~~solutions~~additional capabilities, ~~advisory~~custom ~~services~~development, and ~~leading~~staff ~~content~~and ~~assets~~support ~~creates~~resources. ~~significant~~We ~~value~~have ~~for~~been ~~our~~able ~~clients~~to ~~and~~build ~~their~~on ~~constituents.~~our ~~Through~~strong reputation and expand our ~~deep~~business ~~analytic~~with ~~capabilities~~CMS and ~~methodologies,~~with weother ~~are~~agencies ~~able~~with towhich ~~help~~we ~~ensure~~have ~~our~~long‑standing ~~clients~~relationships. ~~measurably~~We ~~reduce~~have ~~costs,~~also ~~manage~~expanded ~~risk,~~our ~~improve~~scope ~~clinical~~into additional state agencies and ~~operational~~federal ~~performance~~agencies, ~~and~~such ~~enhance~~as the ~~effectiveness~~DOD, ~~coordination~~National ~~and~~Institutes ~~transparency~~ of ~~healthcare~~Health, ~~delivery~~Centers ~~throughout~~for ~~the~~Disease ~~healthcare~~Control ~~continuum.~~and ~~Our~~Prevention, ~~advisory~~Food ~~services,~~and ~~consulting~~Drug Administration, and ~~custom~~Social ~~research~~Security ~~leverage~~Administration. ~~our~~Our ~~content~~network ~~assets~~of ~~and~~potential ~~expertise~~partners to ~~help~~contract ~~clients~~with toin ~~meaningfully~~the ~~affect~~Government ~~change~~segment inhas ~~their~~also ~~organizations,~~expanded ~~such~~which asallows ~~reducing~~us ~~the~~to ~~cost~~jointly ofbid ~~healthcare~~on ~~benefits~~government ~~for employers~~business, ~~increasing~~prime ~~engagement~~more ofcontracts ~~consumers~~directly, ~~increasing~~and ~~operating~~leverage ~~efficiency~~partner ~~for~~relationships ~~providers,~~ and ~~improving~~contract ~~quality,~~vehicles. ~~access~~For example, ~~and~~in ~~integrity~~2014 inwe ~~government~~won ~~healthcare~~several ~~programs.~~IDIQ We(Indefinite ~~believe~~Delivery/Indefinite Quantity) task orders and won the ~~value~~CMS ~~provided~~Research ~~through~~Management ~~our~~Assessment ~~analytics~~Design and ~~data~~Analysis ~~services~~IDIQ ~~helps~~(RMADA), ~~drive~~naming ~~long~~us ~~term~~as ~~client~~one ~~relationships~~of ~~and~~15 ~~our~~prime ~~reputation~~contractors asable ato ~~trusted~~bid ~~and~~on ~~authoritative~~RMADA ~~source~~task oforders ~~analytics~~with ~~solutions~~a ~~and~~$7 billion ~~services~~total spending ceiling.

•Continuously ~~Deploy~~expand ~~our~~product ~~analytics~~and ~~capabilities~~data ~~to improve healthcare~~offerings. We ~~embed~~further leverage our ~~advanced~~strong ~~analytic~~position ~~and~~across ~~predictive~~the ~~methodologies~~segments inwe ~~solutions~~serve ~~and~~by ~~services~~continuously ~~that~~investing ~~enable~~in ~~customers~~features toand ~~manage~~functionality ~~and~~to improve ~~the~~solutions ~~performance~~and ~~of their healthcare~~ services and ~~programs.~~enhance ~~Long-standing~~opportunities ~~challenges~~to inexpand ~~understanding~~into ~~healthcare~~new ~~cost~~markets. ~~and~~For ~~quality~~example, ~~are~~we ~~intensified~~have byrecently ~~the~~introduced ~~current~~enhanced ~~reform~~solution ~~environment,~~capabilities in ~~which~~physician ~~the~~performance, ~~degree~~consumer ofengagement ~~change~~ and ~~variation~~interactive ~~has increased dramatically. Sophisticated analytics that adjust for factors such as severity of illness~~reporting, ~~demographics,~~ and ~~facility~~have ~~characteristics~~added ~~are~~access ~~necessary in order~~ to ~~draw~~oncology ~~conclusions~~EMR ~~about~~data ~~the~~to ~~quality~~support ~~and effect of care. As an example, comparisons of~~ outcomes ~~for~~research ~~quality and resource use among physicians cannot be based on raw~~services.

~~mortality~~Grow ~~outcomes~~through ~~because~~strategic acquisitions. We expect to continue to increase the ~~mix~~value of ~~patients~~our isbusiness ~~different. Our~~through ~~analytics~~acquisitions ~~enable~~that ~~comparison~~improve ~~over~~our ~~time~~strategic ~~within~~ and ~~across~~market ~~healthcare~~position. ~~organizations~~In 2014, ~~leveling~~we completed the ~~playing~~acquisition ~~field~~of ~~for~~Simpler, adding "Lean" transformational performance improvement services capabilities that complement our ~~customers~~analytics solutions and ~~helping~~services, ~~them~~JWA, ~~identify~~which ~~trends~~provides "Lean" healthcare consulting services, and ~~target~~HBE, ~~areas~~a ~~for~~leading ~~performance~~provider ~~improvement. We~~of ~~continuously~~stakeholder ~~upgrade~~information ~~our~~that ~~analytic~~is ~~capabilities~~essential for life sciences companies to ~~better~~gain ~~ensure~~drug ~~that~~approval, wereimbursement ~~can~~and ~~deploy~~adoption. ~~the~~Our ~~best~~acquisition ~~analytic~~priorities ~~methods~~include: increasing access to the ~~healthcare~~value ~~quality,~~of ~~business~~analytics through integration, tools and ~~policy~~services; ~~questions~~expanding usage within customer organizations; enhancing our differentiated service capabilities that leverage our data and analytics in growing areas of ~~today~~need; and ~~tomorrow.~~extending our core analytic capability with expanded data, content and analytics methods.

•Expand ~~Develop~~globally ~~highly~~through ~~predictive~~existing ~~models~~international ~~using our large analytic data assets~~infrastructure. We ~~develop~~have ~~and~~developed ~~maintain~~ a ~~robust~~global ~~library~~platform offor ~~analytic~~the ~~methods~~sale ~~that~~and ~~are~~distribution ~~leveraged~~of in our ~~analytic~~ solutions and services. ~~Our~~in ~~analytic~~more ~~methods~~than ~~include~~80 ~~classifications~~countries, ~~groupers,~~primarily ~~measures,~~focused ~~projections,~~on ~~predictive~~our ~~models~~patient ~~and~~care ~~other statistical and big data techniques~~offerings. WeLeveraging ~~believe that~~ our ~~analytic~~distributor ~~methods~~network, ~~are~~direct ~~more~~sales ~~effective~~teams ~~than~~and ~~others~~international ~~because~~office ~~they are built~~locations, ~~calibrated, and verified using our large healthcare databases. The data assets on which~~ we ~~build~~seek ~~our~~to ~~models~~increase ~~include~~ the ~~nation’s~~sale ~~largest proprietary collection~~ of ~~commercially~~our ~~insured~~analytic ~~patient~~solutions ~~data available for research~~ and ~~one~~services ofthat meet the ~~largest~~needs ~~all-payer inpatient databases which contains more than half~~ of ~~all~~our ~~inpatient~~international ~~hospital discharges in the United States and is projected to represent all short-term, general, nonfederal hospitals, and most specialty hospitals~~clients.

• Leverage our customer scale to maintain market-leading analytic databases. As a trusted source of high quality healthcare data and analytics, we are able to acquire data from across market constituencies and have developed databases that we believe would be difficult to replicate in size or breadth. The highly fragmented nature of the healthcare system and divergent interests of key constituents represent a barrier to the aggregation of data. Our databases contain over 3 petabytes of online storage data and include data sourced across our base of more than 8,500 customers. We have a proven and scaled capability to integrate data from disparate sources across care settings (e.g., plan, care management, inpatient, outpatient, lab and pharmacy). We believe that we are able to provide more comprehensive and meaningful assessments and comparisons of care risks, costs and outcomes than competitors that are limited to data sourced from only one domain. With the extension of these capabilities to incorporate the growing sources of clinical data through HIEs, EMRs, and clinical integration, even deeper insights and more targeted solutions will be possible.offerings

•We ~~Expand~~market ~~wallet~~healthcare ~~share~~analytics ~~across~~solutions ~~our valuable customer base. Truven has successfully built a large~~ and ~~loyal~~services ~~customer~~that ~~base~~address ascritical ~~represented~~market ~~by the over 11 year average tenure of the top 20 clients in each of our customer segments/channels~~needs. WeOur ~~believe~~extensive ~~our~~data ~~long~~and ~~key~~content ~~client~~assets ~~relationships~~combined ~~not~~with ~~only prove the value we provide to~~ our ~~clients,~~healthcare ~~but~~data ~~also~~integration ~~create~~and aanalytics ~~basis~~capabilities toare ~~expand~~embedded ~~and~~across ~~grow~~ our ~~client relationships over time~~offerings. ~~With~~Analytics ~~many~~solutions oftypically ~~our~~include ~~customers, what begins with the successful~~ implementation ~~of a core solution leads to an expansion of the relationships through additional modules, aggregation of additional data streams, consulting services,~~ and ~~new~~product ~~solution~~support ~~sales~~services. OfMany ~~equal~~of ~~importance,~~ our ~~clients~~analytics ~~continually~~solutions ~~add~~are ~~data~~also tobundled ~~our~~with ~~database,~~related ~~which~~services insuch ~~turn,~~as ~~makes our~~ data ~~assets~~management ~~even more valuable to existing~~ and ~~potential~~analytic ~~customers.~~consulting Wethat ~~believe~~are ~~this~~tailored ~~self-reinforcing~~to ~~aspect of our~~ client ~~relationships~~demands. ~~provides~~Our aprincipal ~~significant~~offerings ~~and~~are ~~sustainable~~grouped ~~competitive~~into ~~advantage~~categories ~~against~~based ~~competitors~~on ~~who~~the ~~lack~~customer aneeds ~~comparable~~that ~~database~~they address.

• Capitalize on our position across markets. As a trusted source of high quality healthcare analytics, Truven operates and integrates data across all key constituents, reaching a scale that we believe positions us as an authoritative, independent standard in the industry. We believe our solid position across the various healthcare constituents and stakeholders enables us to be well-positioned for changing industry dynamics, as the market demands more tools for measurement and shifts towards requiring a greater degree of cooperation between providers and payers due to increased sharing of risk. Some specific examples of this healthcare market synergy include our population health solutions, expansion of our payment integrity offerings from health plans and government markets into the employer market, and penetrating large hospital systems and government clients with employer solutions.

• Integrate our domain expertise across data science, technology, and healthcare management and practice. We employ clinicians, epidemiologists, statisticians, and technologists with domain expertise in healthcare who develop analytics, algorithms, tools, and methodologies that inform and shape our solutions and services. Through these activities, our domain knowledge is embedded and scaled in our analytics solutions and services. Our extensive and diverse group of healthcare experts includes: a Chief Medical Officer team adding clinical

~~insight~~Analytics to solution development and client interactions; over 200 researchers and thought leaders (made up of clinicians, epidemiologists, statisticians, and other healthcare administration and policy experts); over 450 product managers, software engineers, and user design professionals; over 200 technologists expert in a broad spectrum of disciplines; over 300 analytic consulting and client services resources; and over 80 physicians, clinicians, clinical pharmacists, nurses, and other allied health and editorial professionals. In addition to providing analytic services, our healthcare experts develop methods, algorithms, and strategies that continuously enhance our analytics solutions ~~and services. Our experts serve as thought leaders, analyzing the major issues impacting the industry and engaging with clients directly to address their most pressing needs and latest challenges.~~

• Deliver large scale solutions using advanced cloud technologies. We provide end-to-end data acquisition, warehousing and end user solutions in a HIPAA-compliant, secure, private cloud infrastructure. Our infrastructure leverages virtualization (cloud) technologies and an engineered systems approach for scale, efficiency, and security. Utilizing what we believe are our state of the art data center facilities, we host, architect, implement and maintain sophisticated solutions for our clients. In addition, common configuration and customization needs such as report design are met through our self-service, SaaS product suite. We continuously evaluate and incorporate leading technologies into our platforms. For example, we used an open source Apache™ Hadoop® framework to integrate clinical and claims data. Furthermore, we are interoperable with all major clinical health information systems and health information exchanges.



Category	Description	Key Products	Division(s)
Population health and cost analysis solutions	Solutions that help our clients integrate and analyze healthcare data on utilization, patient characteristics and costs for populations receiving healthcare services (e.g., a company’s employees and families, a state’s Medicaid enrollees, or an ACO’s members). Analytic methods are integrated with clinical and claims data and tools to enable care management, health benefits management, performance measurement, data exchange and integration, treatment cost transparency and personalized consumer engagement.	Advantage Suite Consumer Advantage Unify	Commercial Government
Provider performance management solutions	Solutions that help care delivery organizations track, measure and improve performance across core functions, including operational, financial, marketing and planning, and clinical and quality domains.	ActionOI CareDiscovery Market Expert	Commercial
Payment integrity and compliance solutions	Payment integrity solutions support government clients, for both Medicare and Medicaid data, as well as health plans and employers, to fight fraud, waste and abuse by way of powerful applications, advanced analytic methods, an extensive algorithm library and data mining capabilities.	DataProbe J‑SURS	Commercial Government
Patient care solutions	Clinical and intelligent evidence solutions help providers combine real‑time patient data with reference information to provide point of care decision support. These solutions include the leading evidence‑based reference information for drug, disease, toxicology, patient education and neonatology. Our clinical solutions integrate with providers’ clinical systems, giving immediate access to the evidence‑based information needed, at the point of care.	Micromedex Evidence 360 Care Insights Patient Connect	Commercial Government
Research solutions	Market analysis, claims management and research solutions provide a broad, up‑to‑date picture of treatment patterns and costs by tracking detailed information about important aspects of care for patients as they travel through the U.S. healthcare system.	MarketScan Treatment Pathways	Commercial Government

• Extend our analytic and data management capabilities to meet evolving market needs. In addition to continuously enhancing our analytics solutions and services, we apply our expertise to meet specific analytics or data management requirements of our clients. As a result of our significant experience in creating, updating, and managing healthcare databases to support our solutions, we are directly engaged in defining, implementing and operating data warehouses for many of our key clients. We also apply our analytic tools and methods directly to our client’s data to drive client analysis and decision making, both within data warehouses we have built for them as well as for pre-existing client data marts.

• Continuously invest in and evaluate market expansion opportunities. Even with our strong position across the segments we serve, we are constantly investing in features and functionally to improve existing solutions and services and enhance opportunities to expand into new markets. We have several third party relationships today that have created new market opportunities and we intend to continue to evaluate future relationships and candidates for acquisition that open new adjacent markets or add important capabilities.

• Expand globally through existing international infrastructure. We have developed an extensive global platform for the sale and distribution of our solutions and services internationally. Leveraging our distributor network, international office locations, and direct sales teams located throughout the world, we seek to increase the sale of our existing analytic solutions and services that meet the needs of our geographically dispersed clients. We believe that our substantial global selling platform enables us to effectively cross-sell to the expanded market opportunity provided by our global footprint.

Our Solutions and Services

We develop and maintain healthcare analytics solutions and services that address critical market needs. Our healthcare analytics capabilities and analytic data and content assets are applied throughout all of our solutions and services and provide a foundation for future solutions and services as well. Analytics solutions are purchased both independently and in conjunction with analytics services.

Analytic Solution Areas

• Population health and cost analysis solutions: Solutions that help our clients integrate and analyze healthcare data relating to utilization, patient characteristics and costs associated with a population receiving healthcare services. Analytic methods are integrated with clinical and claims data and tools to

~~enable~~Analytics ~~care management, improved benefit design, health benefits management, performance improvement, treatment cost transparency, and personalized consumer engagement.~~services

•Category ~~Hospital~~Description ~~performance~~Analytics ~~management~~consulting services Through our analytic consulting services, we help our customers gain greater value from our solutions: ~~Solutions~~and apply our data and solutions to specific problems. Our analytic consultants deliver insights that help ~~care~~customers ~~delivery~~identify ~~organizations~~and ~~track~~implement the best course of action to achieve their objectives. Projects range in size and can address a specific issue, ~~measure~~provide an in‑depth analysis of a more complex challenge, or monitor and ~~improve~~evaluate ~~performance~~results. In specialized areas, such as fraud detection and prevention, our analytics services are provided by a deeply experienced team that specializes in fraud analytics. Strategic consulting and advisory services Experts across our business deliver custom consulting services leveraging advanced analytics in areas such as cost containment, budgeting, new payment models, plan and provider profiling, program integrity and operational and quality improvement. As a result of the ~~core~~acquisition ~~functions~~of Simpler and JWA, we provide multi‑year coaching and enablement services that use both clinical and non‑clinical applications of "Lean" principles to help our customers streamline processes and decrease waste. And, with the ~~hospital~~acquisition of Heartbeat Experts, we offer a comprehensive range of analytics, data management, stakeholder engagement, strategic consulting, and health economics and outcomes research services to life sciences companies. Research services Our research staff has deep, cross‑industry knowledge that they leverage to deliver projects that are designed to improve healthcare access, enhance quality and reduce costs. Our staff includes senior researchers with established expertise in a range of specialty areas, including ~~operational~~outcomes research, ~~financial~~provider quality and efficiency measurement, ~~marketing~~health and ~~planning~~productivity research, research data development and ~~clinical~~behavioral health and quality ~~domains~~research. Many of our researchers have PhD and other advanced degrees and are well‑known and highly regarded in their respective fields. Data Management and Systems Integration We partner with clients to support their initial and ongoing data management and data warehousing needs, freeing up their resources to focus on other opportunities and mission‑critical issues. We leverage our relationships with thousands of data suppliers, as well as the proven experience and in‑depth knowledge of our on‑staff experts, to meet the information management goals of our clients. We also provide program and implementation management services.

•Our ~~Payment~~data integrity and compliance solutions: Payment integrity solutions support clients, including both Medicare and Medicaid as well as health plans and employers, to fight fraud, waste and abuse by way of powerful applications, advanced analytic methods, an extensive algorithm library and a deeply experienced team that specializes in fraud analytics.suppliers

•We ~~Patient~~maintain ~~care~~a ~~solutions:~~diverse ~~Clinical~~data ~~and~~supplier ~~intelligent~~base ~~evidence~~in ~~solutions~~which ~~help~~the ~~clients~~vast ~~combine~~majority ~~real-time~~of ~~patient~~our data ~~with~~comes ~~reference~~from ~~information~~our toclients. Many of our clients provide ~~point~~us ofwith ~~care~~raw ~~decision~~clinical, ~~support~~operational, financial and/or administrative claims data that we process to create our analytic databases. ~~These~~We return this enhanced data to clients through analytic solutions ~~include~~to ~~the~~help ~~leading~~benchmark ~~evidence-based~~performance. ~~reference~~The ~~information~~value ~~for~~of ~~drug,~~our ~~disease,~~data ~~toxicology~~assets increases as an inherent function of the business, ~~patient~~as ~~education~~each current client refreshes data and ~~neonatology~~each new client contributes additional depth and breadth of data.

• Research solutions: Market analysis, claims management and research solutions provide a broad, up-to-date picture of treatment patterns and costs by tracking detailed information about various aspects of care for patients as they travel through the U.S. healthcare system. Our ~~commercial claims database contains 20 billion data records on nearly 200 million covered lives.~~technology

~~Analytic~~We ~~Services~~have designed our technology infrastructure to be secure, scalable and efficient. Our approach to technology architecture and design, platform development, infrastructure and operations, data management and data security and privacy addresses industry requirements and is flexible and adaptable to support our growth strategies. We deliver the majority of our analytics solutions (determined by revenue) through our HIPAA compliant, secure, private cloud. Our cloud leverages virtualization technologies enabling us to provide highly efficient and flexible client data processing and integration, capacity planning, resource and operations management, and maintenance. We deliver the remainder of our analytics solutions on dedicated infrastructure hosted in our data center or located at client sites. Our technology operations deliver secure computing, storage, network, database and data center capacity to meet and exceed contractual customer service levels and support customized infrastructure and data center solutions for large customer engagements.

• Analytic Consulting and Research Services: We provide cross-industry expertise in evolving trends, including comparative effectiveness, quality and cost of care, health information technology advances, clinical decision support, and prevention and wellness. Government and private organizations rely on our experts and databases to provide practical, timely solutions to improve healthcare access, enhance quality, and reduce costs.

• Strategic Consulting: Experts in each of our market segments deliver custom consulting services leveraging advanced analytics in the areas such as cost containment, budgeting, managing population health, plan and provider profiling, program integrity, and quality improvement.

• Data Warehousing / Data Management: We partner with clients to support their data warehousing and data management needs, freeing up their resources to focus on other opportunities and mission-critical issues. We leverage our relationships with thousands of data suppliers, as well as the proven experience and in-depth knowledge of our on-staff experts, to apply our analytics and achieve information management goals.

Our Clients

For over 30 years, we have provided high quality healthcare data and analytics solutions across the healthcare spectrum. Over that time, we have successfully built a leading position and have reached a scale that we believe is noteworthy in the industry, covering a significant portion of key constituents in the U.S. healthcare market. At the end of 2013 our clients included:

• Over 40% of Fortune 100 and 25% of Fortune 500 companies

• Over 125 health plans

• Over 4,000 hospitals in the U.S. and more than 1,800 healthcare facilities internationally

• Medicaid agencies in 30 states covering over 50% of Medicaid beneficiaries

• A diverse set Federal Government agencies (CMS, AHRQ, the VA, etc.)

• Nearly all of the top 25 life sciences companies

Our ~~revenue is well distributed among a large, diversified and loyal customer base of blue-chip customers. The average tenure of the top 20~~ clients ~~in each of our customer channels is over 11 years.~~

~~Our~~For ~~Segments~~over 40 years, we have provided high quality healthcare data and analytics solutions to our clients. Over that time, we have successfully built a leading position and have reached a scale that we believe is noteworthy in the industry, covering a significant portion of key constituents in the U.S. healthcare market. At the end of 2014 our clients included:

WeOver ~~currently~~60% ~~operate and manage our business under three segments - Payer, Hospitals, and Clinicians. Each segment offers analytics solutions and services to customers or groups~~ of ~~similar~~Fortune ~~customers~~100 ~~that~~companies ~~are subject to different pricing, process~~ and ~~marketing~~almost ~~strategies.~~30% ~~In January 2014, management announced that the Company's segment structure will undergo changes in 2014 with the objective~~ of ~~focusing~~Fortune on500 more effective business and market facing opportunities and to simplify the business decision-making process. See “Management's discussion and Analysis of Financial Condition and Results of Operations-Recent Developments." In 2013, the Company’s business segments primarily operate in the United States.companies;

~~Payer~~Over 125 health plans;

~~The~~Over ~~Payer segment provides information and solutions to customers such as employers/ health plans~~4,000 ~~life~~hospitals ~~sciences~~in ~~companies, federal government and state government, to improve~~ the ~~cost and quality of healthcare~~U.S. ~~These analytic solutions~~ and ~~services~~more ~~focus~~than ~~on care and risk management~~1,800 ~~which enhance benefit design, medical cost trend management, disease management, population health, consumer engagement, network design and quality management processes in~~ healthcare ~~payer~~facilities ~~and purchasing organizations.~~internationally;

~~The~~Medicaid ~~continued~~agencies ~~projected increases~~ in ~~national~~31 ~~healthcare~~states ~~expenditures,~~covering ~~the~~over ~~availability~~50% ~~and use~~ of ~~more~~Medicaid ~~expensive medical technology, new pharmaceuticals and biologic therapies, and the projected increases in an aging population have fueled payers’ focus on containing healthcare costs.~~beneficiaries;

WeA ~~leverage~~diverse ~~our~~set ~~analytic~~federal ~~methods~~agencies, ~~and~~including ~~tools~~CMS, ~~along~~Agency ~~with~~for ~~our~~Healthcare ~~content~~Research ~~assets~~and Quality, ~~across~~and the ~~healthcare~~VA; ~~industry to address the needs of payers managing their healthcare costs.~~ and

~~Our~~Each ~~Payer clients primarily utilize a combination~~ of ~~our~~the ~~Population~~top ~~health~~25 ~~and~~life ~~cost~~sciences analysis solutions, Payment integrity and compliance solutions, Patient care solutions, Research solutions, Analytics Consulting and Research Services, Strategic Consulting Services, and Data Warehousing Servicescompanies.

~~Hospitals~~Our revenue is well distributed among a large, diversified and loyal customer base of blue‑chip customers. The average tenure of our top 20 clients is approximately 13 years.

~~The~~Our Hospitals segment provides analytics solutions and services to healthcare providers. These solutions benchmark customer data and evaluate the customer’s performance against peer organizations. Typical benchmarks include costs, operational efficiencies, clinical performance and re-admissions. This segment also delivers our population health suite of solutions for improving care and effective decision making across hospitals, Accountable Care Organizations (ACOs), health plans, and regional health information exchanges.segments

Our hospital performance management analytics solutions and services address the needs of care delivery organizations to track, measure, and improve performance across the operational/financial, marketing and planning and clinical/quality domains. We currently ~~serve~~operate ~~managers~~and inmanage ~~over 1,850 hospitals in the United States in this segment. Our analytic solutions help~~ our ~~clients~~business ~~compare~~under ~~costs~~two ~~and performance relative to other hospitals, project market demand for physicians and services and help hospitals grow through targeted marketing.~~segments:

“Meaningful use” standards require that performance metrics are tracked and measured, leading to an increased need for the analytics we offer. Pay-for-performance initiatives and value based purchasing requirements, which assess hospital performance based on the achievement of a distinct set of quality and patient satisfaction measurement data, are driving increased demand for solutions to help hospitals measure and manage their performance.Commercial

~~Our~~The ~~Hospital~~Commercial ~~clients~~segment ~~primarily~~provides ~~utilize~~analytic asolutions ~~combination~~and ofservices ~~our~~to ~~Hospital~~improve ~~performance~~the ~~management~~cost, ~~solutions~~quality, ~~Population~~and ~~heath~~effectiveness ~~and~~of ~~cost~~healthcare ~~analysis~~for ~~solutions~~commercial organizations across the healthcare industry including providers, ~~Analytics~~integrated ~~Consulting~~delivery ~~and~~networks, ~~Research~~insurers, ~~Services~~professional ~~and~~services ~~Strategic~~organizations, ~~Consulting~~healthcare ~~Services~~exchanges, manufacturers, and corporations.

~~Clinicians~~Government

The Government segment provides integrated analytic solutions and services to improve the cost, quality, and effectiveness of healthcare for federal and state Government channels (e.g. Centers for Medicare & Medicaid Services and state Medicaid agencies) and federally owned and operated healthcare facilities. Our sales and client services are tailored to meet the specific procurement, sales and support requirements of the government market.

Our competition

We compete with a diverse set of businesses, including large companies that compete in a variety of our markets, small companies that compete in some of our markets, and new entrants that compete with us in specific end markets or solution areas. Competition in healthcare analytics solutions and services is largely based on analytical capabilities and healthcare industry expertise, the size and quality of the underlying datasets and benchmarks, ease of use, reputation and customer service.

We are singularly focused on increasing the value of analytics solutions and services for our customers across the healthcare industry, unlike some of our largest competitors which are part of large health insurance companies or group purchasing organizations, or largely based in one particular end market. We believe that many of our customers value our independence and objectivity, and prefer to have access to more robust benchmarks based on data sourced across a diverse set of organizations. As the growth in healthcare spending and changes in government regulation draw increasing attention to healthcare analytics and data, new competitors, such as consultants, technology companies and start‑ ups, are participating in the sector.

~~The~~Commercial Clinicians segment delivers high value content, analytic solutions and sophisticated decision support tools primarily to hospitals and health systems for use by nurses, physicians and pharmacists. These solutions and tools are aimed at improving patient care, reducing medication errors and enhancing disease and condition management.competition

~~Our~~Across ~~patient management offerings address~~ the ~~needs~~Commercial ofDivision, ~~the~~we ~~clinical~~compete ~~environment~~against ~~and~~organizations ~~provide~~with ~~hospitals~~broad ~~and~~offerings ~~other~~such ~~care~~as ~~delivery~~The ~~organizations~~Advisory ~~with~~Board ~~analytic based~~Company, ~~highly reliable~~Deloitte, ~~trusted~~Evidera, ~~evidence~~Healthagen ~~based~~(Aetna), ~~clinical~~IBM, ~~reference~~IMS, ~~tools.~~McKesson, AsOptum of(United ~~December~~Health 31Group), ~~2013~~Premier, weReed ~~serve clinicians in over 3~~Elsevier,~~500~~ ~~U.S.~~Verisk ~~hospitals~~ and ~~over~~Wolters ~~1,800~~Kluwer ~~facilities~~as inwell 80as ~~other~~with ~~countries~~smaller, inmore ~~this~~narrowly ~~segment.~~focused ~~Our~~solution ~~solutions~~providers ~~provide clinicians~~ with ~~evidence~~emphasis ~~based~~on ~~tools~~a ~~before~~specific ~~administering~~type ~~drugs~~of tosolution ~~patients~~such as ~~well~~Benefitfocus, asCastlight, ~~act~~and asRTI aHealth ~~guide to physicians when addressing unique diseases~~Solutions.

~~Our~~Government ~~Clinician clients primarily utilize our Patient care solutions and/or Population health and cost analysis solutions.~~competition

~~For~~Many ~~additional~~of ~~financial~~the ~~information~~industry ~~regarding~~players noted in the Commercial segment are also our ~~segments~~competitors in the Government segment. Additionally, ~~see~~large ~~Note~~and 17specialized tosystem integrators compete for government contracts. Sometimes we bid against these companies, and sometimes they seek us out as a sub‑contractor or partner given our ~~audited~~specialized ~~financial~~and ~~statements~~domain expertise. Certain companies with a large government focus such as Accenture, ~~included~~HMS ~~elsewhere~~Holdings, inGeneral ~~this~~Dynamics, ~~Annual~~Lockheed ~~Report~~Martin and Northrop Grumman have established material positions in the industry.

~~Our~~Research ~~Competition~~and development

~~Competition~~We inhave ~~the~~focused ~~healthcare~~our ~~data~~product ~~and~~research ~~analytics solutions~~ and ~~services~~development ~~sector~~("R&D") ~~is largely based~~ on ~~analytical~~a ~~capabilities~~number ~~and~~of ~~healthcare~~interrelated ~~industry~~areas ~~expertise,~~to ~~the~~expand ~~size~~our ~~and~~analytics ~~quality~~market ofposition, ~~the~~address ~~underlying~~emerging ~~datasets~~industry ~~and benchmarks~~needs, ~~ease~~and ofprovide ~~use,~~additional flexibility and ~~customer service~~usability. ~~The~~Specific ~~sector~~examples ~~includes a wide variety~~ of ~~competitors,~~recent ~~including many large competitors that compete across segments~~ and ~~small~~ongoing ~~companies~~development ~~with a specific segment or solution area focus.~~include:

Wenew ~~believe~~predictive ~~that~~analytic ~~many~~methods ~~of our customers value our independence and prefer~~ to ~~have~~measure ~~access~~risk ~~to more robust benchmarks based on data sourced across a diversity of health plans, employers~~ and ~~Medicaid~~apply ~~programs.~~results ~~As the growth in healthcare spending and changes in government regulation draw increasing attention~~ to ~~healthcare~~real‑time ~~analytics~~decision ~~and data, other competitors, such as consultants, technology companies and start-ups, are also increasingly participating in the sector.~~ making;

~~Payer~~improving ~~Competition~~data management processes and increasing the integration into patient and provider workflows;

~~Across~~improving ~~the Payer segment~~reporting, weincluding compete against firms with broad offerings across the payer channels such as OptumInsight (United Health Group), Verisk, HDMS (Aetna), General Dynamics. McKesson, Evidera, and IMS, as well as smaller, narrowly focused solution providers with emphasis on a ~~specific~~new ~~type~~interface ~~of payer or solution such as Castlight, Benefitfocus,~~ and ~~RTI. In~~reporting some channels we often both compete with and partner with the same set of competitors and in other channels some market competitors will license our core content or outsource work to us directly. We see this wide range of competitive diversity and competition across all of our payer channels: Employer, Health Plan, State/Federal Government, and Life Sciences.engine;

~~Hospitals~~new ~~Competition~~advanced search and user interface that enables users to better leverage and access evidence data, as well as mobile applications for point‑ of‑care; and

~~Notable~~investments ~~solution providers~~ in the ~~provider~~collection ~~market~~of ~~include~~additional ~~The~~data ~~Advisory~~types ~~Board~~related ~~Company,~~to ~~Premier, Inc.~~certain ~~and~~health ~~other~~reform ~~focused customer channel participants~~provisions. Premier offers similar solutions in the operational and clinical customer channels. The Advisory Board is a consulting and research firm focused on the hospital market. Hospital customer segment participants also include other specialized and focused businesses such as Quantros, Sg2, and CPM HealthGrades.

~~Clinicians~~R&D ~~Competition~~costs mainly related to labor costs and services bought and are expensed as incurred. The R&D costs expensed were $1.0 million for the year ended December 31, 2014, $1.7 million for the year ended December 31, 2013, $0.5 million for the period from April 20, 2012 (inception) to December 31, 2012, and $1.6 million for the Predecessor Period from January 1, 2012 to June 6, 2012.

~~The~~Our Clinicians customer solutions are typically categorized within the Clinical Decision Support industry, which encompasses a wide variety of electronic and print referential content offerings utilized by physicians, nurses, and pharmacists. Competitors in this segment, including Elsevier, Wolters Kluwer and Hearst (Zynx Health), offer numerous separate and discrete products. employees

~~Research~~As ~~and~~of ~~Development~~December 31, 2014, we had approximately 2,500 employees. None of our employees are represented by a labor union. We consider our relationship with our employees to be good.

Product research and development (R&D) across our segments have been focused on a number of interrelated areas to expand our analytics market position, address emerging industry needs, and to provide additional flexibility and usability. Specific examples of recent and ongoing development include:

• new predictive analytic methods to measure risk and apply results to real-time decision making;

• improving data management processes and increasing the integration into patient and provider workflows;

• improving reporting, including a new interface and dashboard/reporting engine;

• new advanced search and user interface that enables users to better leverage and access evidence data, as well as mobile applications for point-of-care; and,

• investments in the collection of additional data types related to certain health reform provisions.

R&D costs are expensed as incurred. The R&D costs expensed were $1.7 million for the Successor Period ended December 31, 2013, $0.5 million for the Successor Period from April 20, 2012 to December 31, 2012, $1.6 million for the Predecessor Period from January 1, 2012 to June 6, 2012, and $6.6 million for the year ended December 31, 2011.

Our Employees

As of December 31, 2013, we had approximately 2,300 employees. None of our employees are represented by a labor union. We consider our relationship with our employees to be good.

Regulation and legislation

Introduction

The healthcare industry is highly regulated and subject to changing political, legislative, regulatory and other influences. The Patient Protection and Affordable Care Act (“PPACA”) is changing how healthcare services are covered, delivered and reimbursed through expanded coverage of uninsured individuals, reduced Medicare program spending and substantial insurance market reforms. PPACA also imposes significant Medicare Advantage funding cuts and material reductions to Medicare and Medicaid program spending. PPACA provides additional resources to combat healthcare fraud, waste and abuse and also requires HHS to adopt standards for electronic transactions, in addition to those required under HIPAA, and to establish operating rules to promote uniformity in the implementation of each standardized electronic transaction.

While many of the provisions of PPACA will not be directly applicable to us, PPACA, as enacted, affects the businesses of our customers. PPACA’s complexity, lack of implementing regulations or interpretive guidance, former court challenges and political debate makes it difficult to predict the ways in which PPACA ~~would~~will impact us or the business of our customers.

In addition to PPACA, the healthcare industry is faced with other challenges. The Health Information Technology for Economic and Clinical Health Act ("HITECH") offers incentives for certain healthcare providers to adopt “"meaningful use”" health information technology and provides penalties in later years if they are unable to do so. The October 1, ~~2014~~2015 mandated adoption of a new medical classification system, also known as ICD-‑10 is impacting both payers and providers. The healthcare industry is also required to comply with extensive and complex laws and regulations at the federal and state levels.

Although many regulatory and governmental requirements do not directly apply to our operations, our customers are required to comply with a variety of laws and we may be impacted by these laws as a result of our contractual obligations. We have attempted to structure our operations to comply with applicable legal requirements, but there can be no assurance that our operations will not be challenged or adversely impacted by enforcement initiatives. See “Risk factors-Risks related to our business-Government regulation creates risks and challenges with respect to our compliance efforts and our business strategies.”

Requirements regarding the confidentiality, privacy and security of personal information

HIPAA Privacy Standards and Security Standards. ~~The Health Insurance Portability and Accountability Act of 1996 (“~~ HIPAA") Privacy Standards and HIPAA Security Standards apply directly to us when we are functioning as a Business Associate of our Covered Entity customers. As a result, stricter limitations have been placed on certain types of uses and disclosures. The HIPAA Privacy Standards extensively regulate the use and disclosure of individually identifiable health information by Covered Entities and their Business Associates. The HIPAA Security Standards require Covered Entities and their Business Associates to implement and maintain administrative, physical and technical safeguards to protect the security of individually identifiable health information that is electronically transmitted or electronically stored. See "Risk factors-Risks related to our business-Government regulation creates risks and challenges with respect to our compliance efforts and our business strategies."

Data breaches. In recent years, there have been a number of well publicized data breaches involving the improper dissemination of personal information of individuals both within and outside of the healthcare industry. Many states, as well as the federal Government through HIPAA, have responded to these incidents by enacting laws requiring holders of personal information to maintain safeguards and to take certain actions in response to a data breach, such as providing prompt notification of the breach to affected individuals. We have implemented and maintain physical, technical and administrative safeguards intended to protect all personal data and have processes in place to assist us in complying with all applicable laws and regulations regarding the protection of this data and properly responding to any security breaches or incidents. See "Risk factors-Risks related to our business-Government regulation creates risks and challenges with respect to our compliance efforts and our business strategies."

~~“Risk~~Other ~~factors-Risks~~requirements. In ~~related~~addition to ~~our~~HIPAA, ~~business-Government~~numerous ~~regulation~~other ~~creates~~international, ~~risks~~state and ~~challenges~~federal ~~with~~laws ~~respect~~govern the collection, dissemination, use, access to ~~our~~and ~~compliance~~confidentiality ~~efforts~~of individually identifiable health information and ~~our~~healthcare ~~business~~provider ~~strategies~~information.” Some states also are considering new laws and regulations that further protect the confidentiality, privacy and security of medical records or other types of medical information.

Data breaches. In recent years, there have been a number of well publicized data breaches involving the improper dissemination of personal information of individuals both within and outside of the healthcare industry. Many states, as well as the federal government through HIPAA, have responded to these incidents by enacting laws requiring holders of personal information to maintain safeguards and to take certain actions in response to a data breach, such as providing prompt notification of the breach to affected individuals. We have implemented and maintain physical, technical and administrative safeguards intended to protect all personal data and have processes in place to assist us in complying with all applicable laws and regulations regarding the protection of this data and properly responding to any security breaches or incidents. See “Risk factors-Risks related to our business-Government regulation creates risks and challenges with respect to our compliance efforts and our business strategies.”

False claims laws and other fraud, waste and abuse restrictions

We provide solutions to health plan sponsors and other customers that relate to the reimbursement of health services covered by Medicare, Medicaid, other federal healthcare programs and private payers. As a result of these aspects of our business, we may be subject to, or contractually required to comply with, state and federal laws that govern various aspects of the submission of healthcare claims for reimbursement and the receipt of payments for healthcare items or services. These laws generally prohibit an individual or entity from knowingly presenting or causing to be presented claims for payment to Medicare, Medicaid or other third party payers that are false or fraudulent. False or fraudulent claims include, but are not limited to, billing for services not rendered, failing to refund known overpayments, misrepresenting actual services rendered in order to obtain higher reimbursement and improper coding and billing for medically unnecessary goods and services. Further, providers may not contract with individuals or entities excluded from participation in any federal healthcare program. Like the federal Anti-‑Kickback Statute, these provisions are very broad. See “Risk factors-Risks related to our business-Government regulation creates risks and challenges with respect to our compliance efforts and our business strategies.”

Some of these laws, including restrictions contained in amendments to the Social Security Act, commonly known as the federal civil monetary penalty laws ("CMPL"), require a lower burden of proof than other fraud, waste and abuse laws. Federal and state governments increasingly use the federal CMPL, especially where they believe they cannot meet the higher burden of proof requirements under the various criminal healthcare fraud provisions. Many of these laws provide significant civil and criminal penalties for noncompliance and can be enforced by private individuals through "whistleblower" or qui tam actions. For example, the federal CMPL provides for penalties ranging from $10,000 to $50,000 per prohibited act and assessments of up to three times the amount claimed or received. Further, violations of the federal False Claims Act ("FCA") are punishable by treble damages and penalties of up to $11,000 per false claim, and whistleblowers may receive a share of amounts recovered. Under PPACA, civil penalties also may now be imposed for the failure to report and return an overpayment made by the federal Government within 60 days of identifying the overpayment and may also result in liability under the FCA. Whistleblowers, the federal Government and some courts have taken the position that entities that have violated other statutes, such as the federal Anti‑Kickback Statute, have thereby submitted false claims under the FCA. PPACA clarifies this issue with respect to the federal Anti‑Kickback Statute by providing that submission of a claim for an item or service generated in violation of the federal Anti‑Kickback Statute constitutes a false or fraudulent claim under the FCA.

Our intellectual property

We rely upon a combination of trade secret, copyright and trademark laws, license agreements, confidentiality procedures, nondisclosure agreements and technical measures to protect the intellectual property used across our segments and customer channels. We generally enter into confidentiality agreements with our employees, consultants, vendors and customers. We also seek to control access to, and distribution of, our technology, documentation and other proprietary information.

We use numerous trademarks, trade names and service marks for our solutions across our segments and customer channels. We also rely on a variety of intellectual property rights that we license from third parties. Although we believe that ~~alternative~~alternatives ~~technologies~~ are generally available to replace such licensed intellectual property, these third party ~~technologies~~properties may not continue to be available to us on commercially reasonable terms or at all.

We also have several patents and patent applications covering solutions we provide, including software applications. Due to the nature of our applications, we believe that patent protection is a less significant factor than our ability to further develop, enhance and modify our current solutions in order to remain competitive.

The steps we have taken to protect our copyrights, trademarks, service marks and other intellectual property may not be adequate, and third parties could infringe, misappropriate or misuse our intellectual property. If this were to occur, it could harm our reputation and adversely affect our competitive position or results of operations.

As required by the terms of the Stock and Asset Purchase Agreement, we ceased the use of the Thomson Reuters name and transitioned to a new name when TRHI changed its name to Truven Health Analytics Inc. after the closing of the

~~Acquisition.~~ The ~~adoption~~steps ofwe ahave ~~new~~taken ~~brand~~to ~~name~~protect ~~may result in market confusion despite~~ our ~~efforts~~copyrights, totrademarks, ~~inform~~service ~~our~~marks ~~current~~ and ~~prospective~~other ~~customers~~intellectual ofproperty ~~our~~may ~~name~~not ~~and~~be ~~ownership change. In addition~~adequate, weand ~~continue~~third toparties ~~invest~~could ~~significant~~infringe, ~~resources~~misappropriate inor misuse our ~~rebranding~~intellectual ~~efforts~~property. ~~and~~If ~~there~~this ~~can~~were beto nooccur, ~~assurance~~it ~~that~~could ~~the~~harm ~~new~~our ~~brand~~reputation ~~will~~and beadversely ~~successful~~affect ~~or that~~ our ~~rebranding~~competitive ~~strategy~~position ~~will~~or ~~timely~~results ~~gain~~of ~~market awareness or acceptance~~operations.

ITEM 1A - RISK FACTORS

You should carefully consider the risks described below and all of the information contained in this Annual Report. The risks and uncertainties described below are not the only risks and uncertainties we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. If any of those risks actually occurs, our business, financial condition and results of operations could suffer. The risks discussed below also include forward-looking statements, and our actual results may differ substantially from those discussed or implied in these forward-looking statements. See “Forward-Looking Statements” in this Annual Report.

Risks related to our business

We are highly dependent on customers and, in many cases, their insurance carriers, as well as third-party vendors, to supply us with data necessary for the delivery of our solutions and services and any deterioration in our key sources of data would adversely affect our business.

Our solutions and services incorporate data that we obtain from our customers and, with respect to our employer customers, the insurance carriers that service them, as well as data that we purchase from third-party vendors. These data suppliers provide us with a majority of the data that we use for our products and services. Some of our customers have expressed concern about the commercial uses of the data that they contribute to us and insurance carriers are concerned that certain data they supply could be used in ways that disadvantage them. Health insurance carriers generally view certain health plan data as proprietary information and are increasingly asserting control over how the data may be used and to whom it may be provided, even if authorized by the health plan sponsor. The imposition of restrictions or limitations on our use of or access to customer and health plan data could adversely affect our solutions and service offerings, including product functionality, our ability to provide data and corresponding products and services to commercial customers, our ability to develop new product and service offerings and our reputation and brand equity resulting from diminished data access. In addition, we may be unable to find alternative, up to date data sources from third-party vendors on commercially reasonable terms or at all. Third party vendors of data may increase restrictions on our use of data, increase pricing to purchase or license data or refuse altogether to provide us with data. Any significant impairment to the access to data that we currently enjoy, due to increased pricing, the imposition of restrictions and limitations that we consider onerous or the withdrawal of the provision of data to us from key sources, could have a material adverse impact on our business, results of operations or financial condition.

We receive, process, store, use and transmit individually identifiable health information and other sensitive data, which subjects us to governmental regulation and other legal obligations related to privacy and security, and any actual or perceived failure to comply with such obligations could harm our business.

We receive, process, store, use and transmit individually identifiable health information and other sensitive data. There are numerous federal and state laws regarding privacy and the storing, sharing, use, processing, disclosure and protection of individually identifiable health information and other personal information, the scope of which is changing and subject to differing interpretations. We strive to comply with applicable laws, policies, legal obligations and industry codes of conduct relating to privacy and data protection to the extent feasible. However, it is possible that these obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Any failure or perceived failure by us to comply with our privacy policies, our privacy-related obligations to customers or third parties or our privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of individually identifiable health information or other sensitive data, may result in governmental enforcement actions, litigation or public statements against us by consumer advocacy groups or others and could cause our customers to lose trust in us, which could have a material adverse effect on our business, financial condition and results of operations. In addition, we cannot provide assurances with regard to how governmental regulation and other legal obligations related to privacy and security will be interpreted, enforced or applied to our operations.

If our security measures are breached, or if the systems our customers use to gain access to our solutions are compromised, we could lose sales and customers.

Our business involves the storage, use and transmission of individually identifiable health information and other highly confidential data. Therefore, the security features of our offerings are extremely important. A security breach or failure could result from a variety of circumstances and events, including third-party actions such as computer hacker attacks or phishing, employee malfeasance or error, computer viruses and malware, software bugs or other technical malfunctions, power outages, hardware or telecommunications failures, and catastrophic events. If our security measures are breached or fail, or if ~~the~~our computer systems, ofor ~~us,~~those of our customers, or our third party providers are compromised, unauthorized data access may occur. Any of these circumstances could lead to interruptions, delays or shutdowns, causing loss of critical data or the unauthorized disclosure or use of personally identifiable or other confidential information. Security breaches or compromises of computer systems or security measures may be difficult to prevent, detect and resolve.. Because the techniques used to obtain unauthorized access, disable service or sabotage systems change frequently, may originate from less regulated and remote areas around the world and generally are not recognized until launched against us, we may be unable to proactively address these techniques or to implement adequate preventative measures.

We outsource to third parties certain important aspects of the storage and transmission of the information provided to us by our customers and other sources. These outsourced functions include services such as co-location data centers, software development, software engineering, database consulting, system administration, network security and firewall services. We attempt to address the associated risks by requiring our subcontractors with data access to sign agreements, including Business Associate agreements where necessary, obligating them to take security measures to protect such data. In addition, certain of our third party subcontractors are subject to security audits. However, we cannot assure you that these contractual measures and other safeguards will provide adequate protection against the risks associated with the storage and transmission of the data in our care.

In the event of a security breach or compromise that results in performance or availability problems with respect to our solutions, data assets or services, or the loss or unauthorized disclosure of individually identifiable health or other confidential information, our reputation could be severely damaged and the costs to our business could increase substantially. Our existing customers may lose trust and confidence in us and our solutions and services, causing them to decrease or stop the use of our solutions and services. We may experience difficulty in attracting new customers. We could be subject to lawsuits, government enforcement action and other claims that could result in third party liability, penalties, and fines, and we could be required to expend significant resources to remediate the damage and protect against future security breaches. These consequences could diminish our competitive position and have a material adverse effect on our business, results of operations and financial condition.

Failure of our customers to obtain proper permissions or provide us with accurate data may result in claims against us or may limit or prevent our use of data, which could harm our business.

We require our customers to obtain necessary permissions for the use and disclosure of the information that we receive. If they fail to obtain necessary permissions, then our use and disclosure of information that we receive from them or on their behalf may be limited or prohibited by state or federal privacy or other laws. Also, we rely on our customers to provide us with accurate and ~~uncorrect~~correct data. In addition, such failures by our customers could interfere with or prevent creation or use of rules, analyses or other data-driven activities that benefit us. Accordingly, we may be subject to claims or liability for use or disclosure of information by reason of lack of valid permissions or due to data inaccuracy. These claims or liabilities could damage our reputation, subject us to unexpected costs and adversely affect our financial condition and operating results.

Certain of our activities present the potential for identity theft or similar illegal behavior by our employees or contractors with respect to third parties.

Our services involve the use and disclosure of personal information that in some cases could be used to impersonate third parties or otherwise improperly gain access to their data or funds. If any of our employees or contractors takes, converts or misuses such information, or we experience a data breach creating a risk of identity theft, we could be liable

for damages, and our business reputation could be damaged or destroyed. In addition, we could be perceived to have facilitated or participated in illegal misappropriation of documents or data and, therefore, be subject to civil or criminal liability. Federal and state regulators may take the position that a data breach or misdirection of data constitutes an unfair or deceptive act or trade practice. We also may be required to notify individuals affected by any data breaches. Further, a data breach or similar incident could impact the ability of our customers that are creditors to comply with the federal “red flags” rules, which require the implementation of identity theft prevention programs to detect, prevent and mitigate identity theft in connection with customer accounts.

Government regulation creates risks and challenges with respect to our compliance efforts and our business strategies.

The healthcare industry is highly regulated and subject to changing political, legislative, regulatory and other influences. Healthcare laws, including HIPAA, are complex and their application to specific services and relationships may not be clear. We may also be impacted by non-healthcare laws as a result of some of our solution platforms.

Given the evolving legal and regulatory environment, we are unable to predict what changes to laws or regulations might be made or how those changes could affect our business or costs of compliance. We have attempted to structure our operations to comply with legal requirements directly applicable to us and to our customers, but there can be no assurance that our operations will not be challenged or adversely impacted by enforcement initiatives. Any determination by a court or agency that our solutions violate, or cause our customers to violate, applicable laws or regulations could subject us or our customers to civil or criminal penalties. Such a determination could also require us to change or terminate portions of our business, disqualify us from serving customers who are or do business with government entities, or cause us to refund some or all of our service fees or otherwise compensate our customers. In addition, failure to satisfy laws or regulations could adversely affect demand for our solutions and could force us to expend significant capital, research and development and other resources to address the failure. Even an unsuccessful challenge by regulatory authorities or private whistleblowers could result in loss of business, exposure to adverse publicity and injury to our reputation and could adversely affect our ability to retain and attract customers. Laws and regulations impacting our operations include the following:

HIPAA and other privacy and security requirements. There are numerous federal and state laws and regulations related to the privacy and security of personal health information. In particular, regulations promulgated pursuant to HIPAA established national privacy and security standards that limit the use and disclosure of individually identifiable health information and require the implementation of administrative, physical and technological safeguards to ensure the confidentiality, integrity and availability of individually identifiable health information in electronic form. In addition to regulating privacy of individual health information, HIPAA includes several anti-fraud and abuse laws and extends criminal penalties to private healthcare benefit programs.

Many of our customers are directly subject to the so called HIPAA Privacy Standards, and HIPAA Security Standards. As such, they are required to enter into written agreements with us, known as Business Associate agreements, which obligate us to safeguard individually identifiable health information and restrict how we may use and disclose that information. HITECH addresses the privacy and security concerns associated with the electronic transmission of health information, in part, through several provisions that strengthen the civil and criminal enforcement of HIPAA, which directly affects our business and increases penalties for noncompliance. Prior to HITECH, the HIPAA Privacy Standards and HIPAA Security Standards applied to us indirectly as a result of our contractual obligation to our customers. Effective February 2010, the American Recovery and Reinvestment Act of 2009 (“"ARRA”") extended the direct application of certain provisions of the HIPAA Privacy Standards and HIPAA Security Standards to us when we are functioning as a Business Associate of our customers that are “"Covered Entities”" under HIPAA. ARRA required the Department of Health and Human Services (“"HHS”") to issue regulations implementing HITECH. The Final Rule aligning the HIPAA Privacy Standards, HIPAA Security Standards and enforcement rules with HITECH’'s statutory changes was released at the end of January 2013. Along with changes in breach notification standards, which are expected to lead to a higher proportion of data security incident being classified as reportable breaches, the rule extends Business Associate status to subcontractors of Business Associates, making us a Business Associate in some contexts where we previously had only contractual liability.

If we are unable to properly protect the privacy and security of health information entrusted to us, we could be found to have breached our contracts with our customers. Further, HIPAA includes civil and criminal penalties for Covered Entities and Business Associates that violate the HIPAA Privacy Standards or the HIPAA Security Standards. ARRA significantly increased the amount of the civil penalties, with penalties of up to $50,000 per violation for a maximum civil penalty of $1.5 million in a calendar year for violations of the same requirement.

We have implemented and maintain policies and processes to assist us in complying with the HIPAA Privacy Standards, the HIPAA Security Standards and our contractual obligations. We cannot provide assurance regarding how these standards will be interpreted, enforced or applied to our operations.

Data breach laws. In recent years, there have been a number of well publicized data breaches involving the improper dissemination of personal information of individuals both within and outside of the healthcare industry. Many states, as well as the federal ~~government~~Government through HIPAA, have responded to these incidents by enacting laws requiring holders of personal information to maintain safeguards and take certain actions in response to a data breach, such as providing prompt notification of the breach to affected individuals. In many cases, these laws are limited to electronic data, but states are increasingly enacting or considering stricter and broader requirements. HIPAA Covered Entities must report breaches of unsecured individually identifiable health information to affected individuals without unreasonable delay but not to exceed 60 days of discovery of the breach by a Covered Entity or its agents. Notification must also be made to HHS and, in certain circumstances involving large breaches, to the media. Business Associates must report breaches of unsecured individually identifiable health information to Covered Entities within 60 days of discovery of the breach by the Business Associate or its agents. In addition, the Federal Trade Commission has prosecuted some data breach cases as unfair and deceptive acts or practices under the Federal Trade Commission Act. We have implemented and maintain physical, technical and administrative safeguards intended to protect all personal data and have processes in place to assist us in complying with applicable laws and regulations regarding the protection of this data and properly responding to any security breaches or incidents. However, data breaches could subject us to certain liabilities and could result in a loss of business, exposure to adverse publicity and injury to our reputation, any of which could adversely affect our ability to retain and attract customers.

Other requirements. In addition to HIPAA, numerous other state and federal laws govern the collection, dissemination, use, access to and confidentiality of individually identifiable health information and healthcare provider information. Some states also are considering new laws and regulations that further protect the confidentiality, privacy and security of medical records or other types of medical information. In many cases, these state laws are not preempted by the HIPAA Privacy Standards and may be subject to interpretation by various courts and other governmental authorities. Further, the U.S. Congress and a number of states have considered or are considering prohibitions or limitations on the disclosure of medical or other information to individuals or entities located outside of the United States.

False or fraudulent claim laws. There are numerous federal and state laws that prohibit false or fraudulent claims. False or fraudulent claims include, but are not limited to, billing for services not rendered, failing to refund known overpayments, misrepresenting actual services rendered and improper coding and billing for medically unnecessary items or services. The False Claims Act (“"FCA”") and some state false claims laws contain whistleblower provisions that allow private individuals to bring qui tam actions, which are actions on behalf of the government alleging that the defendant has defrauded the government. Whistleblowers, the federal ~~government~~Government and some courts have taken the position that entities that have violated other statutes, such as the federal Anti-Kickback Statute prohibiting any person from knowingly and willfully soliciting, receiving or paying any remuneration to induce another person to refer, recommend or arrange the purchase, lease or order of goods or services that are in any way paid for by a federal healthcare program such as Medicare or Medicaid, have been found to violate the FCA. We rely on our customers to provide us with accurate and complete information. Errors and the unintended consequences of data manipulations by us or our systems with respect to entry, formatting, preparation or transmission of claim information may be determined or alleged to be in violation of these laws and regulations or could adversely impact the compliance of our customers.

Anti-Kickback and Anti-Bribery Laws. A number of federal and state laws govern patient referrals, financial relationships with physicians and other referral sources and inducements to providers and patients, including restrictions contained in amendments to the Social Security Act, commonly known as the “federal Anti-Kickback Statute.” The federal Anti-Kickback Statute prohibits any person or entity from offering, paying, soliciting or receiving, directly or indirectly, anything of value with the intent of generating referrals of patients covered by Medicare, Medicaid or other federal healthcare programs. Many states also have similar anti-kickback laws that are not necessarily limited to items or services for which payment is made by a federal healthcare program. Moreover, both federal and state laws forbid

Kickback Statute prohibits any person or entity from offering, paying, soliciting or receiving, directly or indirectly, anything of value with the intent of generating referrals of patients covered by Medicare, Medicaid or other federal healthcare programs. Many states also have similar anti-kickback laws that are not necessarily limited to items or services for which payment is made by a federal healthcare program. Moreover, both federal and state laws forbid bribery and similar behavior. While unlikely, any determination by a state or federal regulatory agency that any of our activities or those of our customers or vendors violate any of these laws could subject us to civil or criminal penalties or could require us to change or terminate some portions of our business, could require us to refund a portion of our service fees, could disqualify us from providing services to customers who are or do business with government programs, any one of which could have an adverse effect on our business. Even an unsuccessful challenge by regulatory authorities of our activities could result in adverse publicity and could require a costly response from us.

Customer contracts with governmental agencies, or which are funded by government programs, impose strict compliance burdens on us, may give rise to conflicts with some of our other important businesses and are subject to termination and delays in funding.

A significant portion of our revenues comes from customers that are governmental agencies or are funded by government programs. Our contracts and subcontracts with these customers may be subject to some or all of the following:


•	termination when appropriated funding for the current fiscal year is exhausted;


•	termination for the governmental customer’s convenience, subject to a negotiated settlement for costs incurred and profit on work completed, along with the right to place contracts out for bid before the full contract term, and the right to make unilateral changes in contract requirements, subject to negotiated price adjustments;


•	compliance and reporting requirements related to, among other things, agency specific policies and regulations, cost principles and accounting systems, equal employment opportunity, affirmative action for veterans and workers with disabilities and accessibility for the disabled;


•	broad audit rights;


•	specialized remedies for breach and default, including set off rights, retroactive price adjustments and civil or criminal fraud penalties, as well as mandatory administrative dispute resolution procedures instead of state contract law remedies; and


•	potential delays or terminations of, or failures to renew, existing U.S. government contracts and subcontracts, as well as the potential delay or reduction in the rate of creation of new contracts, as a result of budget cuts relating to the Budget Control Act of 2011 and the related automatic sequestration process that followed.

In addition, certain violations of federal and state law may subject us to having our contracts terminated and, under certain circumstances, suspension and/or debarment from future government contracts. We are also subject to organizational conflict of interest rules that may affect our eligibility for some government contracts, including rules applicable to all U.S. government contracts, as well as rules applicable to the specific agencies with which we have contracts or with which we may seek to enter into contracts. For example, there has been an increasing focus on payment integrity issues with respect to government programs, and solutions and services that we provide to hospitals may constitute an organizational conflict of interest under our payment integrity contracts. If an organizational conflict of interest cannot be mitigated, then we may be disqualified from certain government contracts.

Inaccuracies in the solutions and services that we deliver to our customers could have an adverse effect on our reputation and business and expose us to liability.

The information solutions and services that we deliver to our customers are becoming increasingly sophisticated. Errors in these solutions and services could cause serious problems for our customers. Some of these risks are heightened as we seek to expand our solutions and service offerings, including various patient safety solutions utilized by clinicians. If problems like these occur, our customers may seek compensation from us or may seek to terminate their agreements with us, withhold payments due to us, seek refunds from us of part or all of the fees charged under our agreements, a loan or advancement of funds or initiate litigation or other dispute resolution procedures. In addition, we may be subject to claims against us by others affected by any such problems.

Failures, delays, or interruptions in the operation of our computer and communications systems or the failure to implement system enhancements may harm our business.

~~and~~Failures, ~~our~~delays, ~~contractual~~or ~~obligations~~interruptions ~~with~~in ~~respect to~~ the ~~delivery~~operation of our ~~information~~computer ~~products~~ and ~~services.~~communications Failure to do so could subject us to liability, as well as cause us to lose customers. In addition, because of the large amount of data we collect and manage, it is possible that hardware failures and errors in our systems ~~would result in data loss~~ or ~~corruption or cause~~ the ~~information~~failure ~~that we collect~~ to beimplement ~~incomplete~~system orenhancements ~~contain inaccuracies that our customers regard as significant. If problems like these occur, our customers~~ may ~~seek~~harm ~~full or partial refunds or credits from us or may seek to terminate their agreements with us, withhold payments due to us, or initiate litigation or other dispute resolution procedures. Also,~~ our business ~~could be harmed if our customers and potential customers believe our service is unreliable~~.

Our success depends on the efficient and uninterrupted operation of our computer and communications systems and other aspects of our information technology infrastructure. We must meet our customers’ service level expectations and our contractual obligations with respect to the delivery of our information products and services. Failure to do so could subject us to liability, as well as cause us to lose customers. In addition, because of the large amount of data we collect and manage, it is possible that hardware failures and errors in our systems would result in data loss or corruption or cause the information that we collect to be incomplete or contain inaccuracies that our customers regard as significant. If problems like these occur, our customers may seek full or partial refunds or credits from us or may seek to terminate their agreements with us, withhold payments due to us, or initiate litigation or other dispute resolution procedures. Also, our business could be harmed if our customers and potential customers believe our service is unreliable.

We depend on data centers that are not owned or operated by us. While we control and have access to our servers and the components of our network that are located in our external data centers, we do not own or control the operation of these facilities. The agreement that governs our use of the data centers is for a specified term, and we have no assurance that it can be renewed on commercially reasonable terms or at all.

Damage or failure of systems and technology environment. A failure at our data centers or of our network or data gathering and dissemination processes could impede the processing of data, delivery of databases and services, client orders and day to day management of our business and could result in the corruption or loss of data. While we have disaster recovery plans for our main data center and our other operations that we believe are appropriate, we currently do not have full backup facilities for all of our operations to provide redundant network capacity in the event of a data center or system failure. Despite any precautions we may take, damage from fire, floods, hurricanes, power loss, telecommunications failures, computer viruses, malware, break-ins, sabotage, breaches of security, epidemics and similar events at our various computer facilities could result in interruptions in the flow of data to and from our servers.

In addition, any failure by our computer information technology environment to provide our required data communications capacity could result in interruptions in our service. If at any time our data facility providers are unable to satisfy our requirements, we could be required to transfer our operations to an alternative provider of server hosting services. Such a transfer, whether planned or unplanned, could result in significant delays in our ability to deliver our products and services to our clients. Additionally, significant delays in the planned delivery of system enhancements, improvements and inadequate performance of the systems once they are completed could damage our reputation and harm our business.

Long term business disruption. Finally, long term disruptions in the infrastructure caused by events such as natural disasters, the outbreak of war, the escalation of hostilities, epidemics or acts of terrorism (particularly involving cities in which we have offices or maintain our data) could adversely affect our businesses. Although we carry property casualty and business interruption insurance, our coverage may not be adequate to compensate us for all losses that may occur. The occurrence of any of these events could disrupt our business and operations or harm our brand and reputation, either of which could materially adversely affect our business, results of operations and financial condition.

If we are unable to retain our existing customers, our business, financial condition and results of operations could suffer.

Our success depends substantially upon the retention of our customers, particularly due to our recurring revenue model. Historically, a significant percentage of our revenue has come from ongoing customer relationships. We may not be able to maintain similarly high renewal and/or retention rates in the future. Our success in securing renewals depends in part upon our clients’ budgetary environment, our reputation and performance and our competitors. Our subscription-based revenues depend in part upon maintaining our customer renewal and retention rates. If we are unable to retain customers at an acceptable rate, our business, results of operations and financial condition could be materially adversely impacted.

AGeneral ~~prolonged~~ economic, ~~downturn~~political ~~could~~and ~~have~~market aforces ~~material~~and ~~adverse~~dislocations ~~effect~~beyond on our ~~business,~~control ~~financial~~could ~~condition~~reduce demand for our solutions and ~~results~~harm ofour ~~operations~~business.

The U.S. economy experienced a significant economic downturn in recent years. While recent indicators suggest improvement in the U.S. and global economy, we cannot predict the duration or extent of any economy recovery. Weak economic conditions may create increased financial pressures on our customers, which could reduce their spending on products and services such as our solutions and/or result in increased competitive pricing pressures. Weak economic conditions may also adversely affect our customers’ credit worthiness, which could result in us incurring increased bad

~~debt~~The ~~expense.~~demand Iffor weour solutions may be impacted by domestic and international factors that are ~~not~~beyond ~~able~~our tocontrol, ~~timely~~including macroeconomic, political and ~~appropriately~~market ~~adapt~~conditions, the availability of short-term and long-term funding and capital, the level and volatility of interest rates, currency exchange rates and inflation. The United States economy recently experienced periods of contraction and both the future domestic and global economic environments may continue to ~~changes~~be ~~resulting~~less ~~from~~favorable than those of prior years. Any one or more of these factors may contribute to reduced activity and prices in the securities markets generally and could result in a ~~weak~~reduction ~~economic~~in ~~environment,~~demand for our ~~business~~solutions, which could have an adverse effect on our results of operations and financial condition. A significant additional decline in the value of assets for which risk is transferred in market transactions could behave ~~materially~~an ~~and~~adverse ~~adversely~~impact ~~affected~~on the demand for our solutions. In addition, the decline of the credit markets has reduced the number of mortgage originators, and therefore, the immediate demand for our related analytics solutions.

Content innovation and technological developments could render our solutions and services obsolete or uncompetitive and we may not be able to develop new content innovations and technology necessary for our business to remain competitive.

To remain competitive, we must consistently deliver comprehensive and effective data solutions and services to our clients in forms that are easy to use while simultaneously providing clear answers to complex questions, some of which require us to focus on content innovation. In addition, the technologies supporting the industries we serve and our platforms for delivering our solutions and services to our customers are susceptible to rapid changes and in order to be competitive we must consistently develop cost effective technologies for secure and reliable data collection and analysis. We may not be able to develop new content innovations or technologies, or enhancements to, updates of or new versions of our technologies, as necessary for our business or we may not do so as quickly or cost effectively as our competition.

Further, the introduction of new solutions and services embodying new technologies and the emergence of new industry standards could render existing solutions and services obsolete. Our continued success will depend on our ability to adapt to changing technologies, manage and process ever increasing types and amounts of data and improve the performance, features and reliability of our data solutions and services in response to changing client and industry demands. We may experience difficulties that could delay or prevent the successful design, development, testing, introduction or marketing of our solutions and services. New solutions and services, or enhancements or updates to existing solutions and services, may not adequately meet the requirements of current and prospective customers or achieve any degree of significant market acceptance.

Our business is subject to significant or potentially significant competition that is likely to intensify.

Our future growth and success ~~depends~~depend on our ability to successfully compete with other companies that provide similar services in the same markets, some of which may have financial, marketing, technical and other advantages. Some of our existing customers, including some for which we act as a subcontractor, compete with us or may plan to do so or belong to alliances that compete with us or plan to do so, either with respect to the same products and services we provide to them or with respect to some of our other lines of business. The ability of customers or other competitors to replicate our solutions and services may adversely affect the terms and conditions we are able to negotiate in our agreements and our transaction volume with them, which directly ~~relates~~impacts to our revenues. We are competing with other vendors to be the first to deliver real time and prospective analytics and the integration of financial and clinical data, and any vendor that exhibits an advantage in any of these areas will be at a distinct competitive advantage. In addition, some of our solutions and services allow health care sponsors and carriers to outsource business processes that have been or could be performed internally and, in order for us to be able to compete, use of our solutions and services must be more efficient for them than use of internal resources. We are also often required to respond to requests for proposals (“RFPs”) to compete for a contract. This requires that we accurately estimate our cost structure for servicing a proposed contract, the time required to establish operations and likely terms of the proposals submitted by competitors. We cannot assure you that we will continue to obtain contracts in response to RFPs or that our proposals will result in profitable contracts. In addition, competitors may protest contracts awarded to us through the RFP process which may cause the award to be delayed or overturned or may require the client to reinitiate the RFP process.

Our business could be harmed if we are no longer able to license or integrate third party technologies, or to the extent any problems arise with the functionality or successful integration of any software or other technologies licensed to us by third party vendors.

We depend upon licenses from third party vendors for some of the technology used in our business intelligence and software tools and the technology platforms upon which these tools operate. We also use third party software to maintain and enhance, among other things, content generation and delivery, and to support our technology infrastructure. These technologies might not continue to be available to us on commercially reasonable terms or at all. Most of these licenses can be renewed only by mutual agreement and may be terminated if we breach the terms of the license and fail to cure the breach within a specified period of time. Our inability to obtain and maintain any of these licenses could delay our ability to provide services until alternative technology can be identified, licensed and integrated, which may harm our

~~financial~~Our ~~condition~~business ~~and~~could ~~results~~be ofharmed ~~operations.~~if ~~Some~~we ofare ~~our~~no longer able to license or integrate third party ~~licenses~~technologies, ~~are~~or ~~non-exclusive~~to ~~and~~the ~~our~~extent ~~competitors~~any ~~may~~problems ~~obtain~~arise with the ~~right~~functionality toor ~~use~~successful ~~any~~integration of ~~the~~any ~~technology~~software ~~covered~~or byother ~~these~~technologies ~~licenses~~licensed to ~~compete~~us ~~directly~~by ~~with~~third usparty vendors.

Our use of third party technologies exposes us to risks associated with the integration of new technology into our solutions, the diversion of our resources from development of our own proprietary technology and the generation of revenue from licensed technology sufficient to offset associated procurement and maintenance costs. Because some of our products and services incorporate software developed and maintained by third parties, we are, to a certain extent, dependent upon such third parties’ ability to maintain or enhance their current products and services, to ensure that their products are free of defects or security vulnerabilities, to develop new products and services on a timely and cost-effective basis and to respond to emerging industry standards and other technological changes. To the extent any problems arise with the proper functioning or successful integration of any software or other technologies licensed to us by third party vendors, this could prevent our products and services from operating as our customers expect them to, thereby harming our relationships with our customers. If problems like these occur, our customers may seek compensation from us or may seek to terminate their agreements with us, withhold payments due to us, seek refunds from us of part or all of the fees charged under our agreements, or file a lawsuit. Further, we may be subject to claims against us by others affected by any such problems. As a result, our business, financial condition and results of operations could suffer. In addition, if our vendors choose to discontinue support of the licensed technology in the future, we might not be able to modify or adapt our own solutions.

Client procurement strategies could put additional pressure on the pricing of our information services, thereby leading to decreased earnings.

Certain of our clients may continue to seek further price concessions from us. This puts pressure on the pricing of our information services, which could limit the amounts we earn. If our competitors offer deep discounts on certain products in an effort to recapture or gain market share or to sell other products, we may then need to lower prices or offer other favorable terms in order to compete successfully. Any such changes would be likely to reduce margins and could adversely affect operating results. If we cannot offset price reductions with a corresponding increase in sales or with lower spending, then the reduced software revenues resulting from lower prices would adversely affect our results. In some areas of our Commercial segment, we see pricing pressure as healthcare reform drives clients to manage healthcare information technology spending in the context of other technology investments they are implementing concurrently.

As is common in high technology industries with rapid technological change, our customers may also require us to continue to add functionality to our products in order to maintain price. Additionally, changes in the pricing model for our products and solutions could require us to implement a new pricing model in order to remain competitive. A change in pricing model could require significant resources in order to transition successfully and could reduce our revenue during such a transition. While we attempt to mitigate the revenue impact of any pricing pressure through effective negotiations and by providing services to individual businesses within particular groups, there can be no assurance as to the degree to which we will be able to do so, which could materially adversely affect our business, results of operations and financial condition.

The protection of our intellectual property ~~requires~~may require substantial resources.

The steps we have taken to protect and enforce our proprietary rights and intellectual property may not be adequate. For instance, we may not be able to secure trademark or service mark registrations for marks in the United States or in foreign countries or take similar steps to secure patents for our proprietary applications. Further, despite our efforts, it may be possible for third parties to reverse engineer or otherwise obtain, copy and use information that we regard as proprietary. Third parties may infringe upon or misappropriate our copyrights, trademarks, service marks and other intellectual property rights, which could have a material and adverse effect on our business, financial condition and results of operations. If we believe a third party has misappropriated our intellectual property, litigation may be necessary to enforce and protect those rights, which would divert management resources, would be expensive and may not effectively protect our intellectual property. If we expand our overseas offerings, the laws of some countries do not protect and enforce proprietary rights to the same extent as the laws of the United States. As a result, if anyone misappropriates our intellectual property, it may have a material adverse effect on our business, results of operations and financial condition.

may be possible for third parties to reverse engineer or otherwise obtain, copy and use information that we regard as proprietary. Third parties may infringe upon or misappropriate our copyrights, trademarks, service marks and other intellectual property rights, which could have a material and adverse effect on our business, financial condition and results of operations. If we believe a third party has misappropriated our intellectual property, litigation may be necessary to enforce and protect those rights, which would divert management resources, would be expensive and may not effectively protect our intellectual property. If we expand our overseas offerings, the laws of some countries do not protect and enforce proprietary rights to the same extent as the laws of the United States. As a result, if anyone misappropriates our intellectual property, it may have a material adverse effect on our business, results of operations and financial condition.

Third parties may claim that we are infringing their intellectual property, and we could suffer significant litigation or licensing expenses or be prevented from selling certain solutions.

We could be subject to claims that we are misappropriating or infringing intellectual property or other proprietary rights of others. These claims, even if not meritorious, could be expensive to defend and divert management’s attention from our operations. If we become liable to third parties for infringing these rights, we could be required to pay a substantial damage award and to develop non-infringing technology, obtain a license or cease selling the products or services that use or contain the infringing intellectual property. We may be unable to develop non-infringing solutions or obtain a license on commercially reasonable terms, or at all. We may also be required to indemnify our customers if they become subject to third party claims relating to intellectual property that we license or otherwise provide to them, which could be costly.

We are, and may become, involved in litigation that could harm the value of our business.

In the normal course of our business, we are involved in lawsuits, claims, audits and investigations. The outcome of these matters could have a material adverse effect on our business, results of operation or financial condition. In addition, we may become subject to future lawsuits, claims, audits and investigations that could result in substantial costs and divert our attention and resources. For example, we have, and may in the future, become subject to claims relating to unfavorable patient outcomes based on information that we may have made available to clinicians or pharmaceutical customers. There can be no assurances that the outcome of any such litigation if successful will not have a material effect on our business.

Our success depends in part on our ability to identify, recruit and retain skilled management, including our executive officers, and technical personnel. If we fail to recruit and retain suitable candidates or if our relationship with our employees changes or deteriorates, there could be an adverse effect on our business.

Our future success depends upon our continuing ability to identify, attract, hire and retain highly qualified personnel, including skilled technical, management, product and technology and sales and marketing personnel, all of whom are in high demand and are often subject to competing offers. In particular, our executive officers are critical to the management of our business. The loss of any of our executive officers could impair our ability to execute our business plan and growth strategy, reduce revenues, cause us to lose customers or lead to employee morale problems and/or the loss of key employees. Competition for qualified personnel in the healthcare information technology and services industry is intense, and we may not be able to hire or retain a sufficient number of qualified personnel to meet our requirements, or at salary, benefit and other compensation costs that are acceptable to us. A loss of a substantial number of qualified employees, or an inability to attract, retain and motivate additional highly skilled employees required for expansion of our business, could have an adverse effect on our business.

Failure to successfully complete or integrate acquisitions into our existing operations could have an adverse impact on our business, financial condition and results of operations.

We regularly evaluate opportunities for strategic growth through acquisitions. Recently, we completed the acquisitions of Simpler, JWA and HBE. Potential issues associated with ~~these~~ acquisitions could include, among other things; our ability to realize the full extent of the benefits or cost savings that we expect to realize as a result of the completion of the acquisition within the anticipated time frame, or at all; receipt of necessary consents, clearances and approvals in connection with the acquisition; and diversion of management’'s attention from base strategies and objectives. Further, we may be unsuccessful in our effort to combine our businesses with the business of the acquired company in a manner that permits cost savings to be realized, including sales and administrative support activities and information technology systems, motivating, recruiting and retaining executives and key employees, conforming standards, controls, procedures and policies, business cultures and compensation structures, consolidating and streamlining corporate and administrative infrastructures, consolidating sales and marketing operations, retaining existing customers and attracting new customers, identifying and eliminating redundant and underperforming operations and assets, coordinating geographically dispersed organizations, and managing tax costs or inefficiencies associated with integrating our operations following completion of the acquisitions. The process of integrating acquired companies and operations may result in unforeseen operating difficulties and may require significant financial resources and management’s time and attention that would otherwise be available for the ongoing development or expansion of our existing operations. In addition, acquisitions outside of the United States increase our exposure to risks associated with foreign operations, including fluctuations in foreign exchange rates and compliance

that permits cost savings to be realized, including sales and administrative support activities and information technology systems, motivating, recruiting and retaining executives and key employees, conforming standards, controls, procedures and policies, business cultures and compensation structures, consolidating and streamlining corporate and administrative infrastructures, consolidating sales and marketing operations, retaining existing customers and attracting new customers, identifying and eliminating redundant and underperforming operations and assets, coordinating geographically dispersed organizations, and managing tax costs or inefficiencies associated with integrating our operations following completion of the acquisitions. The process of integrating acquired companies and operations may result in unforeseen operating difficulties and may require significant financial resources and management's time and attention that would otherwise be available for the ongoing development or expansion of our existing operations. In addition, acquisitions outside of the United States increase our exposure to risks associated with foreign operations, including fluctuations in foreign exchange rates and compliance with foreign laws and regulations. [A significant portion of the operations and personnel of HBE, which we acquired in November, are outside of the United States.] If an acquisition is not successfully completed or integrated into our existing operations, our business, results of operations and financial condition could be materially adversely impacted.

To the extent the availability of free or relatively inexpensive information increases, the demand for some of our solutions may decrease.

Public sources of free or relatively inexpensive information have become increasingly available recently, particularly through the Internet, and this trend is expected to continue. Governmental agencies in particular have increased the amount of information to which they provide free public access. Public sources of free or relatively inexpensive information may enable third parties to create value added, analytically enhanced or authoritative content that may compete with and reduce demand for our solutions. To the extent that customers choose not to obtain solutions from us and instead rely on these alternative new sources, our business and results of operations may be adversely affected.

Our foreign operations expose us to political, economic, regulatory and other risks, which could adversely impact our financial results.

We conduct a portion of our operations ~~through subsidiaries~~ in the United Kingdom and India, [Canada, Brazil, Belgium and Japan], including some sales functions and some data service functions. Operating in overseas environments carries risks for our business, including currency exposures, unexpected changes in local government laws and regulations, including those relating to intellectual property, data management, labor and cross-border trade, volatility of an emerging economy, corruption and fraudulent business practices, recruiting and retention of skilled personnel, tax law changes, and other exposures inherent in operating in foreign jurisdictions.

As an “emerging growth company” under the JOBS Act, we are permitted to, and intend to, rely on exemptions from some disclosure requirements.

As an “emerging growth company” under the JOBS Act, we are permitted to, and intend to, rely on exemptions from some disclosure requirements. We are an emerging growth company until the earliest of: (i) the last day of the fiscal year during which we had total annual gross revenues of $1 billion or more; (ii) the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement under the Securities Act; (iii) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt or (iv) the date on which we are deemed to be a “large accelerated filer” as defined under the federal securities laws. For so long as we remain an emerging growth company, we will not be required to, among other things:

• have an auditor attestation report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; and

• include detailed compensation discussion and analysis in our filings under the Exchange Act, and instead may provide a reduced level of disclosure concerning executive compensation.

We have not taken advantage of all of these reduced burdens, and if we do, the information that we provide you in our public filings may be different than that of other public companies in which you hold securities. Although we rely on certain exemptions provided in the JOBS Act, the exact implications of the JOBS Act for us are still subject to interpretations and guidance by the SEC and other regulatory agencies. In addition, as our business grows, we may no longer satisfy the conditions of an emerging growth company. We are currently evaluating and monitoring developments with respect to these new rules and we cannot assure you that we will be able to take advantage of all of the benefits from the JOBS Act.

Our Predecessor’s historical financial information may not be representative of our results as a standalone company or indicative of our future financial performance.

Our Predecessor’s historical financial information included in this Annual Report has been derived from the consolidated financial statements of Thomson Reuters, which owned our business during each of the periods presented. This financial information relies on assumptions and estimates that relate to the ownership of our business by Thomson Reuters and, as a result, the financial information may not reflect what our results of operations, financial position and cash flows

would have been had we been a standalone entity during the periods presented or what our results of operations, financial position and cash flows will be in the future because:

• costs reflected in this Annual Report may differ from the costs we would have incurred had we operated as a standalone entity during the periods presented;

• our Predecessor’s historical capital structure and reliance on Thomson Reuters for funding will not reflect our capital needs as a standalone entity;

• we have made certain adjustments and allocations since we did not operate as and were not accounted for as, a single, standalone business for the periods presented; and

• the information does not reflect certain changes that will occur in our operations as a result of our separation from Thomson Reuters.

Accordingly, our Predecessor’s historical financial statements may not be indicative of our future operating or financial performance or financial position. Transition activities are complicated and may distract the organization from operating the business. Additionally, successful carve-out execution is risky, complex and requires substantial resources and expenditures. Thomson Reuters historically allocated expenses and other centralized operating costs to our Predecessor. The allocated costs included in our Predecessor’s historical financial statements could differ from amounts that would have been incurred by us if we operated on a standalone basis and are not necessarily indicative of costs to be incurred in the future. To the extent that these expenses exceed our estimates, our liquidity and results of operations may be materially adversely affected.

We are controlled by the Sponsor, whose interest as equity holder may conflict with yours as a holder of Notes.

We are controlled by the Sponsor, through its affiliated private equity funds. The Sponsor controls the election of our directors and thereby has the power to control our affairs and policies, including the appointment of management, the issuance of additional equity and the declaration and payment of dividends if allowed under the terms of the credit agreement governing our Senior Credit Facility, the terms of the indenture governing the Notes and the terms of our other indebtedness outstanding at the time. The Sponsor does not have any liability for any obligations under or relating to the Notes and their interests may be in conflict with yours. For example, if we encounter financial difficulties or are unable to pay our debts as they mature, the Sponsor may pursue strategies that favor equity investors over debt investors. In addition, the Sponsor, through its affiliated private equity funds, may have an interest in pursuing acquisitions, divestitures, financing or other transactions that, in its judgment, could enhance their equity investments, even though such transactions may involve risk to you as a holder of the Notes. Additionally, the Sponsor, through its affiliated private equity funds, may make investments in businesses that directly or indirectly compete with us, or may pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us. For information concerning our arrangements with the Sponsor, see "Management" and "Certain relationships and related party transactions."

If we do not remediate material weaknesses in our internal control over financial reporting or are unable to implement and maintain effective internal control over financial reporting in the future, the accuracy and timeliness of our financial reporting may be adversely affected. 20

InIf ~~connection with the audits of our financial statements for the 2013 and the 2012 periods,~~ we ~~have~~do ~~identified~~not ~~control~~remediate ~~deficiencies~~material weakness in our internal control over financial reporting ~~that~~or ~~constituted~~are ~~material~~unable ~~weaknesses.~~to Aimplement ~~material~~and ~~weakness~~maintain iseffective ~~defined under the standards issued by the Public Company Accounting Oversight Board as a deficiency, or combination of deficiencies, in~~ internal control over financial reporting, ~~such~~in that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected and corrected on a timely basis. Specifically, it was determined that material weaknesses exist as follows: (1) we do not maintain effective controls over reconciliation of certain financial statement accounts, (2) we do not maintain effective controls over the ~~accounting for business combinations~~future, ~~(3) we do not maintain effective controls over~~ the ~~accounting~~accuracy ~~for taxes~~ and ~~(4) we~~timeliness ~~do not maintain a sufficient complement~~ of ~~personnel~~our ~~with~~financial anreporting ~~appropriate~~may ~~level~~be ofadversely ~~accounting knowledge, experience and training in the application of GAAP~~affected.

WeIn ~~are~~connection ~~currently~~with ~~implementing~~the audit of our financial statements for the ~~requirements~~2014 period, we have identified control deficiencies in our internal control over financial reporting that constituted a material weakness. A material weakness is defined under the standards issued by the Public Company Accounting Oversight Board as a deficiency, or combination of ~~Section~~deficiencies, ~~404~~in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected and ~~while~~corrected ~~undergoing~~on ~~this~~a ~~implementation~~timely basis. Specifically, ~~have~~it ~~addressed~~was determined that we do not maintain a sufficient complement of personnel with an appropriate level of accounting knowledge, experience and training in the ~~process~~application of GAAP. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls ~~surrounding~~and procedures were not effective at the ~~above~~reasonable ~~mentioned~~assurance level as of December 31, 2014 because of the material weaknesses discussed above. As aWe ~~part~~are currently in the process of remediating this ~~implementation~~weakness. During the course of the remediation effort, we may identify additional control deficiencies, which could give rise to other material weaknesses, in addition to the material weakness described above. In connection with the audit of our financial statements for 2013 and 2012, we identified other control deficiencies that constituted material weakness, which we have ~~documented~~remediated following discussion of these material weaknesses. See "Controls and Procedures-Identification of Material Weaknesses". If we are unable to successfully remediate this material weakness, it could harm our ~~significant~~operating results, cause us to fail to meet our U.S. Securities and Exchange Commission (the "SEC") reporting obligations or result in inaccurate financial reporting ~~processes~~or material misstatements in our annual or interim consolidated and ~~controls~~combined financial statements that would not be prevented or detected in a timely basis. We cannot assure you that the measures we have taken to date, ~~including~~or any measures we may take in the ~~processes~~future, will be sufficient to remediate the material weakness described above or avoid potential future material weaknesses.

21Further, our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal controls over financial reporting.

~~around~~We ~~account~~were ~~reconciliations,~~unable accounting for taxes and accounting for business combinations. Key controls have been documented and will be tested in 2014. Remediation efforts, where applicable, will be identified, tracked and monitored to ~~ensure~~file ~~effectiveness~~our ofQuarterly ~~control~~Report ~~design~~on ~~and~~Form 10‑Q ~~operation. During~~for the ~~course~~fiscal ofquarter ~~the~~ended ~~remediation effort~~March 31, we2014 ~~may~~by ~~identify~~the ~~additional~~prescribed ~~control~~time ~~deficiencies,~~due ~~which could give rise~~ to ~~other~~an ~~material~~unexpected ~~weaknesses,~~delay in ~~addition~~completing to the ~~material~~notes ~~weaknesses~~to ~~described above. Each of the material weaknesses described above could result in a misstatement of~~ our ~~accounts or disclosures that would result in a material misstatement of our annual or interim consolidated and combined~~ financial statements ~~that~~for ~~would not be prevented or detected. We cannot assure you~~ that ~~the measures we have taken to date, or any measures we may take in the future, will be sufficient to remediate the material weaknesses described above or avoid potential future material weaknesses~~period.

IfAs wean ~~are~~"emerging ~~unable~~growth tocompany" ~~successfully~~under ~~remediate~~the ~~these~~JOBS ~~material weaknesses~~Act, itwe ~~could~~rely ~~harm~~on ~~our~~exemptions ~~operating~~from ~~results,~~some ~~cause~~disclosure ~~us to fail to meet our SEC reporting obligations or result in inaccurate financial reporting or material misstatements in our annual or interim financial statements~~requirements.

WeAs ~~are~~an ~~not~~"emerging ~~currently~~growth ~~required~~company" tounder ~~comply~~the ~~with~~JOBS ~~the~~Act, ~~SEC’s~~we ~~rule~~rely ~~implementing~~on ~~Section 404~~exemptions offrom ~~the~~some ~~Sarbanes-Oxley~~disclosure ~~Act,~~requirements. ~~and~~We are ~~therefore~~an ~~not~~emerging ~~required~~growth tocompany ~~make~~until athe ~~formal~~earliest ~~assessment~~ of: (i) the ~~effectiveness~~last day of ~~our~~the ~~internal~~fiscal ~~control~~year ~~over~~during ~~financial~~which ~~reporting~~we ~~for~~had ~~that~~total ~~purpose.~~annual ~~Sections~~gross ~~302~~revenues ~~and 404~~ of ~~the~~$1 ~~Sarbanes-Oxley~~billion ~~Act~~or ~~require~~more; ~~our~~(ii) the ~~management~~last today ~~certify~~of ~~financial~~the ~~and~~fiscal ~~other~~year ~~information~~following inthe ~~our~~fifth ~~quarterly~~anniversary ~~and~~of ~~annual~~the ~~reports~~date ~~and~~of ~~provide an annual management report on~~ the ~~effectiveness~~first sale of our ~~internal~~common ~~control~~stock ~~over~~pursuant ~~financial reporting. Though we are required~~ to ~~disclose~~an ~~changes~~effective ~~made~~registration tostatement ~~our~~under ~~internal~~the ~~controls~~Securities ~~and~~Act; ~~procedures~~(iii) the date on awhich ~~quarterly~~we ~~basis~~have, weduring ~~will~~the ~~not~~previous bethree-year ~~required~~period, toissued ~~make~~more ~~our~~than ~~first~~$1 ~~annual~~billion ~~assessment~~in ofnon-convertible ~~our~~debt ~~internal~~or ~~control over financial reporting pursuant to Section~~(iv) ~~404 until 2014. To comply with~~ the ~~requirements~~date ofon ~~being~~which ~~a company with publicly traded securities,~~ we ~~will~~are ~~need~~deemed to ~~implement~~be ~~additional~~a ~~internal~~"large ~~controls,~~accelerated ~~reporting~~filer" ~~systems~~as ~~and~~defined ~~procedures~~under ~~and~~the ~~hire~~federal ~~additional~~securities ~~accounting~~laws. ~~and~~For ~~finance~~so ~~staff.~~long ~~Further,~~as ~~our~~we ~~independent~~remain ~~registered~~an ~~public~~emerging ~~accounting~~growth ~~firm~~company, iswe will not be required to, ~~formally~~among ~~attest~~other ~~to the effectiveness of our internal controls over financial reporting.~~ things:


•	have an auditor attestation report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; and


•	include detailed compensation discussion and analysis in our filings under the Exchange Act, and instead may provide a reduced level of disclosure concerning executive compensation.

To the extent we take advantage of these reduced burdens, the information that we provide you in our public filings may be different than that of other public companies in which you hold securities.

Risks related to the Notes

Our substantial indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations under the Notes.

As of December 31, ~~2013~~2014, our total principal indebtedness was ~~approximately~~ $~~888~~992.10 million and we have undrawn availability under the Revolving Credit Facility of ~~approximately~~ $1942.75 million (after giving effect to approximately $07.35 million of outstanding letters of credit, which, while not drawn, reduce the available balance under the Revolving Credit Facility). Of this total amount, approximately $561.0 million is secured indebtedness under our Senior Credit Facility (excluding approximately $0.3 million represented by letters of credit under the Revolving Credit Facility), to which the Notes are effectively subordinated to the extent of the value of the assets securing such indebtedness. We may also request incremental increases in commitments under the Senior Credit Facility in an aggregate principal amount up to (x) $75.0 million plus (y) up to an additional $75.0 million if the consolidated senior secured leverage ratio is less than or equal to 4.0:1.0, subject to certain conditions.

amount, $624.9 million is secured indebtedness under our Senior Credit Facility (excluding $7.5 million represented by letters of credit under the Revolving Credit Facility), to which the Notes are effectively subordinated to the extent of the value of the assets securing such indebtedness. We may also request incremental increases in commitments under the Senior Credit Facility in an aggregate principal amount up to (x) $75.0 million plus (y) up to an additional $75.0 million if the consolidated senior secured leverage ratio is less than or equal to 4.0:1.0, subject to certain conditions.

Subject to the limits contained in the credit agreement that governs our Senior Credit Facility, the indenture that governs the Notes and our other debt instruments, we may be able to incur substantial additional debt from time to time to finance working capital, capital expenditures, investments or acquisitions, or for other purposes. If we do so, the risks related to our high level of debt could intensify. Specifically, our high level of debt could have important consequences to the holders of the Notes, including the following:


•	making it more difficult for us to satisfy our obligations with respect to the Notes and our other debt;


•	limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements;


•	requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes;


•	increasing our vulnerability to general adverse economic and industry conditions;


•	exposing us to the risk of increased interest rates as certain of our borrowings, including borrowings under our Senior Credit Facility, are at variable rates of interest;


•	limiting our flexibility in planning for and reacting to changes in the industry in which we compete;


•	placing us at a disadvantage compared to other, less leveraged competitors; and


•	increasing our cost of borrowing.

In addition, the indenture that governs the Notes and the credit agreement that governs our Senior Credit Facility contain restrictive covenants that limit our ability to engage in activities that may be in our long term best interest. Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all our debt.

We may not be able to generate sufficient cash to service all of our indebtedness, including the Notes, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

Our ability to make scheduled payments on or refinance our debt obligations, including the Notes, depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors beyond our control. We may be unable to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness, including the Notes. See “Management’s discussion and analysis of financial condition and results of operations-Liquidity and capital resources.”

If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance our indebtedness, including the Notes. We may not be able to effect any such alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations. Our credit agreement that governs our Senior Credit Facility and the indenture that governs the Notes restricts our ability to dispose of assets and use the proceeds from those dispositions and may also restrict our ability to raise debt or equity capital to be used to repay other indebtedness when it becomes due. We may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due.

As of the date of this Annual Report, we have ~~two~~nine foreign subsidiaries, ~~neither~~that ofdo ~~which~~not ~~guarantees~~guarantee our obligations under our Senior Credit Facility or the Notes. These foreign subsidiaries are insignificant and account for less than 3% of our consolidated revenues, operating income and total assets~~. Accordingly~~, asAs of the date of this Annual Report, Truven Holding is the only guarantor. However, in the future, we may choose to acquire or form one or more subsidiaries in connection with the operation of our business that will be a restricted subsidiary. Any such future direct or indirect subsidiary that is a borrower under or that guarantees obligations under our Senior Credit Facility or that guarantees our other indebtedness or indebtedness of any future subsidiary guarantors will guarantee the Notes. We may also have future subsidiaries that may not be guarantors of the Notes or our other indebtedness. Accordingly, repayment of our indebtedness, including the Notes, may be dependent in part on the generation of cash flow by our future subsidiaries, if any, and their ability to make such cash available to us by dividend, debt repayment or otherwise. Unless they are guarantors of the Notes or our other indebtedness, our subsidiaries will not have any obligation to pay amounts due on the Notes or our other indebtedness or to make funds available for that purpose. Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us to make payments in respect of our indebtedness, including the Notes. Each such subsidiary will be a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from subsidiaries. While the indenture that governs the Notes, our credit agreement that governs our Senior Credit Facility and certain of our other existing indebtedness will limit the ability of any subsidiary to incur consensual restrictions on its ability to pay dividends or make other intercompany payments to us, these limitations are subject to qualifications and exceptions. In the event that we do not receive distributions from our subsidiaries, we may be unable to make required principal and interest payments on our indebtedness, including the Notes.

2322

our domestic subsidiaries guarantee the debt. In the future, we may choose to acquire or form additional subsidiaries in connection with the operation of our business that will be restricted subsidiaries. Any such future direct or indirect subsidiary that is a borrower under or that guarantees obligations under our Senior Credit Facility or that guarantees our other indebtedness or indebtedness of any future subsidiary guarantors will guarantee the Notes. We may also have future subsidiaries that may not be guarantors of the Notes or our other indebtedness. Accordingly, repayment of our indebtedness, including the Notes, may be dependent in part on the generation of cash flow by our current and future subsidiaries, and their ability to make such cash available to us by dividend, debt repayment or otherwise. Unless they are guarantors of the Notes or our other indebtedness, our subsidiaries will not have any obligation to pay amounts due on the Notes or our other indebtedness or to make funds available for that purpose. Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us to make payments in respect of our indebtedness, including the Notes. Each such subsidiary will be a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from subsidiaries. While the indenture that governs the Notes, our credit agreement that governs our Senior Credit Facility and certain of our other existing indebtedness will limit the ability of any subsidiary to incur consensual restrictions on its ability to pay dividends or make other intercompany payments to us, these limitations are subject to qualifications and exceptions. In the event that we do not receive distributions from our subsidiaries, we may be unable to make required principal and interest payments on our indebtedness, including the Notes.

Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would materially and adversely affect our financial position and results of operations and our ability to satisfy our obligations under the Notes.

If we cannot make scheduled payments on our debt, we will be in default and holders of the Notes could declare all outstanding principal and interest to be due and payable, the lenders under our Senior Credit Facility could terminate their commitments to loan money and foreclose against the assets securing the Senior Credit Facility and we could be forced into bankruptcy or liquidation. All of these events could result in your losing your investment in the Notes.

Certain of our assets collateralize our Senior Credit Facility and any such assets may not be available to pay our other indebtedness.

Our Senior Credit Facility is collateralized by a security interest in substantially all of our tangible and intangible assets, including the stock and the assets of Truven and certain of our ~~future~~ wholly-owned U.S. subsidiaries and a portion of the stock of certain of our non-U.S. subsidiaries. The furnishing of ~~such~~ security interests with respect to such assets may materially and adversely affect our financial flexibility, including the costs of or ability to raise additional financing.

Despite our current level of indebtedness, we and our subsidiaries may still be able to incur substantially more debt. This could further exacerbate the risks to our financial condition described above.

We and our subsidiaries may be able to incur significant additional indebtedness in the future. Although the indenture that governs the Notes and our credit agreement that governs our Senior Credit Facility contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial. If we incur any additional indebtedness that ranks equally with the Notes, subject to collateral arrangements, the holders of that debt will be entitled to share ratably with you in any proceeds distributed in connection with any insolvency, liquidation, reorganization, dissolution or other winding up of our company. This may have the effect of reducing the amount of proceeds paid to you. These restrictions also will not prevent us from incurring obligations that do not constitute indebtedness. In addition, as of December 31, ~~2013~~2014, our Revolving Credit Facility had unused commitments of approximately $1942.75 million (after giving effect to approximately $07.35 million of outstanding letters of credit, which, while not drawn, reduce the available balance under the Revolving Credit Facility). Further, we may request incremental increases in commitments under the Senior Credit Facility in an aggregate principal amount up to (x) $75.0 million plus (y) up to an additional $75.0 million if the consolidated senior secured leverage ratio is less than or equal to 4.0:1.0, subject to certain conditions. All of the borrowings under our Senior Credit Facility are and will be secured indebtedness and, therefore, effectively senior to the Notes and the guarantees of the Notes to the extent of the value of the assets securing such debt. If new debt is added to our current debt levels, the related risks that we and the guarantors face could intensify.

The terms of the credit agreement that governs our Senior Credit Facility and the indenture that governs the Notes will restrict our current and future operations, particularly our ability to respond to changes or to take certain actions.

The indenture that governs the Notes and the credit agreement that governs our Senior Credit Facility contain a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long term best interest, including, among other things, restrictions on our ability to:


•	incur additional indebtedness and guarantee indebtedness;


•	pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock;


•	prepay, redeem or repurchase certain debt;


•	make loans, investments and acquisitions;


•	sell or otherwise dispose of assets;


•	incur liens;


•	enter into transactions with affiliates;


•	alter the businesses we conduct;


•	enter into sale-leaseback transactions;


•	enter into certain swap agreements;


•	change our fiscal year;


•	enter into agreements restricting our subsidiaries’ ability to pay dividends and incur liens; and


•	consolidate, merge or sell all or substantially all of our assets.

The covenants in the indenture that governs the Notes are subject to important exceptions and qualifications. Certain of these covenants will cease to apply to the Notes when the Notes have investment grade ratings from both Moody’s Investors Service, Inc. (“Moody’s”) and Standard & Poor’s Ratings Group (“Standard & Poor’s”).

In addition, the restrictive covenants in the credit agreement that governs our Senior Credit Facility require us to maintain specified financial ratios and satisfy other financial condition tests. Our ability to meet those financial ratios and tests can be affected by events beyond our control, and we may be unable to meet them.

A breach of the covenants or restrictions under the indenture that governs the Notes or under the credit agreement that governs our Senior Credit Facility could result in an event of default under the applicable indebtedness. Such a default may allow the creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross acceleration or cross default provision applies. In addition, an event of default under the credit agreement that governs our Senior Credit Facility would permit the lenders under our Senior Credit Facility to terminate all commitments to extend further credit under that facility. Furthermore, if we were unable to repay the amounts due and payable under our Senior Credit Facility, those lenders could proceed against the collateral granted to them to secure that indebtedness. In the event our lenders or noteholders accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness. As a result of these restrictions, we may be:


•	limited in how we conduct our business;


•	unable to raise additional debt or equity financing to operate during general economic or business downturns; or


•	unable to compete effectively or to take advantage of new business opportunities.

These restrictions may affect our ability to grow in accordance with our strategy. In addition, our financial results, our substantial indebtedness and our credit ratings could adversely affect the availability and terms of our financing.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Borrowings under our Senior Credit Facility are at variable rates of interest with an established LIBOR floor rate of 1.25% and may expose us to interest rate risk. If interest rates were to increase above the floor rate, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, would correspondingly decrease. Assuming $50.0 million of the Revolving Credit Facility is drawn, a one percent change in interest rates in excess of the floor established by the Senior Credit Facility would result in a $0.50 million change in annual interest expense on our indebtedness under our Senior Credit Facility. In the future, we may enter into interest rate swaps that involve the exchange of floating for fixed rate interest payments in order to reduce interest rate volatility. However, we may not maintain interest rate swaps with respect to all of our variable rate indebtedness, and any swaps we enter into may not fully mitigate our interest rate risk.

The Notes are effectively subordinated to our ~~and our~~ subsidiary guarantors’ indebtedness under our Senior Credit Facility and any other secured indebtedness of our company to the extent of the value of the property securing that indebtedness.

The Notes are not secured by any of our or our subsidiary guarantors’ assets. As a result, the Notes and the guarantees are effectively subordinated to our and the guarantors’ indebtedness under our Senior Credit Facility to the extent of the value of the assets that secure that indebtedness. As of December 31, ~~2013~~2014, we had approximately $~~561~~624.09 million of principal indebtedness outstanding under our Term Loan Facility, all of which is effectively senior to the Notes, and we had approximately $7.5 million in letters of credit outstanding under our Revolving Credit Facility, resulting in total unused availability of approximately $42.5 million under our Revolving Credit Facility. In addition, we may request incremental increases in commitments under the Senior Credit Facility in an aggregate principal amount up to (x) $75.0 million plus (y) up to an additional $75.0 million if the consolidated senior secured leverage ratio is less than or equal to 4.0:1.0, subject to certain conditions. Further, we may incur additional secured debt in the future under the indenture governing the Notes and under the credit agreement that governs our Senior Credit Facility if certain specified conditions are satisfied. The effect of this subordination is that upon a default in payment on, or the acceleration of, any of our secured indebtedness, or in the event of bankruptcy, insolvency, liquidation, dissolution or reorganization of our company or any subsidiary guarantor, the proceeds from the sale of assets securing our secured indebtedness will be available to pay obligations on the Notes only after all indebtedness under our Senior Credit Facility and such other secured debt has been paid in full. As a result, the holders of the Notes may receive less ratably than the holders of secured debt in the event of our or any of our subsidiary guarantors’ bankruptcy, insolvency, liquidation, dissolution or reorganization.

we had approximately $0.3 million in letters of credit outstanding under our Revolving Credit Facility, resulting in total unused availability of approximately $19.7 million under our Revolving Credit Facility. In addition, we may request incremental increases in commitments under the Senior Credit Facility in an aggregate principal amount up to (x) $75.0 million plus (y) up to an additional $75.0 million if the consolidated senior secured leverage ratio is less than or equal to 4.0:1.0, subject to certain conditions. Further, we may incur additional secured debt in the future under the indenture governing the Notes and under the credit agreement that governs our Senior Credit Facility if certain specified conditions are satisfied. The effect of this subordination is that upon a default in payment on, or the acceleration of, any of our secured indebtedness, or in the event of bankruptcy, insolvency, liquidation, dissolution or reorganization of our company or any subsidiary guarantor, the proceeds from the sale of assets securing our secured indebtedness will be available to pay obligations on the Notes only after all indebtedness under our Senior Credit Facility and such other secured debt has been paid in full. As a result, the holders of the Notes may receive less ratably than the holders of secured debt in the event of our or any of our subsidiary guarantors’ bankruptcy, insolvency, liquidation, dissolution or reorganization.

The Notes are structurally subordinated to all obligations of subsidiaries that do not become guarantors of the Notes.

The Notes are guaranteed by Truven Holding and by each of our ~~subsequently acquired or organized~~ subsidiaries, ~~if any,~~ that guarantee our Senior Credit Facility or that, in the future, guarantee our other indebtedness or indebtedness of any ~~future~~ subsidiary guarantor. Except for ~~any~~ such ~~future~~ subsidiary guarantors of the Notes, our subsidiaries, including our ~~two~~ foreign subsidiaries (~~neither~~none of which is a guarantor of the Notes or under the Senior Credit Facility), ~~and any other future non-domestic subsidiaries~~ will have no obligation, contingent or otherwise, to pay amounts due under the Notes or to make any funds available to pay those amounts, whether by dividend, distribution, loan or other payment. The Notes and guarantees are structurally subordinated to all indebtedness and other obligations of any non-guarantor subsidiary such that in the event of insolvency, liquidation, reorganization, dissolution or other winding up of any such subsidiary that is not a guarantor, all of that subsidiary’'s creditors (including trade creditors) would be entitled to payment in full out of that subsidiary’'s assets before we would be entitled to any payment.

In addition, the indenture that governs the Notes, subject to some limitations, permits any non-guarantor subsidiaries to incur additional indebtedness and did not contain any limitation on the amount of other liabilities, such as trade payables, that may be incurred by such subsidiaries.

As of the date of this Annual Report, we have ~~two~~ foreign subsidiaries, ~~neither~~that ofdo ~~which~~not ~~guarantees~~guarantee our obligations under our Senior Credit Facility or the Notes. Moreover, in the future, we may choose to acquire or form one or more subsidiaries in connection with the operation of our business that will be a restricted subsidiary. If any such future direct or indirect subsidiary is not a borrower under our Senior Credit Facility and does not guarantee obligations under our Senior Credit ~~Facility or guarantee our other indebtedness or indebtedness of any future subsidiary guarantors, it will be a non-subsidiary guarantor.~~

Facility or guarantee our other indebtedness or indebtedness of any future subsidiary guarantors, it will be a non- guarantor subsidiary.

In addition, any subsidiary guarantors will be automatically released from their guarantees upon the occurrence of certain events, including the following:

• the designation of any ~~future~~ subsidiary guarantor as an unrestricted subsidiary;


•	the release or discharge of any guarantee or indebtedness that resulted in the creation of the guarantee of the Notes by such subsidiary guarantor; or


•	the sale or other disposition, including the sale of substantially all the assets, of that subsidiary guarantor.

If any guarantee is released, no holder of the Notes will have a claim as a creditor against that subsidiary guarantor, and the indebtedness and other liabilities, including trade payables and preferred stock, if any, whether secured or unsecured, of that subsidiary guarantor will be effectively senior to the claim of any holders of the Notes.

We may not be able to repurchase the Notes upon a change of control.

Upon the occurrence of certain kinds of change of control events, we will be required to offer to repurchase all outstanding Notes at 101% of their principal amount, together with accrued and unpaid interest to the purchase date. Additionally, under our Senior Credit Facility, a change of control (as defined in the credit agreement governing our Senior Credit Facility) constitutes an event of default that permits the lenders to accelerate the maturity of borrowings under our credit agreement and the commitments to lend would terminate, and any of our future debt agreements may contain similar provisions. The source of funds for any purchase of the Notes and repayment of borrowings under our Senior Credit Facility would be our available cash or cash generated from our subsidiaries’ operations or other sources, including borrowings, sales of assets or sales of equity. We may not be able to repurchase the Notes upon a change of control because we may not have sufficient financial resources to purchase all of the debt securities that are tendered upon a change of control and repay our other indebtedness that will become due. If we fail to repurchase the Notes in that circumstance, we will be in default under the indenture that governs the Notes. We may require additional financing from third parties to fund any such purchases, and we may be unable to obtain financing on satisfactory terms or at all. Further, our ability to repurchase the Notes may be limited by law. In order to avoid the obligations to repurchase the Notes and events of default and potential breaches of our credit agreement that governs our Senior Credit Facility, we may have to avoid certain change of control transactions that would otherwise be beneficial to us.

credit agreement and the commitments to lend would terminate, and any of our future debt agreements may contain similar provisions. The source of funds for any purchase of the Notes and repayment of borrowings under our Senior Credit Facility would be our available cash or cash generated from our subsidiaries’ operations or other sources, including borrowings, sales of assets or sales of equity. We may not be able to repurchase the Notes upon a change of control because we may not have sufficient financial resources to purchase all of the debt securities that are tendered upon a change of control and repay our other indebtedness that will become due. If we fail to repurchase the Notes in that circumstance, we will be in default under the indenture that governs the Notes. We may require additional financing from third parties to fund any such purchases, and we may be unable to obtain financing on satisfactory terms or at all. Further, our ability to repurchase the Notes may be limited by law. In order to avoid the obligations to repurchase the Notes and events of default and potential breaches of our credit agreement that governs our Senior Credit Facility, we may have to avoid certain change of control transactions that would otherwise be beneficial to us.

In addition, certain important corporate events, such as leveraged recapitalizations, may not, under the indenture that governs the Notes, constitute a “change of control” that would require us to repurchase the Notes, even though those corporate events could increase the level of our indebtedness or otherwise adversely affect our capital structure, credit ratings or the value of the Notes.

The exercise by the holders of Notes of their right to require us to repurchase the Notes pursuant to a change of control offer could cause a default under the agreements governing our other indebtedness, including future agreements, even if the change of control itself does not, due to the financial effect of such repurchases on us. In the event a change of control offer is required to be made at a time when we are prohibited from purchasing Notes, we could attempt to refinance the borrowings that contain such prohibitions. If we do not obtain a consent or repay those borrowings, we will remain prohibited from purchasing Notes. In that case, our failure to purchase tendered Notes would constitute an event of default under the indenture that governs the Notes, which could, in turn, constitute a default under our other indebtedness. Finally, our ability to pay cash to the holders of Notes upon a repurchase may be limited by our then existing financial resources.

Holders of the Notes may not be able to determine when a change of control giving rise to their right to have the Notes repurchased has occurred following a sale of “substantially all” of our assets.

One of the circumstances under which a change of control may occur is upon the sale or disposition of “all or substantially all” of our assets. There is no precise established definition of the phrase “substantially all” under applicable law and the interpretation of that phrase will likely depend upon particular facts and circumstances. Accordingly, the ability of a holder of Notes to require us to repurchase its Notes as a result of a sale of less than all our assets to another person may be uncertain.

Federal and state fraudulent transfer laws may permit a court to void the Notes and/or the guarantees thereof, and if that occurs, you may not receive any payments on the Notes.

Federal and state fraudulent transfer and conveyance statutes may apply to the issuance of the Notes and the incurrence of the guarantees of the Notes. Under federal bankruptcy law and comparable provisions of state fraudulent transfer or conveyance laws, which may vary from state to state, the Notes or the guarantees thereof could be voided as a fraudulent transfer or conveyance if we or any of the guarantors, as applicable, (a) issued the Notes or incurred the guarantees with the intent of hindering, delaying or defrauding creditors or (b) received less than reasonably equivalent value or fair consideration in return for either issuing the Notes or incurring the guarantees and, in the case of (b) only, one of the following is also true at the time thereof:


•	we or any of the guarantors, as applicable, were insolvent or rendered insolvent by reason of the issuance of the Notes or the incurrence of the guarantees;


•	the issuance of the Notes or the incurrence of the guarantees left us or any of the guarantors, as applicable, with an unreasonably small amount of capital or assets to carry on the business;


•	we or any of the guarantors intended to, or believed that we or such guarantor would, incur debts beyond our or such guarantor’s ability to pay as they mature; or


•	we or any of the guarantors were a defendant in an action for money damages, or had a judgment for money damages docketed against us or the guarantor if, in either case, the judgment is unsatisfied after final judgment.

As a general matter, value is given for a transfer or an obligation if, in exchange for the transfer or obligation, property is transferred or a valid antecedent debt is secured or satisfied. A court would likely find that a guarantor did not receive reasonably equivalent value or fair consideration for its guarantee to the extent the guarantor did not obtain a reasonably equivalent benefit directly or indirectly from the issuance of the Notes.

We cannot be certain as to the standards a court would use to determine whether or not we or the guarantors were insolvent at the relevant time or, regardless of the standard that a court uses, whether the Notes or the guarantees would be subordinated to our or any of our guarantors’ other debt. In general, however, a court would deem an entity insolvent if:


•	the sum of its debts, including contingent and unliquidated liabilities, was greater than the fair saleable value of all of its assets;


•	the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or


•	it could not pay its debts as they became due.

If a court were to find that the issuance of the Notes or the incurrence of a guarantee was a fraudulent transfer or conveyance, the court could void the payment obligations under the Notes or that guarantee, could subordinate the Notes or that guarantee to presently existing and future indebtedness of ours or of the related guarantor or could require the holders of the Notes to repay any amounts received with respect to that guarantee. In the event of a finding that a fraudulent transfer or conveyance occurred, you may not receive any repayment on the Notes. Sufficient funds to repay the Notes may not be available from other sources, including remaining guarantors, if any. Further, the avoidance of the Notes could result in an event of default with respect to our and the guarantors’ other debt that could result in acceleration of that debt.

Finally, as a court of equity, the bankruptcy court may subordinate the claims in respect of the Notes to other claims against us under the principle of equitable subordination if the court determines that (1) the holder of Notes engaged in some type of inequitable conduct, (2) the inequitable conduct resulted in injury to our other creditors or conferred an unfair advantage upon the holders of Notes and (3) equitable subordination is not inconsistent with the provisions of the bankruptcy code.

A lowering or withdrawal of the ratings assigned to our debt securities by rating agencies may increase our future borrowing costs and reduce our access to capital.

Our debt has a non-investment grade rating, and any rating assigned could be lowered or withdrawn entirely by a rating agency if in that rating agency’s judgment, future circumstances relating to the basis of the rating, such as adverse changes in our business, so warrant. Consequently, real or anticipated changes in our credit ratings will generally affect the market value of the Notes. Credit ratings are not recommendations to purchase, hold or sell the Notes. Additionally, credit ratings may not reflect the potential effect of risks relating to the structure or marketing of the Notes. Any downgrade by either Moody’s or Standard & Poor’s could increase the interest rate on our Senior Credit Facility or decrease earnings and would likely make it more difficult or more expensive for us to obtain additional debt financing. If any credit rating initially assigned to the Notes is subsequently lowered or withdrawn for any reason, you may not be able to resell your Notes at a favorable price or at all.

Many of the covenants in the indenture that governs the Notes will not apply during any period in which the Notes are rated investment grade by both Moody’s and Standard & Poor’s.

Many of the covenants in the indenture that governs the Notes will not apply to us during any period in which the Notes are rated investment grade by both Moody’s and Standard & Poor’s, provided at such time no default or event of default has occurred and is continuing. These covenants will restrict, among other things, our ability to pay distributions, incur indebtedness and enter into certain other transactions. There can be no assurance that the Notes will ever be rated investment grade or, if they are rated investment grade, that the Notes will maintain these ratings. However, suspension of these covenants would allow us to engage in certain transactions that would not be permitted while these covenants were in force. To the extent the covenants are subsequently reinstated, any such actions taken while the covenants were suspended would not result in an event of default under the indenture that governs the Notes.

ITEM 1B - UNRESOLVED STAFF COMMENTS

None.

ITEM 2 - PROPERTIES

We do not own any real estate property as we lease all of our existing facilities. Our registered principal office is located in a leased office space in Ann Arbor, Michigan. Our operating facilities accommodate product development, marketing and sales, information technology, administration, training, graphic services and operations personnel. As of December 31, ~~2013~~2014, our three main facilities are as follows:



Facility Address	Square Feet	Purpose	Lease Start Date	Lease Expiration Date
777 East Eisenhower Parkway, Ann Arbor, MI 48108	172,004	Corporate headquarters/Operating facilities	6/1/2012	2/28/2017
1 North Dearborn Street, Suite 1400, Chicago, IL 60602	40,695	Operating facilities	6/1/2012	11/1/2020
6200 S. Syracuse Way, #300, Greenwood Village, CO 80111	102,631	Operating facilities	8/31/2013	7/31/2021

ITEM 3 - LEGAL PROCEEDINGS

From time to time, we become involved in legal proceedings arising in the ordinary course of our business. The following matters are the significant pending legal proceedings against us.

We have been named as a defendant in approximately 225 separate pharmaceutical tort lawsuits relating to the use of Reglan or its generic version, the first of which was filed in June 2010 and the most recent of which was filed in March 2012. All of these actions are pending in the Court of Common Pleas in Philadelphia County, Pennsylvania. In these matters, the plaintiffs complain that they sustained various injuries (including neurological disorders) as a result of their ingestion of Reglan. While a host of drug manufacturers and pharmacies are named as defendants in each of the suits, claims have also been asserted against so-called “Patient Education Monograph” (“PEM”) defendants, including us. It is generally alleged in all of the actions that certain PEM defendants provided Reglan “patient drug information” to pharmacies which, in turn, provided that drug information to the pharmacies’ customers, the plaintiffs in these actions. Plaintiffs further allege that the PEM defendants’ patient drug information did not provide adequate warning information about the use of Reglan. Other PEM defendants have also been named in these and other similar actions. In general, the lawsuits have been procedurally consolidated in Philadelphia as mass tort actions. To date none of the actions against us specifically identifies us as the author of a PEM that was supplied to a plaintiff. Instead, plaintiffs in these cases allege only that they read an unnamed PEM and, in effect, that it must have been published by at least one of the PEM defendants named in the action. 28

We have been named as a defendant in approximately 200 separate pharmaceutical tort lawsuits relating to the use of Reglan or its generic version, the first of which was filed by June 2010 and the most recent of which was filed in March 2012. All of these actions are pending in the Court of Common Pleas in Philadelphia County, Pennsylvania. In these matters, the plaintiffs complain that they sustained various injuries (including neurological disorders) as a result of their ingestion of Reglan. While a host of drug manufacturers and pharmacies are named as defendants in each of the suits, claims have also been asserted against so-called "Patient Education Monograph" ("PEM") defendants, including us. It is generally alleged in all of the actions that certain PEM defendants provided Reglan "patient drug information" to pharmacies which, in turn, provided that drug information to the pharmacies' customers, the plaintiffs in these actions. Plaintiffs further allege that the PEM defendants' patient drug information did not provide adequate warning information about the use of Reglan. Other PEM defendants have also been named in these and other similar actions. In general, the lawsuits have been procedurally consolidated in Philadelphia as mass tort actions. To date none of the actions against us specifically identifies us as the author of a PEM that was supplied to a plaintiff. Instead, plaintiffs in these cases allege only that they read an unnamed PEM and, in effect, that it must have been published by at least one of the PEM defendants named in the action.

Along with other PEM defendants, we made one dispositive motion to dismiss all the actions. While that motion to dismiss has been denied, it was without prejudice, permitting us to renew at a later stage in the litigation.

Pending the resolution of anappeals ~~appeal~~ by the co-defendant generic drug company defendants, the resolution of which will not affect the continuation of the actions against us, there has been no active discovery involving Truven. At this time, we believe that we have meritorious defenses to the claims in each of these actions.

29On December 15, 2011, Midwest Health Initiative, a client of our research business, requested arbitration of a dispute relating to our performance under a client services agreement. The arbitration proceedings were initiated in St. Louis and were settled by both parties during the fourth quarter of 2013. The settlement amount was immaterial.

OnPacific ~~December 15,~~Alliance ~~2011,~~Medical ~~Midwest~~Center ~~Health~~("PAMC") ~~Initiative,~~claimed ain ~~client~~2007 ofthat ~~our~~we ~~research~~failed ~~business,~~to ~~requested~~properly ~~arbitration~~submit some of aPAMC's ~~dispute~~data, ~~relating~~resulting in denial of Medicare reimbursement to ~~our~~PAMC ~~performance~~in ~~under~~the aapproximate ~~client~~amount ~~services~~of ~~agreement~~$600,000. ~~The~~PAMC ~~arbitration~~was ~~proceedings~~denied ~~were~~relief ~~initiated~~by administrative agencies and appealed to the U.S. District Court in Stthe Central District of California for judicial review, which was denied. ~~Louis~~ ~~and~~PAMC ~~were~~later ~~settled~~appealed byto ~~both~~and ~~parties~~was ~~during~~denied relief by the ~~fourth~~United ~~quarter~~States Court of ~~2013~~Appeals for the Ninth Circuit. The ~~settlement~~parties ~~was~~have ~~immaterial~~entered into a tolling agreement. If a claim is filed against us, we expect to defend it.

~~Pacific~~We ~~Alliance~~filed ~~Medical~~U.S. ~~Center~~trademark ~~(“PAMC”)~~applications ~~claimed~~for inthe ~~2007~~trademarks ~~that~~Truven weHealth ~~failed~~Analytics toand ~~properly~~Truven ~~submit~~Health ~~some~~Unify. In ofMay, ~~PAMC’s~~2013 ~~data~~and March, ~~resulting~~2014, inrespectively, ~~denial~~Truveris, Inc. (“Truveris”) filed notices of ~~Medicare~~opposition ~~reimbursement~~against tothese ~~PAMC~~applications in the ~~approximate~~Trademark ~~amount~~Trial ofand ~~$600,000.~~Appeal ~~PAMC~~Board ~~was~~of ~~denied~~the ~~relief~~United byStates ~~administrative~~Patent ~~agencies~~ and ~~appealed~~Trademark toOffice ~~the~~alleging ~~U.S.~~that ~~District~~the ~~Court~~Truven inHealth ~~the~~Analytics ~~Central~~and ~~District~~Truven ofHealth ~~California~~Unify ~~for~~applications ~~judicial~~create ~~review,~~a ~~which~~likelihood ~~was~~of ~~denied.~~confusion ~~PAMC~~with ~~later~~Truveris’s ~~appealed~~alleged tocommon ~~the~~law ~~United~~trademark ~~States~~Truveris ~~Court~~as ofwell ~~Appeals~~as ~~for~~its ~~the~~registered ~~Ninth~~trademarks ~~Circuit~~Trubid, ~~and~~Truguard, ~~that~~Trubuy, ~~appeal~~Trureport isand ~~currently pending~~Trurxpay. Truveris ~~The~~has ~~parties~~also ~~have~~alleged ~~entered~~that ~~into~~Truven’s ause ~~tolling~~of ~~agreement pending~~ the ~~outcome~~Truven ofalleged ~~PAMC’s~~mark ~~appeal.~~is Iflikely ato ~~claim~~cause isconfusion ~~filed~~with ~~against~~Truveris’s ~~us,~~alleged wetrademark. We ~~expect~~plan to vigorously defend ~~it.~~these claims.

We are involved in various other litigation and administrative proceedings that arise in the ordinary course of business. ~~Although~~While ~~the~~it ~~ultimate~~is not possible to predict the outcome of any of these ~~matters~~proceedings, ~~cannot~~the beCompany's ~~predicted~~management, in conjunction with ~~certainty~~its legal advisors, webased doon ~~not~~its ~~believe~~assessment ~~that~~of the ~~currently~~facts ~~expected~~and ~~outcome~~circumstances ofnow ~~any matter~~known, ~~lawsuit~~does ornot ~~claim~~believe that isany ~~pending~~of orthese ~~threatened~~proceedings, individually or ~~all~~in ofthe ~~them combined~~aggregate, will have a material adverse effect on ~~our~~the Company's financial ~~condition~~position, results of operations orand ~~liquidity~~cash flows.

ITEM 4 - MINE SAFETY DISCLOSURE

Not applicable.

PART II

ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

There is no established public trading market for the registrants' common stock. Truven Health Analytics Inc. is 100% owned by Truven Holding Corp, which is also 100% owned by VCPH Holding LLC.

The registrant has not paid any cash dividends in the past. We anticipate that any earnings will be retained for development of our business and we do not anticipate paying any cash dividends in the foreseeable future. Our credit facility, senior subordinated notes and senior secured notes all restrict our ability to issue cash dividends. Any future dividends declared would be at the discretion of our board of directors and would depend on our financial condition, results of operations, contractual obligations, the terms of our financing agreements at the time a dividend is considered, and other relevant factors.

ITEM 6 - SELECTED FINANCIAL DATA

The following table sets forth our selected historical financial and other data for the periods and at the dates indicated:

The term Predecessor Period refers to all periods related to the Thomson Reuters Healthcare business (the Predecessor) prior to and including the date of the closing of the Prior Acquisition on June 6, 2012. We have derived the statement of comprehensive income (loss) and cash flow data for the ~~fiscal years ended December 31, 2011 and 2010 and for the~~ period from January 1 to June 6, 2012, ~~and~~years ~~the~~ended ~~balance sheet data as of~~ December 31, 2011 and 2010 from our Predecessor’s audited combined financial statements.

The term Successor Period refers to all periods from inception of Truven Holding (April 20, 2012 onwards), which includes all periods of Truven after the closing of the Prior Acquisition on June 6, 2012. Following the Prior Acquisition and the related Merger, Truven (formerly TRHI) owns certain other assets and liabilities of the Thomson Reuters Healthcare business and is a direct wholly-owned subsidiary Truven Holding (the Successor). We have derived the balance sheet data as of December 31, 2014 , 2013 and ~~December 31,~~ 2012, and the statement of comprehensive ~~income (~~loss) and cash flow data for the ~~period~~years ~~from~~ended ~~January 1, 2013 to~~ December 31, 2014, 2013, and April 20, 2012 to December 31, 2012 from Successor’s audited consolidated financial statements included elsewhere in this Annual Report, which represent the consolidated financial position of Truven Holding and its subsidiaries.

The selected historical financial and other data included below and elsewhere in this Annual Report are not necessarily indicative of future results. The selected financial data presented below has been derived from financial statements that have been prepared in accordance with GAAP and should be read with the information included under the headings “Risk Factors”, “Management’s discussion and analysis of financial condition and results of operations” and with our audited consolidated financial statements and the related notes thereto, included elsewhere in this Annual Report.



	Year ended December 31,			Year ended December 31,			From inception (April 20, 2012) to December 31,			January 1, 2012 to June 6,			Year ended December 31,			Year ended December 31,
	2014			2013			2012			2012			2011			2010
	Successor						Predecessor

Revenues, net (a)	$	544,475		$	492,702		$	241,786		$	208,998		$	483,207		$	450,008
Operating costs and expenses Cost of revenues, excluding depreciation and amortization (b)	(292,999		)	(265,541		)	(141,558		)	(112,050		)	(245,609		)	(233,430		)
Selling and marketing, excluding depreciation and amortization (c)	(57,413		)	(56,157		)	(30,958		)	(25,917		)	(54,814		)	(55,975		)
General and administrative, excluding depreciation and amortization (d)	(55,937		)	(41,042		)	(13,042		)	(27,173		)	(44,867		)	(32,634		)
Allocation of costs from Predecessor Parent and affiliates (e)	—			—			—			(10,003		)	(34,496		)	(33,358		)
Depreciation (f)	(22,350		)	(21,219		)	(6,700		)	(6,805		)	(14,851		)	(13,418		)
Amortization of developed technology and content (g)	(38,752		)	(31,894		)	(15,470		)	(12,460		)	(24,208		)	(23,660		)
Amortization of other identifiable intangible assets (h)	(45,402		)	(34,460		)	(19,527		)	(8,226		)	(19,691		)	(20,112		)
Goodwill impairment (i)	—			(366,662		)	—			—			—			—
Other operating expenses (j)	(20,784		)	(35,038		)	(49,622		)	(18,803		)	(20,002		)	(1,995		)
Total operating costs and expenses	(533,637		)	(852,013		)	(276,877		)	(221,437		)	(458,538		)	(414,582		)
Operating income (loss)	10,838			(359,311		)	(35,091		)	(12,439		)	24,669			35,426
Net interest income from Predecessor Parent (k)	—			—			—			—			134			156
Interest expense (l)	(69,616		)	(70,581		)	(49,014		)	—			(63		)	—
Interest income	—			—			—			3			—			60
Other finance costs	(930		)	(24		)	—			—			—			—
Income (Loss) before income taxes	(59,708		)	(429,916		)	(84,105		)	(12,436		)	24,740			35,642
Benefit from (Provision for) income taxes	22,686			84,927			29,993			4,803			(9,859		)	(13,989		)
Net income (loss)	$	(37,022	)	$	(344,989	)	$	(54,112	)	$	(7,633	)	$	14,881		$	21,653

Other comprehensive income (loss):
Foreign currency translation adjustments	(139		)	(165		)	—			—			—			—
Total comprehensive income (loss)	$	(37,161	)	$	(345,154	)	$	(54,112	)	$	(7,633	)	$	14,881		$	21,653

Cash flow data:
Net cash provided by (used in) operating activities	$	45,217		$	(1,365	)	$	27,352		$	17,806		$	85,017		$	97,684
Net cash used in investing activities (m)	(142,067		)	(43,785		)	(1,280,672		)	(10,285		)	(40,521		)	(43,925		)
Net cash provided by (used in) financing activities	99,338			31,765			1,277,125			(7,513		)	(44,659		)	(55,227		)

Balance sheet data:
Cash and cash equivalents	$	12,604		$	10,255		$	23,805		n.a.			$	70		$	233
Working capital deficit (n)	(45,892		)	(59,762		)	(80,628		)	n.a.			(75,481		)	(75,444		)
Total assets	1,233,089			1,164,603			1,597,127			n.a.			590,875			800,611
Long-term debt, net of original issue discount (o)	977,722			872,258			837,972			n.a.			—			—
Total equity	47,123			79,283			419,252			n.a.			354,299			568,089

	Year ended December 31,			From inception (April 20, 2012) to December 31,			January 1, 2012 to June 6,			Year ended December 31,			Year ended December 31,
	2013			2012			2012			2011			2010
	Successor						Predecessor
Revenues, net	$	492,702		$	241,786		$	208,998		$	483,207		$	450,008
Operating costs and expenses Cost of revenues, excluding depreciation and amortization (a)	(265,541		)	(141,558		)	(112,050		)	(245,609		)	(233,430		)
Selling and marketing, excluding depreciation and amortization (b)	(56,157		)	(30,958		)	(25,917		)	(54,814		)	(55,975		)
General and administrative, excluding depreciation and amortization (c)	(41,042		)	(13,042		)	(27,173		)	(44,867		)	(32,634		)
Allocation of costs from Predecessor Parent and affiliates (d)	—			—			(10,003		)	(34,496		)	(33,358		)
Depreciation	(21,219		)	(6,700		)	(6,805		)	(14,851		)	(13,418		)
Amortization of developed technology and content	(31,894		)	(15,470		)	(12,460		)	(24,208		)	(23,660		)
Amortization of other identifiable intangible assets (e)	(34,460		)	(19,527		)	(8,226		)	(19,691		)	(20,112		)
Goodwill impairment (l)	(366,662		)	—			—			—			—
Other operating expenses (f)	(35,038		)	(49,622		)	(18,803		)	(20,002		)	(1,995		)
Total operating costs and expenses	(852,013		)	(276,877		)	(221,437		)	(458,538		)	(414,582		)
Operating income (loss)	(359,311		)	(35,091		)	(12,439		)	24,669			35,426
Net interest income from Predecessor Parent (g)	—			—			—			134			156
Interest expense	(70,581		)	(49,014		)	—			(63		)	—
Interest income (h)	—			—			3			—			60
Other finance costs	(24		)	—			—			—			—
Income (Loss) before income taxes	(429,916		)	(84,105		)	(12,436		)	24,740			35,642
Benefit from (Provision for) income taxes	84,927			29,993			4,803			(9,859		)	(13,989		)
Net income (loss)	$	(344,989	)	$	(54,112	)	$	(7,633	)	$	14,881		$	21,653
Other comprehensive income (loss):
Foreign currency translation adjustments	$	(165	)	$	—		$	—		$	—		$	—
Total comprehensive income (loss)	$	(345,154	)	$	(54,112	)	$	(7,633	)	$	14,881		$	21,653
Cash flow data:
Net cash provided by (used in) operating activities	$	(1,365	)	$	27,352		$	17,806		$	85,017		$	97,684
Net cash used in investing activities (i)	$	(43,785	)	(1,280,672		)	(10,285		)	(40,521		)	(43,925		)
Net cash provided by (used in) financing activities	$	31,765		1,277,125			(7,513		)	(44,659		)	(55,227		)
Balance sheet data:
Cash and cash equivalents	$	10,255		$	23,805		n.a.			$	70		$	233
Working capital deficit(j)	$	(59,762	)	(80,628		)	n.a.			(75,481		)	(75,444		)
Total assets	$	1,164,603		1,597,127			n.a.			590,875			800,611
Long-term debt, net of original issue discount(k)	$	872,258		837,972			n.a.			—			—
Total equity	$	79,283		419,252			n.a.			354,299			568,089

Includes (i) subscription revenues from sales of products and services that are delivered under a contract over a period of time, which are recognized on a straight line basis over the term of the subscription, (ii) revenues from implementation and hosting arrangement that comprised: (1) the design, production, testing and installation of the customer's database (implementation phase); and (2) the provision of ongoing data management and support services in conjunction with the licensed data and subscription of software data or application (on-going service phase, hosting or subscription).


b.	Includes all personnel and other costs of revenue, including but not limited to, client support, client operations, product management, royalties, allocation of technology support costs administered by our Predecessor relating to market data and professional service costs.


c.	Includes all personnel and other costs related to sales and marketing, including but not limited to, sales and marketing staff, commissions and marketing events.


d.	Includes all personnel and other costs related to general administration as well as costs shared across the organization, including but not limited to technology, finance and strategy.


e.	As described in Note 18 to the financial statements, included elsewhere in this Annual Report, our Predecessor historically engaged in related party transactions with Thomson Reuters relative to certain support services, including among others, finance, accounting, treasury, tax, transaction processing, information technology, legal, human resources, payroll, insurance and real estate management.


f.	Includes depreciation of computer hardware, furniture, fixture and equipments, and leasehold improvements.


g.	Includes amortization of developed technology and contents used internally and capitalized once a project has progressed beyond a conceptual, preliminary stage to that of application development stage. Costs that qualify for capitalization include both internal and external costs, but are limited to those that are directly related to a specific project.


h.	Includes amortization of definite-lived trade names, acquired customer relationships, backlog and noncompete agreements.

On November 1, 2013, we performed our annual goodwill impairment test and determined that the carrying value of all our reporting units exceeded our fair value due to lower-than-expected growth in revenue and cash flow in fiscal year 2013 resulting from certain selling cycle delays, particularly in the government sector, uncertainty in the healthcare sector related to the Patient Protection and Affordable Care Act, higher-than-expected costs due to significant investments in technology infrastructure, as well as an increase in the discount rate used in the discounted cash flow analysis as compared to the rate used in the prior year’s analysis. As a result, we recorded an aggregate non-cash goodwill impairment charge of $366.7 million in the fourth quarter of 2013.

Other operating expenses in the Predecessor period includes related disposal costs incurred as part of the Prior Acquisition process (comprised of audit services, accounting and consulting services and legal fees), severance and retention bonuses relating to the Prior Acquisition, and costs relating to other acquisition activities of our Predecessor. Other operating expenses in 2012 and 2013 (Successor periods) includes direct costs related to the Prior Acquisition in 2012 as well as costs incurred related to technology and other costs in connection with our transition to a standalone business. These costs include nonrecurring expenses associated with data center migration and separating infrastructure from Thomson Reuters, costs related to the transitional service agreement with Thomson Reuters and related to rebranding, consulting, professional fees and Sponsor fees. Other operating expenses in 2014 includes professional fees related to the acquisition of Simpler, HBE and JWA in 2014, certain costs related to business improvement processes, and certain costs associated with data migration, asset write‑offs, losses on discontinued projects and Sponsor fees. Refer to Note 14 to the consolidated financial statements, included elsewhere in this Annual Report.


k.	Prior to the Prior Acquisition, certain of our Predecessor’s cash management transactions with Thomson Reuters were subject to written loan agreements specifying repayment terms and interest payments, under which Thomson Reuters was required to pay interest to our Predecessor equal to the average monthly rate earned by Thomson Reuters

a.on ~~Includes~~its ~~all~~cash ~~personnel~~investments ~~and~~held ~~other~~with ~~costs~~its ofprimary ~~revenue,~~U.S. ~~including~~banker. ~~but~~Interest ~~not~~on ~~limited~~these ~~to,~~notes ~~client~~is ~~support,~~reflected ~~client~~in ~~operations,~~‘‘Interest ~~product~~income ~~management,~~from ~~royalties,~~Predecessor ~~allocation~~Parent’’ ofin ~~technology~~our ~~support~~Predecessor’s ~~costs~~combined ~~administered~~statement byof ~~Thomson~~operations. ~~Reuters~~These ~~relating~~loan toagreements ~~market~~were ~~data~~satisfied ~~and~~upon ~~professional~~completion ~~service~~of ~~costs~~the Prior Acquisition.

bl. ~~Includes~~Interest ~~all~~earned ~~personnel~~or ~~and~~incurred ~~other costs~~ related to ~~sales~~third-party ~~and marketing, including but not limited to, sales and marketing staff, commissions and marketing events~~transactions.

cm. Includes ~~all~~purchase ~~personnel~~price of Prior Acquisition in 2012 and ~~other~~acquisition ~~costs~~of ~~related~~Simpler, toHBE ~~general~~and ~~administration~~JWA asin ~~well~~2014. asCapital ~~costs~~expenditures ~~shared~~includes ~~across~~purchases ~~the~~of ~~organization~~hardware, ~~including~~software ~~but~~and ~~not~~costs ~~limited~~of todeveloped technology, ~~finance~~ and ~~strategy~~contents.

dn. AsWorking ~~described~~capital inis ~~Note~~defined 18as tocurrent ~~the~~assets ~~financial~~excluding ~~statements,~~cash ~~included~~and ~~elsewhere~~cash inequivalents ~~this~~and ~~Annual~~deferred ~~Report,~~tax ~~our~~assets ~~Predecessor~~minus ~~historically~~current ~~engaged~~liabilities inexcluding ~~related party transactions with Thomson Reuters relative to certain support services~~debt, ~~including~~capital ~~among~~lease ~~others,~~obligations ~~finance,~~and ~~accounting, treasury,~~ tax, ~~transaction~~related ~~processing, information technology, legal, human resources, payroll, insurance and real estate management~~liabilities.

eo. ~~Includes~~Total ~~amortization~~debt ofincludes ~~definite~~current and non-~~lived~~current ~~trade~~portion, ~~names~~net of original issue discount of $14.3 million, ~~database~~$15.9 ~~content~~million and $14.2 million as of December 31, ~~publishing~~2014, ~~rights~~December 31, 2013 and ~~acquired~~December ~~customer~~31, ~~relationship~~2012, ~~assets~~respectively.

f. Includes related disposal costs incurred as part of the Acquisition process (comprised of audit services, accounting and consulting services and legal fees), severance and retention bonuses relating to the Acquisition, costs relating to other acquisition activities in the Predecessor and Successor Periods (such as legal fees and due diligence costs) and other costs which represent severance, consulting expenses and technology expenses as part of certain restructuring activities. Refer to Note 14 to the financial statements included elsewhere in this Annual Report.

g. Prior to the Acquisition, certain of our Predecessor’s cash management transactions with Thomson Reuters were subject to written loan agreements specifying repayment terms and interest payments, under which Thomson Reuters was required to pay interest to our Predecessor equal to the average monthly rate earned by Thomson Reuters on its cash investments held with its primary U.S. banker. Interest on these notes is reflected in “Interest income from Predecessor Parent” in our Predecessor’s combined statement of operations. These loan agreements were satisfied upon completion of the Acquisition.

h. Interest earned or incurred related to third-party transactions.

i. Includes capitalized software and capitalized hardware related infrastructure as the Company transitioned to a standalone business and notes receivables from VCPH Holding LLC.

j. Working capital is defined as current assets excluding cash and cash equivalents minus current liabilities excluding debt and tax related liabilities.

k. Total debt includes current and non-current portion, net of original issue discount of $15.9 million and $14.2 million as of December 31, 2013 and December 31, 2012, respectively.

l. On November 1, 2013, the Company performed its annual goodwill impairment test and determined that the carrying value of all the three reporting units exceeded its fair value due to lower-than-expected growth in revenue and cash flow in fiscal year 2013 resulting from certain selling cycle delays, particularly in the government sector, uncertainty in the healthcare sector related to the Patient Protection and Affordable Care Act, higher-than-expected costs due to significant investments in technology infrastructure, as well as an increase in the discount rate used in the discounted cash flow analysis as compared to the rate used in the prior year’s analysis. As a result, the Company recorded an aggregate non-cash goodwill impairment charge of $366.7 million in the fourth quarter of 2013.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations covers periods prior to and including the closing of the Prior Acquisition on June 6, 2012 (the Predecessor Period) and periods from the inception of Truven Holding (April 20, 2012) through December 31, ~~2013~~2014, which was after the closing of the Prior Acquisition (the Successor Period). ~~Accordingly,~~ ~~the~~The following discussion and analysis of the Predecessor Period does not reflect the significant impact that the Acquisition had on us, including, without limitation, increased leverage, the impact of acquisition accounting and debt service requirements. You should be read ~~the following discussion and analysis~~ in conjunction with our consolidated financial statements ~~as of December 31~~, ~~2013,~~ and the related notes thereto included elsewhere in this ~~annual~~Annual ~~report~~Report. ~~The~~ ~~Successor 's consolidated financial statements for the period ended December 31, 2013 represent the consolidated financial position of Truven Holding and its subsidiaries.~~ This discussion and analysis contains forward-looking statements that are based on management's current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of various factors.

business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of various factors.

Overview

We are a leading ~~provider~~analytics ofcompany ~~healthcare~~focused ~~data~~on ~~and~~improving ~~analytics~~quality ~~solutions~~ and ~~services~~decreasing tocosts ~~key~~across ~~constituents~~the inhealthcare industry. Through the ~~U.S. healthcare~~better ~~system,~~use ~~including~~of ~~federal~~analytics ~~government~~and ~~agencies~~data, ~~state~~we ~~government~~enable ~~agencies,~~our ~~employers~~clients ~~and~~to ~~health~~reduce ~~plans~~costs, ~~hospitals~~manage risk, ~~clinicians~~improve operational performance, enhance patient outcomes and ~~pharmaceutical~~increase ~~companies~~transparency. We ~~Our~~combine ~~solutions~~our analytic expertise, information assets and technology services ~~empower~~to offer our ~~customers~~clients todata ~~make~~insights ~~decisions~~and toanalytical ~~improve~~solutions. ~~the cost~~Furthermore, ~~performance~~we ~~and~~increase ~~quality~~the value of ~~healthcare~~our ~~through~~analytical ~~data~~solutions with performance improvement and ~~data~~analytic ~~analytics.~~consulting expertise.

The Prior Acquisition

On April 23, 2012, VCPH Holding Corp. (now known as Truven Holding~~, the “Company”~~), an affiliate of Veritas ~~Capital (the “Sponsor”)~~, entered into the Stock and Asset Purchase Agreement with ~~Thomson Reuters U.S. Inc. (“~~TRUSI”) and Thomson Reuters Global Resources, both affiliates of the Thomson Reuters ~~Corporation (“Thomson Reuters”) (“the Stock and Asset Purchase Agreement”)~~, which VCPH Holding Corp. assigned to Wolverine on May 24, 2012. Pursuant to the Stock and Asset Purchase Agreement, on June 6, 2012, Wolverine acquired 100% of the equity interests of ~~Thomson Reuters (Healthcare) Inc. (“~~TRHI”) and certain other assets and liabilities of the Thomson Reuters Healthcare business ~~(the “Acquisition”)~~. Upon the closing of the Prior Acquisition, Wolverine merged with and into TRHI, with TRHI surviving the Merger as a direct wholly-‑owned subsidiary of VCPH Holding Corp. (now known as Truven Holding), and subsequently changed its name to Truven Health Analytics Inc. ~~(“Truven”).~~ Following the Merger, the assets and liabilities acquired are now held by Truven (formerly TRHI), which remains a direct wholly-‑owned subsidiary of Truven Holding. Truven Holding was formed on April 20, 2012 for the purpose of consummating the Prior Acquisition. We financed the Prior Acquisition and paid related costs and expenses associated with the Prior Acquisition and the financing as follows: (i) approximately $464.4 million in common equity was contributed by entities affiliated with the Sponsor and certain co-‑investors; (ii) $527.6 million principal amount was borrowed under the Term Loan Facility; and (iii) $327.1 million principal amount of Old Notes were issued.

In connection with the offering of the Notes and the Acquisition, VCPH Holding Corp. (now known as Truven Holding) and Wolverine entered into the Senior Credit Facility, which consisted of (i) the $527.6 million Term Loan Facility and (ii) the $50.0 million Revolving Credit Facility. In connection with the Merger, Truven succeeded to the obligations of Wolverine under (i) the credit agreement that governs our Senior Credit Facility and (ii) the indenture that governs the Notes. 33

In ~~accordance~~connection with the ~~acquisition~~offering ~~method~~ of ~~accounting, following~~ the ~~Acquisition~~existing onnotes ~~June 6,~~and ~~2012, we, with~~ the ~~assistance~~Prior ~~of a third-party valuation firm~~Acquisition, ~~have~~VCPH ~~estimated~~Holding ~~the~~Corp. ~~fair~~(now ~~values~~known ofas ~~acquired~~Truven ~~assets~~Holding) and ~~assumed~~Wolverine ~~liabilities~~entered ~~based~~into on the ~~actual~~Senior ~~tangible~~Credit ~~and~~Facility, ~~identifiable~~which ~~intangible~~consisted ~~assets and liabilities that existed as~~ of ~~June~~(i) 6,the ~~2012~~$527.6 million ~~These~~Term ~~fair~~Loan ~~values~~Facility ~~were finalized~~ and ~~are reflected in our balance sheet on~~ (ii) the ~~date~~$50.0 million ofRevolving ~~the~~Credit ~~Acquisition~~Facility. In ~~this~~connection ~~process,~~with wethe ~~applied~~Merger, ~~certain~~Truven ~~assumptions~~succeeded ~~as inputs~~ to the ~~valuation~~obligations ~~calculations. These assumptions represent our best estimates based on historic performance~~ of ~~the~~Wolverine ~~respective~~under ~~reporting segments, trends within~~ (i) the ~~market~~credit ~~place~~agreement ~~and our consideration of the potential impact of political, economic and social factors~~ that ~~are~~governs ~~considered beyond~~ our ~~control.~~Senior ~~Significant~~Credit ~~assumptions~~Facility ~~included within our discounted cash flow valuation include revenue growth rates, operating profit margins, implied rate of return used~~ and ~~terminal~~(ii) the ~~growth~~indenture ~~rates. The~~that ~~impact~~governs ofthe ~~this~~Old ~~acquisition accounting results in certain differences between Predecessor and Successor financial statements discussed herein, and thereby affects comparability between such statements~~Notes.

In accordance with the acquisition method of accounting, following the Prior Acquisition on June 6, 2012, we, with the assistance of a third‑party valuation firm, estimated the fair values of acquired assets and assumed liabilities based on the actual tangible and identifiable intangible assets and liabilities that existed as of June 6, 2012. These fair values were finalized and are reflected in our balance sheet on the date of the Prior Acquisition. In this process, we applied certain assumptions as inputs to the valuation calculations. These assumptions represent our best estimates based on historic performance of the respective reporting segments, trends within the market place and our consideration of the potential impact of political, economic and social factors that are considered beyond our control. Significant assumptions included within our discounted cash flow valuation include revenue growth rates, operating profit margins, implied rate of return used and terminal growth rates. The impact of this acquisition accounting results in certain differences between Predecessor and Successor ~~Periods~~financial statements discussed herein, and thereby affects comparability between such statements.

~~Successor~~Predecessor ~~Period-The consolidated financial statements as of~~ and ~~for~~successor ~~the year ended December 31, 2013, and for the~~ periods from April 20, 2012 through December 31, 2012 and January 1, 2013 through December 31, 2013 include the accounts of Truven Holding from inception and its subsidiaries subsequent to the closing of the Acquisition on June 6, 2012. The consolidated financial statements of the Successor reflect the Acquisition under the acquisition method of accounting, in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, Business Combinations.

Successor Period. The consolidated financial statements for the year ended December 31, 2014 and 2013, and for the periods from April 20, 2012 (inception) through December 31, 2012 include the accounts of Truven Holding from inception and its subsidiaries subsequent to the closing of the Prior Acquisition on June 6, 2012. The consolidated financial statements of the Successor reflect the Prior Acquisition under the acquisition method of accounting, in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, Business Combinations.

Predecessor Period. The accompanying combined financial statements of the Thomson Reuters Healthcare business prior to the Prior Acquisition, include the combined financial statements of TRHI and certain assets owned by subsidiaries of Thomson Reuters.

The combined financial statements of our Predecessor and the consolidated financial statements of the Successor included in this report have been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”). The combined financial statements of our Predecessor have been derived from the accounting records of Thomson Reuters using historical results of operations and the historical bases of assets and liabilities, adjusted as necessary to conform to GAAP. All significant transactions between our Predecessor and other Thomson Reuters entities are included in our Predecessor’s combined financial statements. Management believes the assumptions underlying our Predecessor’s combined financial statements are reasonable. However, the combined financial statements may not necessarily reflect what our Predecessor’s results of operations, financial position and cash flows would have been had it operated as a standalone company without the shared resources of Thomson Reuters for the periods presented.

~~Predecessor~~Our Period-The accompanying combined financial statements of the Thomson Reuters Healthcare business (our “Predecessor”) prior to the Acquisition, include the combined financial statements of TRHI and certain assets owned by subsidiaries of Thomson Reuters Corporation (“Thomson Reuters” or the “Predecessor Parent”).segments

The ~~combined~~determination ~~financial~~of ~~statements~~reportable ofsegments ~~our~~was ~~Predecessor~~based ~~and~~on the ~~consolidated~~discrete financial ~~statements~~information ofprovided ~~the~~to ~~Successor included in this report have been prepared in conformity with generally accepted accounting principles in~~ the ~~Unites~~Chief ~~States~~Operating ofDecision ~~America~~Maker (~~“GAAP”~~the "CODM"). The ~~combined~~Chief ~~financial~~Executive ~~statements~~Officer ofhas ~~our Predecessor have been derived from~~ the ~~accounting~~authority ~~records~~for ofresource ~~Thomson~~allocation ~~Reuters~~and ~~using~~assessment ~~historical results~~ of ~~operations and~~ the ~~historical~~Company’s ~~bases~~performance ~~of assets~~ and ~~liabilities~~is, ~~adjusted~~therefore, asthe ~~necessary~~CODM. The toCompany’s ~~conform~~segment tostructure ~~GAAP.~~enables ~~All~~us ~~significant~~to ~~transactions~~more ~~between~~effectively ~~our~~focus ~~Predecessor~~on business and ~~other~~market ~~Thomson~~facing ~~Reuters~~opportunities ~~entities~~and ~~are~~to ~~included~~simplify in our ~~Predecessor's~~business ~~combined~~decision-making ~~financial statements~~process. The ~~Management believes the assumptions underlying our Predecessor~~Company's ~~combined~~reportable ~~financial~~segments ~~statements~~ are ~~reasonable. However, the combined financial statements may not necessarily reflect what our Predecessor's results of operations, financial position and cash flows would have been had it operated~~ as aindicated ~~standalone company without the shared resources of Thomson Reuters for the periods presented.~~below:

~~Recent Developments~~Commercial

InThe ~~January~~Commercial ~~2014, management initiated a plan that will change the Company’s~~ segment ~~structure~~provides inanalytic ~~mid~~solutions ~~2014 with the objective of focusing on more effective business~~ and ~~market~~services ~~facing opportunities and~~ to ~~simplify~~improve the ~~business~~cost, ~~decision-making~~quality, ~~process. The operating segments are expected to be realigned to Commercial~~ and ~~Government~~effectiveness ~~division~~of ~~structures~~healthcare ~~that~~for ~~will~~commercial beorganizations ~~headed~~across ~~by a separate segment manager directly reporting to~~ the ~~Chief~~healthcare ~~Operating~~industry ~~Decision~~including ~~Maker~~providers, ~~("CODM"). The~~integrated ~~Commercial~~delivery ~~segment~~networks, ~~is expected to include Payer’s Employer/HealthPlan and Pharma channels~~insurers, ~~and~~professional ~~the Hospitals and Clinicians business. These businesses are expected to benefit from each other and are viewed as one business that can provide integrated or combined~~ services toorganizations, ahealthcare ~~broader~~exchanges, ~~market. The~~manufacturers, ~~Government segment will be mainly comprised of Payer’s Federal~~ and ~~State Government channels~~corporations.

In February 2014, the company formed an integration task force to start the implementation plan for the various functional areas and will work with managers and employees to build and leverage best practices currently being executed. As changes are currently being evaluated and implemented, the current operating/reporting segments will be operating/reporting the same way and the CODM will continue to review the results of operations of the segments based on the current reporting segment structure until such time that the new segments are fully implemented.Government ~~Concurrent with the change in operating/reporting segments, management is also currently evaluating the impact of these changes in the future financial statements.~~

The Government segment provides integrated analytic solutions and services to improve the cost, quality, and effectiveness of healthcare for federal and state Government channels (e.g. Centers for Medicare & Medicaid Services and state Medicaid agencies) and federally owned and operated healthcare facilities. Our ~~Segments~~sales and client services are tailored to meet the specific procurement, sales and support requirements of the government market.

~~For~~Center/shared ~~the~~services ~~periods~~consist ~~presented,~~of weitems ~~operated~~that ~~and~~are ~~managed~~not ~~our~~directly ~~business~~attributable ~~through~~to ~~three~~ reportable segments, such as corporate administrative costs and elimination of intercompany transactions. ~~The~~Additionally, ~~determination~~corporate ofexpenses ~~reportable~~may ~~segments~~include ~~was~~other ~~based~~non-recurring onor ~~the~~non-operational ~~discrete~~activity ~~financial~~that ~~information~~the ~~about~~CODM ~~each~~excludes in assessing operating segment ~~that~~performance. ~~was~~These ~~regularly~~expenses, ~~reviewed~~along bywith ~~the~~depreciation ~~CODM~~and amortization, other operating income/expense and other non-operating activity such as interest expense/income, are not considered in ~~order~~the tomeasure ~~allocate~~of ~~resources~~the segments’ operating performance, but are shown herein as reconciling items to the ~~segment~~Company’s ~~and~~consolidated toloss ~~assess~~before ~~its~~income ~~performance~~taxes.

The ~~Chief~~accounting ~~Executive~~policies ~~Officer~~for ~~has~~ the ~~authority~~reportable ~~for~~segments ~~resource~~are ~~allocation and assessment of~~ the ~~Company's~~same ~~performance~~as ~~and~~those isfor ~~therefore~~ the ~~CODM~~consolidated Company. The ~~CODM~~Company’s ~~evaluates~~operations ~~the~~and ~~performance~~customers ofare ~~the segments~~ based onprimarily ~~segment~~in ~~operating~~the ~~income.~~United States.

~~The~~2014 ~~Company's business segments, which primarily operate in the United States, are as follows for the periods presented:~~ Acquisitions

~~Payer-~~Simpler The Payer segment provides information and solutions to employers and health plans, pharmaceutical companies, the federal government and state governments to improve the cost and quality of healthcare. These solutions focus on care and risk management, which enhance diagnosis and treatment decisions.Acquisition

~~Hospitals-~~On ~~The~~April ~~Hospitals~~11, ~~segment~~2014, ~~provides~~we ~~data,~~acquired ~~analytics,~~Simpler. ~~solutions~~Simpler ~~and~~provides ~~value~~"Lean" ~~added~~enterprise transformation consulting services. toThis ~~healthcare~~strategic ~~providers.~~acquisition ~~These~~combines ~~solutions~~the ~~benchmark~~Company's ~~customer~~market-leading ~~data~~cost and ~~evaluate~~quality analytics in the ~~customer~~commercial segment with Simpler's performance ~~against~~management ~~peer~~consulting ~~organizations~~capabilities to deliver performance improvement solutions to healthcare and commercial customers. ~~Typical~~We ~~benchmarks~~acquired ~~include~~all ~~costs~~of the outstanding equity of Simpler for a purchase price of $81.1 million, ~~operational~~including ~~efficiencies~~a working capital adjustment of $1.1 million, ~~clinical~~and ~~performance~~the issuance of equity interests by Holdings LLC, the direct parent of the Company, of $3.7 million to Simpler. The related acquisition costs amounted to $3.6 million. We financed the acquisition and ~~re-admissions~~related costs and expenses through an increase in the Tranche B Term Loans under the Senior Credit Facility. We did not assume any indebtedness in connection with the Simpler Transaction.

~~Clinicians-~~JWA The Clinicians segment delivers high value content, solutions and sophisticated decision support tools primarily to hospitals and health systems for use by nurses, physicians and pharmacists. These solutions and tools are aimed at improving patient care, reducing medication errors and enhancing disease and condition management.Acquisition

On October 31, 2014, we acquired JWA, a company that provides "Lean" healthcare consulting services. We acquired all of the outstanding equity of JWA for a cash purchase price of $15.3 million, including a $1.2 million working capital adjustment and $0.1 million holdback payment (the "JWA Transaction"). Truven also agreed to pay $1.9 million in three annual payments to a former major shareholder of JWA who became Truven's employee, as long as the former major shareholder remained with Truven for the next three years. The related acquisition costs amounted to $0.5 million. We did not assume any indebtedness in connection with the JWA Transaction. We financed the acquisition and related costs and expenses through the issuance of the Additional Notes.

HBE Acquisition

On November 12, 2014, we acquired HBE, a leading provider of stakeholder information that is essential for life sciences companies to gain drug approval, reimbursement, and adoption, for a cash purchase price of $17.6 million, including negative working capital adjustment of $2.4 million. The related acquisition costs amounted to $1.0 million. We financed the acquisition and related costs and expenses through the issuance of the Additional Notes. We did not assume any indebtedness in connection with the HBE Transaction.

In accordance with the acquisition method of accounting, following the date of each of the foregoing acquisitions, we, with the assistance of a third‑party valuation firm, have estimated the fair values of acquired assets and assumed liabilities based on the

~~Standalone~~actual ~~Company~~tangible and identifiable intangible assets and liabilities that existed at the date of the acquisitions. These fair values are preliminary and were reflected on our balance sheet on the date of the acquisitions. In this process, we applied certain assumptions as inputs to the valuation calculations. These assumptions represent our best estimates based on historic performance of the respective reporting segments, trends within the market place and our consideration of the potential impact of political, economic and social factors that are considered beyond our control. Significant assumptions included within our discounted cash flow valuation include revenue growth rates, operating profit margins, implied rate of return used and terminal growth rates. Our results of operations, financial position and cash flows are impacted by the effects of the acquisitions, which were financed primarily through borrowings, including transaction‑related costs, debt commitment fees and recurring interest costs.

Before the Acquisition, our Predecessor historically engaged in extensive intercompany transactions with Thomson Reuters and its subsidiaries relative to certain support services, including, among others, finance and accounting, treasury, tax, transaction processing, information technology, legal, human resources, payroll, insurance and real estate management. Thomson Reuters allocated costs to our Predecessor for the provision of these services. These amounts are presented within “Allocation of costs from Predecessor Parent and affiliates” in our Predecessor's combined statement of comprehensive loss, except for certain data center costs that are presented in “Cost of revenues, excluding depreciation and amortization.” These amounts are not necessarily representative of the amounts that would have been reflected in the combined financial statements had our Predecessor operated independently of Thomson Reuters.

Under the Transitional Services Agreement that was executed in connection with the Acquisition, the Stock Seller agreed to continue to provide certain services (including, but not limited to, data hosting, management information services support, campus services support, accounts payable, general ledger and payroll systems support, human resources administration support and facilities) for certain pre-determined periods and at pre-determined negotiated rates, as specified therein, depending upon the specific services to be provided. During this period, we incurred duplicate costs while using services provided to us under the Transitional Services Agreement. Such fees are, in the aggregate, in line with the allocation and direct costs reflected in our Predecessor’s statement of comprehensive loss for the period ended June 6, 2012. As of December 31, 2013, we have completed our administrative infrastructure, and all of these functions have been assumed by us or by third parties on our behalf, including hosting services of certain technology infrastructure. The expense incurred under this transition service agreement amounted to $12.3 million from April 20, 2012 to December 31, 2012, and $10.5 million for the year ended December 31, 2013.

We have also incurred $22.1 million and $21.2 million of other costs related to our transition as a standalone company from June 7, 2012 through December 31, 2012 and from January 1, 2013 through December 31, 2013, of which $13 million and $3 million relates to capital expenditures related to data center migration, separating the IT infrastructure from our Predecessor Parent, respectively. We do not expect to incur additional costs related to separation of IT infrastructure from our Predecessor or additional fees under the Transitional Services Agreement in 2014.

Deferred Revenue; Fair Value Adjustments

Our revenues are derived from the sale of subscription data, and analytics solutions and services. Our revenues from the sale of subscription data and analytics solutions are typically billed annually in advance and recognized on a straight-‑line basis over the contract term, which is typically one to three years. As a result, cash collections from customers for subscription data and analytic solutions can be greater than the revenue recognized (which only correspond to those revenues associated with services already rendered). In cases of billings in advance or advanced receipt of payments from customers, we record deferred revenue, a liability that is reduced as revenue is recognized. Our revenues from services are invoiced according to the terms of the contract, typically in arrears (after the corresponding services have been rendered), and recognized over the term of the contract. Contracts for services vary in length from a few months to several years. The carrying value of our deferred revenue as of June 6, 2012 totaled $138.7 million. Following the completion of the Prior Acquisition, we determined, with the assistance of a third-‑party valuation firm, that the fair value of our deferred revenue should be adjusted to $80.2 million. As a result, deferred revenue on certain contracts of $58.5 million was written off, which negatively impacted our revenue for the year ended December 31, ~~2013~~2014, 2013 and ~~Successor~~ ~~Period~~period from April 20, 2012 (inception) to December 31, 2012, by $3.2 million, $8.8 million and $43.5 million, respectively. ~~The write-off will have a future aggregate negative impact of $6.3 million with the majority reflected over the next 24 months.~~

~~Results~~Following the acquisitions of ~~Operations~~Simpler, HBE and JWA during 2014, the carrying values of deferred revenues from acquired companies totaled $11.7 million and with the assistance of a third-party valuation firm, it was determined that the fair value of the deferred revenue should be adjusted to $4.8 million. As a result, deferred revenue on certain contracts of $6.9 million was written off, which negatively impacted our revenue for the period ended December 31, 2014 by $2.9 million.

The ~~following~~write‑offs ~~section~~will ~~provides~~have a ~~comparative~~future ~~discussion~~aggregate ofnegative ~~our~~impact ~~results~~ of ~~operations~~$7.0 ~~for the year ended December~~million ~~31,~~in ~~2013,~~future ~~the~~periods ~~combined~~with ~~2012 Predecessor and Successor Periods, and~~ the ~~Predecessor~~majority ~~year~~expected ~~ended~~to ~~December 31, 2011 respectively, and should~~ be ~~read~~reflected inover ~~conjunction with our consolidated and combined financial statements for~~ the ~~year~~next ~~ended December 31, 2013 and the related notes thereto, included elsewhere in this Annual Report~~12 months. ~~Factors that relate primarily to a specific business segment are discussed in more detail within that business segment.~~

Unaudited Pro Forma Financial Information

The following unaudited pro forma combined financial information is based on the audited combined statement of operations of our Predecessor's (for the period from January 1, 2012 to June 6, 2012) and Successor's (for the period April 20, 2012 to December 31, 2012) audited consolidated statement of operations, which represent the combined results of operations of Truven Holding and its subsidiaries for the year ended December 31, 2012, included elsewhere in this Annual Report, and has been prepared to give effect to the Prior Acquisition, assuming that the Prior Acquisition occurred on January 1, 2012. The pro forma adjustments and certain assumptions underlying these adjustments, using the acquisition method of accounting, are described in the accompanying notes and should be read in conjunction with these unaudited pro forma combined financial statements. The pro forma adjustments are based on valuation estimates, available information and assumptions that we believe are reasonable as of the date of preparation. Our unaudited pro forma combined financial information is not necessarily indicative of what our actual results of operations would have been had the Prior Acquisition occurred as of the date or for the periods indicated, nor does it purport to represent our future results of operations.

The pro forma adjustments contained in the unaudited pro forma combined statement of operations for the year ended December 31, 2012 give effect to the Prior Acquisition as if it was consummated on January 1, 2012. The unaudited pro forma combined financial information gives effect to events that are (1) directly attributable to the Prior Acquisition, (2) factually supportable and (3) expected to have a continuing impact on us. The unaudited pro forma combined statement of comprehensive income (loss) for the year ended December 31, 2012, does not include the effects of any future restructuring activities, including severance or other employee related costs that pertain to the combined operations, or other operating efficiencies or inefficiencies, which may result from the Prior Acquisition but are either non-recurring or at this point not factually supportable. Furthermore, the unaudited pro forma combined financial statements do not include certain non-recurring expenses, such as: (i) for accelerated vesting of employee awards; (ii) other employee benefits costs; and (iii) certain transition costs that we expect to incur in the next 12 months as we transition to be a standalone entity.

Management believes that the assumptions used to derive the pro forma statement of operations are reasonable given the information available. The pro forma combined statement of operations has been provided for informational purposes only and

~~Year~~is ~~ended~~not ~~December~~necessarily ~~31,~~indicative ~~2013~~of ~~compared~~the toresults ~~year~~of ~~ended~~future ~~December~~operations ~~31,~~or ~~2012~~the ~~(Predecessor~~actual ~~fiscal~~results ~~Period~~that ~~from~~would ~~January~~have 1,been ~~2012~~achieved tohad ~~June~~the 6,Prior ~~2012~~Acquisition ~~and~~occurred ~~Successor~~on ~~fiscal~~the ~~Period~~date ~~from April 20, 2012 to December 31, 2012)~~indicated.

InTruven ~~order~~Holding to present a more clear description and meaningful discussion and analysis of our performance during fiscal 2012, our discussion of the 2012 fiscal year combines the results for the period from January 1, 2012 to June 6, 2012 (Predecessor Period) and the period April 20, 2012 to December 31, 2012 (Successor Period)Corp. These combined periods do not purport to represent what our results of operations would have been for the year ended December 31, 2012 on a Predecessor basis or a Successor basis. The following table summarizes our consolidated and combined results of operations for the periods indicated:

(Dollars in thousands)	Year ended December 31, 2013			% of revenue		From inception (April 20, 2012) to December 31, 2012				January 1, 2012 to June 6, 2012			Combined Year ended December 31, 2012			% of revenue		Change			% change
	(Successor)					(Successor)			(Predecessor)
Revenues, net	$	492,702		100	%	$	241,786			$	208,998		$	450,784		100	%	$	41,918		9	%
Operating costs and expenses
Cost of revenues, excluding depreciation and amortization(a)	(265,541		)	(54	)%	(141,558		)		(112,050		)	(253,608		)	(56	)%	(11,933		)	5	%
Selling and marketing, excluding depreciation and amortization(b)	(56,157		)	(11	)%	(30,958		)		(25,917		)	(56,875		)	(13	)%	718			(1	)%
General and administrative, excluding depreciation and amortization(c)	(41,042		)	(8	)%	(13,042		)		(27,173		)	(40,215		)	(9	)%	(827		)	2	%
Allocation of costs from Predecessor Parent and affiliates(d)	—			—	%	—				(10,003		)	(10,003		)	(2	)%	10,003			(100	)%
Depreciation	(21,219		)	(4	)%	(6,700		)		(6,805		)	(13,505		)	(3	)%	(7,714		)	57	%
Amortization of developed technology and content	(31,894		)	(6	)%	(15,470		)		(12,460		)	(27,930		)	(6	)%	(3,964		)	14	%
Amortization of other identifiable intangible assets(e)	(34,460		)	(7	)%	(19,527		)		(8,226		)	(27,753		)	(6	)%	(6,707		)	24	%
Goodwill impairment	(366,662		)	(74	)%	—				—			—			—	%	(366,662		)	NM
Other operating expenses(f)	(35,038		)	(7	)%	(49,622		)		(18,803		)	(68,425		)	(15	)%	33,387			(49	)%
Total operating costs and expenses	(852,013		)	(173	)%	(276,877		)		(221,437		)	(498,314		)	(111	)%	(353,699		)	71	%
Operating income (loss)	(359,311		)	(73	)%	(35,091		)		(12,439		)	(47,530		)	(11	)%	(311,781		)	656	%
Net interest income (expense) (g)	(70,581		)	(14	)%	(49,014		)		3			(49,011		)	(11	)%	(21,570		)	44	%
Other finance costs	(24		)	—	%	—				—			—			—	%	(24		)	—	%
Income (Loss) before income taxes	(429,916		)	(87	)%	(84,105		)		(12,436		)	(96,541		)	(21	)%	(333,375		)	345	%
Benefit from income taxes	84,927			17	%	29,993				4,803			34,796			8	%	50,131			144	%
Net loss	$	(344,989	)	(70	)%	$	(54,112	)		$	(7,633	)	$	(61,745	)	(14	)%	$	(283,244	)	459	%

Unaudited Pro Forma Statement of Operations

~~(a)~~For ~~Includes~~the ~~all~~year ~~personnel~~ended ~~and~~December ~~other costs attributable to a revenue stream~~31, ~~including but not limited to, client support, client operations, product management, royalties, allocation of technology support costs relating to market data and professional service costs.~~2012

(b) Includes all personnel and other costs related to sales and marketing, including but not limited to, sales and marketing staff, commissions and marketing events.



(Dollars in thousands)	From inception (April 20, 2012) to December 31, 2012				January 1, 2012 to June 6, 2012			Acquisition related adjustments				Pro forma
	(Successor)			(Predecessor)
Revenues, net	$	241,786			$	208,998		$	(5,553	)	(a)	$	445,231
Operating costs and expenses
Cost of revenues, excluding depreciation and amortization	(141,558		)		(112,050		)	—				(253,608		)
Selling and marketing, excluding depreciation and amortization	(30,958		)		(25,917		)	—				(56,875		)
General and administrative, excluding depreciation and amortization	(13,042		)		(27,173		)	—				(40,215		)
Allocation of costs from Predecessor Parent and affiliates	—				(10,003		)	—				(10,003		)
Depreciation	(6,700		)		(6,805		)	3,392			(b)	(10,113		)
Amortization of developed technology and content	(15,470		)		(12,460		)	2,228			(b)	(25,702		)
Amortization of other identifiable intangible assets	(19,527		)		(8,226		)	(6,118		)	(b)	(33,871		)
Goodwill impairment	—				—			—				—
Other operating expenses	(49,622		)		(18,803		)	55,452			(c)	(12,973		)
Total operating costs and expenses	(276,877		)		(221,437		)	54,954				(443,360		)
Operating income (loss)	(35,091		)		(12,439		)	49,401				1,871
Net interest income (expense)	(49,014		)		3			(27,770		)	(d)	(76,781		)
Other finance costs	—				—							—
Income (Loss) before income taxes	(84,105		)		(12,436		)	21,631				(74,910		)
Benefit from income taxes	29,993				4,803			(8,436		)	(e)	26,360
Net loss	$	(54,112	)		$	(7,633	)	$	13,195			$	(48,550	)

~~(c)~~Segment ~~Includes all personnel and other costs related to general administration as well as costs shared across the organization, including but not limited to technology, finance and strategy.~~discussion

(d) As described in Note 18 to the financial statements, included elsewhere in this Annual Report, our Predecessor historically engaged in related party transactions with Thomson Reuters relative to certain support services, including among others, finance, accounting, treasury, tax, transaction processing, information technology, legal, human resources, payroll, insurance and real estate management.

(e) Includes amortization of definite‑lived trade names and acquired customer relationship assets.



(Dollars in thousands)	From inception (April 20, 2012) to December 31, 2012		January 1, 2012 to June 6, 2012	Acquisition related adjustments (a)		Pro forma
	(Successor)		(Precessor)
Commercial
Revenues	172,235		195,470	(4,902	)	362,803
Segment operating income	42,036		55,206	(4,902	)	92,340
Government
Revenues	36,763		46,316	(651	)	82,428
Segment operating income (loss)	(228	)	10,654	(651	)	9,775

~~(f)~~The ~~Includes~~following ~~costs~~adjustments ~~incurred~~were tomade ~~transition~~in the ~~Company~~preparation toof ~~a standalone business. These costs include nonrecurring expenses associated with data center migration, separating~~ the ~~infrastructure~~unaudited ~~from~~pro ~~Predecessor~~forma Parent, and the related consulting and professional fees. Also includes severance and retention bonuses relating to the Acquisition and Sponsor fee for Veritas Capital. See Note 14 to the consolidated and combined ~~financial~~statement ~~statements~~of ~~included elsewhere in this report.~~operations:

(ga) This ~~Interest~~adjustment ~~earned~~reflects orthe ~~paid~~full ~~related~~year impact of adjustment on deferred revenue that negatively impacted our revenue in 2012. As part of the purchase accounting adjustment, our deferred revenues of $138.7 million from various contracts have been adjusted to ~~third~~their ~~party~~fair ~~transactions~~value of $80.2 million at the date of the Prior Acquisition. As a result, the deferred revenue on certain contracts has been written off by $58.5 million and had a negative impact on our revenue in the current period and will continue to impact our revenue in the next four years. Had the acquisition happened at January 1, 2012, our revenue in 2012 would have been reduced by $49.0 million. The historical results of the Successor Period include a reduction in revenue of $43.5 million as a result of the decline in value of deferred revenue. The pro forma adjustment of $5.5 million reflects the incremental negative impact on revenue had the Prior Acquisition occurred on January 1, 2012.

~~Discussion~~(b) Reflects the incremental change in depreciation and amortization resulting from new fair values established for computer hardware and other property, developed technology and content, and other identifiable intangible assets with finite lives. As part of ~~year~~the ~~ended~~purchase ~~December~~price 31accounting for the Prior Acquisition, ~~2013~~management, ~~(Successor)~~including ~~compared~~the toassistance ~~year~~of ~~ended~~a ~~December~~third 31party valuation specialist, ~~2012~~has ~~(Combined~~identified ~~Successor~~the following assessed fair values and ~~Predecessor~~estimated ~~Periods)~~useful lives:



(In thousands)	Fair value at acquisition date		Estimated useful lives
Computer hardware and other property	$	24,573		3-7 years
Developed technology and content	159,622			3-10 years
	$	184,195
Other identifiable intangible assets:
Trade names	$	86,200		15 years
Customers relationships	329,800			11-12 years
	$	416,000

To recognize the impact of the Prior Acquisition as if they had been completed as of January 1, 2012, depreciation and amortization expense would differ in the unaudited pro forma combined statement of operations for the year ended December 31, 2012, primarily due to incremental depreciation and amortization that should have been recognized during the Predecessor Period as follows:



(In thousands)	Developed technology and content			Other identifiable intangible assets		Computer hardware and other propoerty
Pro forma depreciation and/or amortization (Predecessor Period)	$	10,232		$	14,344	$	3,413
Historical depreciation and/or amortization (Predecessor Period)	12,460			8,226		6,805
Increase (decrease) in depreciation and amortization	$	(2,228	)	$	6,118	$	(3,392	)

(c) This adjustment eliminates non-recurring costs directly related to the Prior Acquisition, including certain non-recurring audit services, accounting and consulting services and legal fees related to the Predecessor Parent’s disposal of our Predecessor, and severance and retention bonuses to management employees the Prior Acquisition. The adjustment also

includes the portion of the Sponsor's annual fee that would have been incurred had the Prior Acquisition occurred on January 1, 2012. The Sponsor's fee adjustment reflects the full year impact of $2.5 million of the Sponsor's management fee. Approximately $1.5 million is already reflected in the historical results of the Successor Period.



(In thousands)	Year ended December 31, 2012
Direct acquisition costs, including nonrecurring audit, accounting and consulting fees	$	38,569
Severance and retention bonuses	17,925
Sponsor’s fee	(1,042		)
Net decrease in expenses	$	55,452

(d) This adjustment reflects (1) the interest expense of the Exchange Notes and the variable rate Term Loan Facility, as calculated below, together with commitment fees on the unused portion of the Revolving Credit Facility and (2) the amortization of capitalized debt issuance costs associated with the issued debt as follows:



(In thousands)	Year ended December 31, 2012
Pro forma interest expense:
Term Loan Facility (i)	$	30,338
Exchange Notes (ii)	34,760
Revolving Credit Facility Commitment fees (iii)	250
Amortization of original issue discount (i/iv)	2,143
Amortization of debt issuance costs (i/v)	2,673
Pro forma interest expense	70,164
Historical interest expense	(42,394		)
Adjustment to interest expense	$	27,770

(i) The variable interest rate of the Term Loan Facility was assumed at 5.75%, representing the LIBOR floor rate of 1.25% plus an applicable margin of 4.5% in accordance with the amended credit agreement governing our Senior Credit Facility. On October 3, 2012, we entered into a first amendment to the credit agreement governing our Senior Credit Facility, pursuant to which this applicable margin for all loans was reduced by 1%. As of the time of the amendment, the loans with certain lenders were determined to be extinguished under ASC 470-50, Modification or Extinguishment of debt. We incurred lenders' fees of $6.7 million in connection with the amendment. The unaudited pro forma combined statement of operations includes adjustments to reflect the reduction in applicable margin starting on January 1, 2012. In addition, the pro forma amortization of the original issue discount and debt issuance costs have been adjusted to reflect the impact of certain original issue discount and debt issuance costs associated with the debt from certain lenders that were determined to have been extinguished and were written off. The related loss on early extinguishment of debt amounting to $6.7 million and included as part of interest expense is reflected in the Successor historical financial statements and no pro forma adjustment has been included herein.

(ii) The fixed interest rate of 10.625% was used for the Exchange Notes.

(iii) The commitment fee on the Revolving Credit Facility was based on the applicable fee of 0.5% of the unused balance.

(iv) The original issue costs discount on Senior Term loan and Exchange Notes is amortized using the effective interest rate method.

(v) The deferred debt issuance costs are amortized over the term of the related debt.

The underlying one-month LIBOR rate as of December 31, 2012 was 0.21%. Based on a one-year time frame and all other variables remaining constant, a one-eighth of one percent (12.5 basis points) change in the interest rate would have no impact on the interest expense on our Term Loan Facility, as the LIBOR floor of 1.25% applicable to the Term Loan Facility is significantly higher than the prevailing LIBOR rates.

(e) This adjustment is for income tax expense provided at an estimated statutory rate of 39% in effect during period for which pro forma income statement are presented. Because the tax rate used for these pro forma financial statements is an estimate, it may vary from the actual effective tax rate in periods subsequent to the Prior Acquisition.

Results of Operations

The following section provides a comparative discussion of our results of operations for the year ended December 31, 2014 and 2013, and a comparative discussion of our results of operations for the year ended December 31, 2013 and periods in 2012 on both an "as reported" and a "pro forma" basis. The reported results are not necessarily representative of our ongoing operations as "Combined" amounts merely combine pre- and post-acquisition periods without reflecting all relevant pro forma adjustments to give effect to the acquisition. Therefore, to facilitate an understanding of our trends and on-going performance, we have presented pro forma results in addition to the reported results. The unaudited pro forma combined statements of operations were prepared in accordance with the requirements of Article 11- Pro forma Financial Information, of Regulation S-X. See "Unaudited Pro Forma Financial Information" under Management's Discussion and Analysis of Financial Condition and Results of Operations.

The results of operations should be read in conjunction with our consolidated and combined financial statements and the related notes thereto, included elsewhere in this Annual Report. Factors that relate primarily to a specific business segment are discussed in more detail within that business segment.

Year ended December 31, 2014 compared to Year ended December 31, 2013

The following table summarizes our consolidated and combined results of operations for the periods indicated:



(Dollars in thousands)	Year ended December 31, 2014			% of revenue		Year ended December 31, 2013			% of revenue		Change			% change

Revenues, net(a)	$	544,475		100	%	$	492,702		100	%	$	51,773		11	%
Operating costs and expenses
Cost of revenues, excluding depreciation and amortization(b)	(292,999		)	(54	)%	(265,541		)	(54	)%	(27,458		)	10	%
Selling and marketing, excluding depreciation and amortization(c)	(57,413		)	(11	)%	(56,157		)	(11	)%	(1,256		)	2	%
General and administrative, excluding depreciation and amortization(d)	(55,937		)	(10	)%	(41,042		)	(8	)%	(14,895		)	36	%
Depreciation (e)	(22,350		)	(4	)%	(21,219		)	(4	)%	(1,131		)	5	%
Amortization of developed technology and content (f)	(38,752		)	(7	)%	(31,894		)	(6	)%	(6,858		)	22	%
Amortization of other identifiable intangible assets (g)	(45,402		)	(8	)%	(34,460		)	(7	)%	(10,942		)	32	%
Goodwill impairment (h)	—			—	%	(366,662		)	(74	)%	366,662			(100	)%
Other operating expenses (i)	(20,784		)	(4	)%	(35,038		)	(7	)%	14,254			(41	)%
Total operating costs and expenses	(533,637		)	(98	)%	(852,013		)	(173	)%	318,376			(37	)%
Operating income (loss)	10,838			2	%	(359,311		)	(73	)%	370,149			(103	)%
Net interest expense (j)	(69,616		)	(13	)%	(70,581		)	(14	)%	965			(1	)%
Other finance costs	(930		)	—	%	(24		)	—	%	(906		)	3,775	%
Income (Loss) before income taxes	(59,708		)	(11	)%	(429,916		)	(87	)%	370,208			(86	)%
Benefit from (provision for) income taxes	22,686			4	%	84,927			17	%	(62,241		)	(73	)%
Net income (loss)	$	(37,022	)	(7	)%	$	(344,989	)	(70	)%	$	307,967		(89	)%

(a)


(b)	Includes all personnel and other costs attributable to a revenue stream, including but not limited to, client support, client operations, product management, royalties, allocation of technology support costs relating to market data and professional service costs.


(c)	Includes all personnel and other costs related to sales and marketing, including but not limited to, sales and marketing staff, commissions and marketing events.


(d)	Includes all personnel and other costs related to general administration as well as costs shared across the organization, including but not limited to technology, finance and strategy.


(e)	Includes depreciation of computer hardware, furniture, fixture and equipments, and leasehold improvements


(f)	Includes amortization of developed technology and contents used internally and capitalized once a project has progressed beyond a conceptual, preliminary stage to that of application development stage. Costs that qualify for capitalization include both internal and external costs, but are limited to those that are directly related to a specific project.


(g)	Includes amortization of definite‑lived trade names and acquired customer relationship assets.

(h)

On November 1, 2013, we performed our annual goodwill impairment test and determined that the carrying value of all our reporting units exceeded our fair value due to lower‑than‑expected growth in revenue and cash flow in fiscal year 2013 resulting from certain selling cycle delays, particularly in the government sector, uncertainty in the healthcare sector related to the Patient Protection and Affordable Care Act, higher‑than‑expected costs due to significant investments in technology infrastructure, as well as an increase in the discount rate used in the discounted cash flow analysis as compared to the rate used in the prior year’s analysis. As a result, we recorded an aggregate non‑cash goodwill impairment charge of $366.7 million in the fourth quarter of 2013.

(i)

Other operating expenses in 2013 includes direct costs related to the Prior Acquisition in 2012 as well as costs incurred related to technology and other costs in connection with our transition to a standalone business. These costs include nonrecurring expenses associated with data center migration and separating infrastructure from Thomson Reuters, costs related to the transitional service agreement with Thomson Reuters and related to rebranding, consulting, professional fees and Sponsor fees. Other operating expenses in 2014 includes professional fees related to the acquisitions of Simpler, HBE and JWA , certain costs related to business improvement processes, and certain costs associated with data migration, asset write‑offs, losses on discontinued projects and Sponsor fees. Refer to Note 14 to the consolidated financial statements, included elsewhere in this Annual Report.


(j)	Interest earned or paid related to third party transactions.

Discussion of Year ended December 31, 2014 compared to Year ended December 31, 2013

Revenues, net

Our net revenues were $~~492~~544.75 million for the year ended December 31, ~~2013~~2014 as compared to $~~450~~492.87 million for the year ended December 31, ~~2012~~2013, an increase of $4151.98 million or 911%. ~~This~~The increase was primarily due to the ~~impact from the~~ $851.86 million ~~deferred~~increase in revenue ~~adjustment~~from inour ~~2013~~Commercial ~~compared~~segment toand ~~the~~ $430.5 million ~~deferred~~increase ~~revenue adjustment~~ in ~~2012,~~revenue infrom ~~connection~~our ~~with~~Government ~~the Acquisition~~segment. The Inincrease ~~addition,~~in revenue ~~increased~~from byour ~~$9.5~~Commercial ~~million~~segment ~~mainly~~was primarily due to ~~higher~~revenues ~~revenue~~from inour ~~Payer~~acquired ~~segment's~~businesses ~~State~~in ~~Government~~2014 ~~channel,~~of ~~partially~~$38.3 ~~offset~~million, by$8.7 ~~decreases~~million increase in ~~the~~revenue ~~Federal~~due ~~Government~~to ~~channel. Revenue~~new sales from ~~the~~customers ~~Hospitals~~and incremental fees from our employer and ~~Clinicians~~healthplan, ~~segments~~life ~~slightly~~sciences ~~decreased~~and byprovider ~~$1.2~~solutions ~~million~~services and $14.16 million, ~~respectively,~~decrease ~~due~~in todeferred ~~the~~revenue ~~cancellations~~adjustment ~~and~~in ~~price~~connection ~~competition~~with the Prior Acquisition. ~~For~~The aslight ~~detailed~~increase ~~explanation~~in ofGovernment was due to the ~~variations~~increase in ~~revenue~~work ~~for~~in ~~each~~federal ofgovernment ~~our~~projects ~~segments,~~despite ~~see~~lower ~~the~~implementation ~~individual~~project ~~segment~~revenue ~~discussions~~from ~~below.~~state government projects due to timing.

The total impact of deferred revenue adjustment for both our Commercial and Government segments in connection with Prior Acquisition and acquisitions during the 2014 amounted to $4.5 million in 2014 compared to $8.8 million in 2013.

For a more detailed explanation of the variations in revenue for each of our segments, see the individual segment discussions below.

Cost of revenues, excluding depreciation and amortization

Our cost of revenues, excluding depreciation and amortization, was $~~265~~293.50 million for the year ended December 31, ~~2013~~2014 as compared to $~~253~~265.65 million for the year ended December 31, ~~2012~~2013, an increase of $1127.95 million, or 510%. ~~This~~The increase was ~~primarily~~mainly due to ~~higher~~cost ~~implementation~~of ~~and~~revenues ~~data~~from ~~migration~~the ~~costs~~operations of our acquired businesses in 2014 of $18.9 million. We also had an increase of $6.1 million in employee cost related to ~~new~~increase ~~projects,~~in ~~particularly~~headcount onand ~~several~~reduction ~~large~~of ~~State~~certain ~~Government~~benefits ~~contracts. In~~in ~~addition,~~2013 weand ~~incurred~~remaining increase is due to the higher maintenance costs of developed technology and content, ~~royalties~~upon tocompletion ~~Population~~of ~~Health~~our ~~content~~transition ~~providers,~~to ~~telecommunications~~a ~~costs~~standalone business and ~~other~~higher ~~revenue~~costs ~~related~~in ~~costs~~our asGovernment wesegment ~~transitioned~~due to ainitiatives ~~standalone~~to ~~company,~~improve ~~partially~~revenue ~~offset~~in bythe afederal ~~lower~~and ~~bonus~~state ~~accrual in 2013~~agencies.

Selling and marketing expense, excluding depreciation and amortization

Our selling and marketing expense, excluding depreciation and amortization, was $5657.24 million for the year ended December 31, ~~2013~~2014 as compared to $56.92 million for the year ended December 31, ~~2012~~2013, aan ~~decrease~~increase of $01.73 million, or 12%, ~~primarily~~which are mainly due to aselling ~~lower~~and ~~bonus~~marketing ~~accrual~~expenses attributable to our acquired businesses in ~~2013~~2014.

General and administrative expense, excluding depreciation and amortization

Our general and administrative expense, excluding depreciation and amortization, was $4155.09 million for the year ended December 31, ~~2013~~2014 as compared to $4041.20 million for the year ended December 31, ~~2012~~2013, an increase of $014.89 million, or 236%. The increase was primarily due to an$12.0 ~~increase~~million of additional general and and administrative expenses attributable to our acquired businesses in ~~facilities~~2014. The ~~related~~remaining ~~expense,~~increase ~~telecommunications~~relates ~~costs,~~to incremental salaries and ~~related~~wages ~~costs~~expense ~~for~~and ~~additional~~consulting ~~new~~fees ~~hires~~increased asto webuild ~~transitioned~~the toaccounting, ainternal ~~standalone~~audit, ~~company~~procurement, ~~partially~~and ~~offset~~human byresource adepartments, ~~lower~~as ~~bonus~~well ~~accrual~~as from the additional hiring of senior executive management in ~~2013~~operations.

Depreciation and amortization

Our depreciation and amortization expense was $87106.65 million for the year ended December 31, ~~2013~~2014 as compared to $6987.26 million for the year ended December 31, ~~2012~~2013, an increase of $18.49 million or 2722%. This increase was primarily due to the overall impact of new computer hardware and other property, and developed technology and content related to the new data center and new information system infrastructure that were placed in service in late 2013 ~~related~~and to the ~~completion~~$10.9 million incremental amortization of ~~new~~intangible ~~data~~assets ~~center~~from ~~and~~the ~~information~~acquired ~~system~~businesses ~~infrastructure~~in 2014.

Other operating expenses

Our other operating expense was $3520.08 million for the year ended December 31, ~~2013~~2014 as compared to $6835.40 million for the year ended December 31, ~~2012~~2013, a decrease of $3314.43 million or 4941%. This decrease was primarily due to higher ~~Acquisition-~~acquisition related expenses incurred in ~~2012~~2013. In ~~2013~~2014, other operating expenses ~~included~~include $2710.07 million of Acquisition related costs and nonrecurring expenses, consisting of ~~expenses~~professional ~~incurred~~fees ~~mainly~~directly related to ~~data migration and~~ the ~~separation~~acquisitions of ~~our~~Simpler, ITHBE ~~infrastructure~~and ~~from~~JWA, ~~our~~business ~~Predecessor~~integration ~~Parent~~ and ~~costs~~improvement ~~related~~processes, toloss ~~the~~on ~~Transitional~~discontinued ~~Services~~projects, ~~Agreement~~and costs associated with ~~Thomson~~data ~~Reuters~~migration, $32.85 million of severance ~~and retention bonuses~~, $14.37 million of asset write- offs and $2.9 million of Sponsor advisory fees. ~~Other~~In 2013, other operating expenses ~~in 2012~~ included $3827.0 million of ~~Acquisition-~~acquisition related costs, ~~$17.9~~consisting ~~million~~ of ~~severance~~expenses ~~and~~incurred ~~retention~~mainly ~~bonuses ($7.7 million~~ related to ~~our~~data ~~Predecessor),~~migration ~~$9.8~~and ~~million~~the separation of ~~disposal~~our ~~related~~IT ~~costs~~infrastructure offrom our Predecessor Parent and ~~$2.7~~costs ~~million~~related ofto ~~Sponsor~~the ~~advisory~~Transitional ~~fees~~Services ~~and~~Agreement ~~other~~with ~~costs.~~Thomson ~~Acquisition~~Reuters, ~~related~~$3.8 ~~costs~~million inof ~~2012~~severance ~~mainly~~and ~~consisted~~retention ofbonuses, $121.03 million of ~~transaction~~asset ~~fees~~write-offs ~~paid to Veritas Capital~~ and ~~the~~$2.9 ~~remainder~~million ~~related to direct acquisition costs consisting~~ of ~~legal,~~Sponsor ~~finance,~~advisory ~~consulting and professional~~ fees.

Goodwill impairment

The Company performed its annual goodwill impairment test during the fourth quarter of 2013 and concluded that the Company's goodwill on each of its three reporting units is impaired because the carrying value of all the ~~three~~ reporting units exceeded its fair values due to lower-than-expected growth in revenue and cash flow in fiscal year 2013 resulting from certain selling cycle delays, particularly in the ~~government~~Government sector, uncertainty in the healthcare sector related to the ~~Patient Protection and Affordable Care Act~~PPACA, higher-than-expected costs due to significant investments in technology infrastructure, as well as an increase in the discount rate used in the discounted cash flow analysis as compared to the rate used in the prior year’s analysis. ~~Accordingly, the Company recorded a total of $366.7 million of non-cash goodwill impairment charge in the fourth quarter of 2013.~~

Accordingly, the Company recorded a total of $366.7 million of non-cash goodwill impairment charge in the fourth quarter of 2013.

Operating income (loss)

Our operating ~~loss~~income was $~~359~~10.38 million for the year ended December 31, ~~2013~~2014 as compared to an operating loss of $47359.53 million for the year ended December 31, ~~2012~~2013, aan ~~decrease~~increase of $~~311~~370.81 million, or ~~656~~103%, from ~~2012~~2013. The ~~decrease~~increase was primarily due to the goodwill impairment, asin 2013. As discussed above, revenue increased by $51.8 million while total operating expenses decreased by $318.4 million.

Net interest expense

Our net interest expense was $7069.6 million for the year ended December 31, ~~2013~~2014, as compared to $4970.06 million for the year ended December 31, ~~2012~~2013, an increase of $211.60 million, or 441%. The ~~increase~~slight decrease was mainly due to a ~~twelve~~$3.3 ~~months~~million ofloss ~~interest~~on ~~expense~~early inextinguishment ~~2013~~of ~~compared~~debt ~~to approximately seven months in 2012, offset by the interest rate being lower by 2.25%~~ as a result of refinancing of the Term Loan Facility in ~~October 2012 and~~ April 2013. Inthat ~~addition,~~effectively ~~there~~reduced ~~was~~the ~~additional~~ interest rate on ~~incremental borrowings under~~ the Term Loan Facility ~~and~~by ~~Revolving~~1.25%, ~~Credit~~offset ~~Facility~~by ofan ~~$11.3~~increase ~~million~~in ~~and~~interest ~~$30.0~~expense ~~million,~~due ~~respectively.~~to ~~Also,~~the ~~included~~increase of $100 million in the ~~2013~~term ~~interest~~loan ~~expense~~partly ~~was~~to ~~$3.3~~finance ~~million~~the acquisition of ~~loss~~Simpler onin ~~early~~April ~~extinguishment~~2014 and an increase of ~~debt~~$40 asmillion ain ~~result~~Additional ofNotes to finance the ~~April~~acquisitions ~~2013~~of ~~refinancing.~~HBE and JWA.

Other finance costs

Other finance costs mainly represents foreign exchange gains/losses ~~as a result~~ from our international operations. Also included in other finance costs are bank charges and fees.

Benefit from income taxes

Our income tax benefit was $8422.97 million for the year ended December 31, ~~2013~~2014 as compared to a benefit of $3484.89 million for the year ended December 31, ~~2012~~2013, ana ~~increase~~decrease of $5062.12 million or ~~144~~73%. Income tax benefit for the year ended December 31, ~~2013~~2014 at an effective tax rate of 38.0% is different from the amount derived by applying the federal statutory tax rate of 35%, mainly due to the impact of certain state taxes and tax credits partially offset by non deductible expenses and a valuation allowance recorded against the Company's net deferred tax asset as it is not more likely than not that the net deferred tax asset will be realized. Income tax benefit for the year ended December 31, ~~2012~~2013, at an effective tax rate of 19.87%, ~~and 36.0%,~~ respectively, ~~are~~is different from the amount derived by applying the federal statutory tax rate of 35%, mainly due to the impact of certain state ~~income~~ taxes, non deductible goodwill impairment charge, and foreign rate differential.

Segment discussion

The following table summarizes our segment information for the ~~years~~year ended December 31, ~~2013~~2014 and ~~2012~~2013:

(Dollars in thousands)	Year ended December 31, ~~2013~~2014		% of revenue		Year ended December 31, 2013	~~From inception (April 20, 2012) to December 31, 2012~~		% of revenue		~~January 1, 2012 to June 6, 2012~~	Change			~~Combined year ended December 31, 2012~~	% change		~~% of revenue~~		~~Change~~			~~% change~~
	(Successor)					(Successor)			(Predecessor)
Commercial
Payer
Revenues	$	446,500	100	%	$	394,896		100	%		$	51,604			13	%
Revenues	$	259,341	100	%		$	136,922			$	106,482			$	243,404		100	%	$	15,937		7	%
Segment operating income	156,900		35	%	140,173			35	%		16,727				12	%
Segment operating income	38,158		15	%		27,060				15,411				42,471			17	%	(4,313		)	(10	)%
Government
Depreciation and amortization	26,670		10	%		10,978				9,539				20,517			8	%	6,153			30	%
Revenues	98,282		100	%	97,806			100	%		476				—	%
Hospitals
Segment operating income (loss)	$	7,043	7	%	$	11,053		11	%		$	(4,010	)		(36	)%
Revenues	123,692		100	%		59,300				53,236				112,536			100	%	11,156			10	%
Segment operating income	16,646		13	%		4,353				8,222				12,575			11	%	4,071			32	%
Depreciation and amortization	15,301		12	%		6,352				5,520				11,872			11	%	3,429			29	%
Clinicians
Revenues	109,669		100	%		45,563				49,277				94,840			100	%	14,829			16	%
Segment operating income	30,655		28	%		3,231				14,347				17,578			19	%	13,077			74	%
Depreciation and amortization	11,142		10	%		4,840				4,206				9,046			10	%	2,096			23	%

Cost of operations, depreciation and amortization and segment operating income for our segments are based on figures that reflect depreciation of hardware and other tangible assets and amortization of developed technology and content, but exclude amortization of other identifiable intangible assets and other operating expenses because our chief operating decision maker does not consider these items when assessing performance. 43

~~See~~Commercial ~~Note 17 to the consolidated and combined financial statements included in this report for a reconciliation of~~ segment ~~financial information.~~

Payer segment

Revenues

Our ~~Payer~~Commercial segment revenue was $~~259~~446.35 million for ~~the~~2014 ~~year ended December 31, 2013~~ as compared to $~~243~~394.49 million for ~~the year ended December 31~~2013, ~~2012,~~ an increase of $1551.96 million or 713%. ~~This~~ The increase was primarily due to the ~~lower~~$38.3 ~~impact~~million ~~from~~of ~~the deferred~~ revenue ~~adjustment~~from ~~($2.7~~operations ~~million~~of innewly ~~2013~~acquired ~~compared~~businesses toand $94.16 million decrease in ~~2012)~~deferred revenue adjustment in connection with the Prior Acquisition. InThe ~~addition,~~$8.7 ~~revenue~~million ~~increased~~increase in ~~the~~revenue ~~State~~was ~~Government channel~~ due to ~~revenue~~new sales from ~~implementation~~customers and ~~migration~~the ~~projects~~remaining ~~and~~is ~~revenue~~due ~~increased~~to in the ~~Pharma~~incremental ~~channel~~fees ~~due~~from toour anemployer ~~increase~~and inhealthplan, ~~demand~~life ~~for~~sciences ~~MarketScan~~and provider solutions services.

~~Revenue~~Operating in the Employer and Health Plan customer channel was relatively flat, with revenue of $133.1 million for the year ended December 31, 2013 compared to $133.2 million in the year ended December 31, 2012. Revenue in the Federal Government customer channel decreased to $34.6 million for the year ended December 31, 2013 from $38.8 million in the year ended December 31, 2012, principally due to lower new sales and slightly increased contract cancellations. Revenue in the State Government customer channel increased to $52.1 million for the year ended December 31, 2013 from $34.5 million in the year ended December 31, 2012, principally due to implementation and migration revenue from recent large contracts. Revenue in the Pharma customer channel slightly increased to $39.6 million for the year ended December 31, 2013 from $37.0 million in the year ended December 31, 2012, principally due to strong sales of MarketScan services in the first half of 2013.income

40Our Commercial segment operating income was $156.9 million for 2014 as compared to $140.2 million for 2013, an increase of $16.7 million or 12%. The increase was mainly due to the increase in revenue discussed above and decrease in the deferred revenue adjustment which was partially offset by higher maintenance costs of developed technology and content, telecommunications costs and other revenue related costs upon completion of our transition to a standalone company, as well as the increase in administrative costs to maintain our international branches established in mid-2013. Operating income from operations of newly acquired businesses amounted to $5.8 million.

~~Segment~~Government ~~operating income~~segment

Our cost of operations, which includes depreciation and amortization expense, for our Payer segment was $221.2 million for the year ended December 31, 2013 as compared to $200.9 million for the year ended December 31, 2012, an increase of $20.3 million, or 10%. The increase was primarily due to implementation and migration projects in the State Government customer channel and higher depreciation and amortization expense, partially offset by a lower bonus accrual in 2013.

Our depreciation and amortization expense for our Payer segment was $26.7 million for the year ended December 31, 2013 as compared to $20.5 million for the year ended December 31, 2012, an increase of $6.2 million or 30%. This increase was primarily due to capital expenditures on computer hardware and other property, and developed technology and content that were placed in service in 2013.

Our segment operating income for our Payer segment was $38.2 million for the year ended December 31, 2013 as compared to $42.5 million for the year ended December 31, 2012, a decrease of $4.3 million, or 10%. The decrease was mainly due to higher cost of operations that were more than the increase in revenue, as described above.

Hospitals segment

Revenues

Our ~~Hospitals~~Government segment revenue was $~~123~~98.73 million for ~~the~~2014 ~~year ended December 31, 2013,~~ as compared to $~~112~~97.58 million for ~~the year ended December 31~~2013, ~~2012,~~ an increase of $110.25 million~~, or 10%~~. ~~This~~The increase was ~~primarily~~ due to the ~~lower~~increase ~~impact~~of ~~from~~work ~~the deferred revenue adjustment ($3.4 million~~ in ~~2013~~certain ~~compared~~projects ~~to $15.8 million~~ in ~~2012)~~the infederal ~~connection~~government ~~with the Acquisition~~channel, ~~slightly~~partially offset by alower ~~$1.2~~implementation ~~million~~project ~~decrease~~revenue ~~due to some cancellations and pricing competition~~ from the ~~planning~~state ~~and~~government ~~marketing~~channel ~~business,~~due ~~partially~~to ~~offset~~the bytiming ~~increases~~of ~~in Population Health Business, ActionOI product and Clinical products~~projects.

~~Segment~~Operating ~~operating~~ income

Our ~~cost~~Government ofsegment ~~operations,~~operating ~~which~~income ~~includes depreciation and amortization expense, for our Hospitals segment~~ was $~~107~~7.0 million for ~~the~~2014 ~~year ended December 31, 2013~~ as compared to $~~100~~11.01 million for ~~the~~2013, ~~year~~a ~~ended~~decrease ~~December 31,~~in ~~2012,~~operating anincome ~~increase~~ of $74.0 million, or 736%. The ~~This~~decrease ~~increase~~ was ~~primarily~~mainly due to the ~~increase~~higher incosts ~~depreciation~~of operations upon completion of our transition to a standalone company and ~~amortization,~~due ~~royalties~~to higher costs of the Company's initiatives to ~~Population~~improve ~~Health~~sales ~~content~~in ~~providers~~the federal and anstate ~~increase~~government inchannels, ~~maintenance~~such ~~costs~~as onCenters ~~developed~~for ~~technology~~Medicare & Medicaid Services and ~~content~~state Medicaid agencies, ~~partially~~as ~~offset~~well byas afederally ~~lower~~owned ~~bonus~~and ~~accrual~~operated inhealthcare ~~2013~~facilities.

Our depreciation and amortization expense for our Hospitals segment was $15.3 million for the year ended December 31, 2013 as compared to $11.9 million for the year ended December 31, 2012, an increase of $3.4 million or 29%. This was primarily due to the overall impact of new computer hardware and other property and developed technology and content that were placed in service in 2013.44

~~Our~~Year ~~segment operating income for our Hospitals segment was $16.6 million for the year~~ ended December 31, 2013 as compared to ~~$12.6~~Predecessor ~~million~~fiscal ~~for~~Period ~~the~~from ~~year~~January ~~ended December 31~~1, 2012, ~~an increase of $4.1 million. This increase was due~~ to ~~higher~~June ~~revenue~~6, as2012 aand ~~result~~Successor offiscal ~~the~~Period ~~lower impact~~ from ~~the~~April ~~deferred revenue adjustment~~20, ~~which~~2012 ~~more~~to ~~than~~December ~~offset the higher cost of operations~~31, ~~as described above.~~ 2012

The following table summarizes our consolidated and combined results of operations for the periods indicated:

Clinicians segment



(Dollars in thousands)	Year ended December 31, 2013			% of revenue		From inception (April 20, 2012) to December 31, 2012			% of revenue			January 1, 2012 to June 6, 2012			% of revenue
	(Successor)					(Successor)					(Predecessor)
Revenues, net(a)	$	492,702		100	%	$	241,786		100	%		$	208,998		100	%
Operating costs and expenses
Cost of revenues, excluding depreciation and amortization(b)	(265,541		)	(54	)%	(141,558		)	(59	)%		(112,050		)	(54	)%
Selling and marketing, excluding depreciation and amortization(c)	(56,157		)	(11	)%	(30,958		)	(13	)%		(25,917		)	(12	)%
General and administrative, excluding depreciation and amortization(d)	(41,042		)	(8	)%	(13,042		)	(5	)%		(27,173		)	(13	)%
Allocation of costs from Predecessor Parent and affiliates(e)	—			—	%	—			—	%		(10,003		)	(5	)%
Depreciation(f)	(21,219		)	(4	)%	(6,700		)	(3	)%		(6,805		)	(3	)%
Amortization of developed technology and content(g)	(31,894		)	(6	)%	(15,470		)	(6	)%		(12,460		)	(6	)%
Amortization of other identifiable intangible assets(h)	(34,460		)	(7	)%	(19,527		)	(8	)%		(8,226		)	(4	)%
Goodwill impairment(i)	(366,662		)	(74	)%	—			—	%		—			—	%
Other operating expenses(j)	(35,038		)	(7	)%	(49,622		)	(21	)%		(18,803		)	(9	)%
Total operating costs and expenses	(852,013		)	(173	)%	(276,877		)	(115	)%		(221,437		)	(106	)%
Operating income (loss)	(359,311		)	(73	)%	(35,091		)	(15	)%		(12,439		)	(6	)%
Net interest expense(k)	(70,581		)	(14	)%	(49,014		)	(20	)%		3			—	%
Other finance costs	(24		)	—	%	—			—	%		—			—	%
Income (Loss) before income taxes	(429,916		)	(87	)%	(84,105		)	(35	)%		(12,436		)	(6	)%
Benefit from (provision for) income taxes	84,927			17	%	29,993			12	%		4,803			2	%
Net income (loss)	$	(344,989	)	(70	)%	$	(54,112	)	(22	)%		$	(7,633	)	(4	)%

~~Revenues~~(a) Includes (i) subscription revenues from sales of products and services that are delivered under a contract over a period of time, which are recognized on a straight line basis over the term of the subscription, (ii) revenues from implementation and hosting arrangement that comprised: (1) the design, production, testing and installation of the customer's database (implementation phase); and (2) the provision of ongoing data management and support services in conjunction with the licensed data and subscription of software data or application (on-going service phase, hosting or subscription).

~~Our~~(b) ~~Clinicians~~Includes ~~segment~~all ~~revenue~~personnel ~~was~~and ~~$109.7~~other ~~million~~costs ~~for~~attributable ~~the~~to ~~year~~a ~~ended~~revenue ~~December 31~~stream, ~~2013~~including asbut ~~compared~~not limited to, ~~$94.8~~client ~~million~~support, ~~for~~client ~~the~~operations, ~~year~~product ~~ended December 31~~management, ~~2012~~royalties, anallocation ~~increase~~ of ~~$14.8~~technology ~~million~~support orcosts ~~16%.~~relating ~~This was primarily due~~ to ~~the~~market ~~lower~~data impact from the deferred revenue adjustment ($2.7 million in 2013 compared to $18.6 million in 2012) in connection with the Acquisition, slightly offset by a $1.1 million decrease in revenue due to some cancellations and ~~price~~professional ~~competition~~service ~~in core products~~costs.

41(c) Includes all personnel and other costs related to sales and marketing, including but not limited to, sales and marketing staff, commissions and marketing events.

~~Segment~~(d) ~~operating~~Includes ~~income~~all personnel and other costs related to general administration as well as costs shared across the organization, including but not limited to technology, finance and strategy.

~~Our~~(e) ~~cost~~As ofdescribed ~~operations,~~in ~~which~~Note ~~includes~~18 ~~depreciation~~to ~~and amortization expense, for our Clinicians segment was $79.0 million for~~ the ~~year~~financial ~~ended December 31~~statements, ~~2013~~included aselsewhere ~~compared~~in tothis ~~$77.3~~Annual ~~million for the year ended December 31~~Report, ~~2012,~~our anPredecessor ~~increase~~historically ofengaged ~~$1.8~~in ~~million~~related orparty ~~2.4%.~~transactions ~~The~~with ~~increase~~Thomson inReuters ~~cost~~relative ~~of operations was due~~ to ~~higher~~certain ~~depreciation~~support ~~and~~services, ~~amortization~~including ~~expense~~among ~~and~~others, ~~additional~~finance, ~~start~~accounting, uptreasury, ~~costs~~tax, oftransaction ~~international~~processing, ~~branches~~information ~~established~~technology, ~~in 2013~~legal, ~~partially~~human ~~offset~~resources, bypayroll, ~~cost~~insurance ~~savings initiatives~~ and ~~lower~~real ~~bonus~~estate ~~accrual in 2013~~management.

Our depreciation and amortization expense for our Clinicians segment was $11.1 million for the year ended December 31, 2013, as compared to $9.0 million for the year ended December 31, 2012, an increase of $2.1 million or 23%. This was primarily due to the overall impact of new computer hardware and other property and developed technology and content that were placed in service in 2013.45

~~Our~~(f) ~~segment~~Includes ~~operating~~depreciation ~~income for our Clinicians segment was $30.7 million for the year ended December 31, 2013 as compared to $17.6 million for the year ended December 31, 2012, an increase~~ of ~~$13.1~~computer ~~million~~hardware, ~~or 74%. This increase was due to higher revenue as a result of the lower impact from the deferred revenue adjustment~~furniture, ~~which~~fixture ~~more~~and ~~than offset the higher cost of operations~~equipments, asand ~~described~~leasehold ~~above~~improvements.

42(g) Includes amortization of developed technology and contents used internally and capitalized once a project has progressed beyond a conceptual, preliminary stage to that of application development stage. Costs that qualify for capitalization include both internal and external costs, but are limited to those that are directly related to a specific project.

~~Year ended December 31, 2012~~ (~~Combined~~h) ~~Predecessor~~Includes ~~fiscal~~amortization ~~period~~of ~~from~~definite‑lived ~~January~~trade 1,names ~~2012 to June 6, 2012~~ and ~~Successor~~acquired ~~fiscal~~customer ~~period~~relationship ~~from April 20, 2012 to December 31, 2012) compared to the year ended December 31, 2011~~assets.

In(i) ~~order~~On toNovember ~~present~~1, a2013, ~~more~~we ~~clear~~performed ~~description~~our ~~and~~annual ~~meaningful~~goodwill ~~discussion~~impairment test and ~~analysis~~determined that the carrying value of all our ~~performance~~reporting ~~for~~units ~~the~~exceeded ~~combined~~our ~~year~~fair ~~ended~~value ~~December 31,~~due ~~2012~~to ~~compared~~lower‑than‑expected togrowth ~~December 31,~~in ~~2011,~~revenue ~~our~~and ~~2012~~cash ~~period~~flow ~~combines~~in ~~the~~fiscal ~~results~~year ~~for~~2013 ~~the~~resulting ~~period~~from ~~January~~certain 1selling cycle delays, ~~2012~~particularly toin ~~June~~the 6government sector, ~~2012~~uncertainty ~~(Predecessor)~~in the healthcare sector related to the Patient Protection and ~~April~~Affordable 20Care Act, ~~2012~~higher‑than‑expected costs due to ~~December 31~~significant investments in technology infrastructure, ~~2012~~as ~~(Successor).~~well ~~This~~as ~~combined~~an ~~basis~~increase ~~does~~in ~~not~~the ~~purport~~discount torate ~~represent~~used ~~what~~in ~~our~~the ~~results~~discounted ofcash ~~operations~~flow ~~would~~analysis ~~have~~as ~~been~~compared ~~for~~to the ~~period~~rate ~~from~~used ~~January~~in 1,the ~~2012~~prior toyear’s ~~December 31~~analysis. As a result, ~~2012~~we onrecorded aan ~~Predecessor~~aggregate ~~basis~~non‑cash orgoodwill aimpairment ~~Successor~~charge ~~basis~~of $366.7 million in the fourth quarter of 2013.

~~The~~(j) ~~following~~Other ~~table~~operating ~~summarizes~~expenses ~~our~~in ~~consolidated~~the PredecessorPeriod includes related disposal costs incurred as part of the Prior Acquisition process (comprised of audit services, accounting and ~~combined~~consulting ~~results~~services and legal fees), severance and retention bonuses relating to the Prior Acquisition, and costs relating to other acquisition activities of ~~operations~~our ~~for~~Predecessor. Other operating expenses in 2012 and 2013 (Successor Periods) includes direct costs related to the ~~periods~~Prior ~~indicated:~~Acquisition in 2012 as well as costs incurred related to technology and other costs in connection with our transition to a standalone business. These costs include nonrecurring expenses associated with data center migration and separating infrastructure from Thomson Reuters, costs related to the transitional service agreement with Thomson Reuters and related to rebranding, consulting, professional fees and Sponsor fees. Refer to Note 14 to the consolidated financial statements included in this Annual Report.

(Dollars in thousands)	From inception (April 20, 2012) to December 31, 2012			January 1, 2012 to June 6, 2012			Combined Year ended December 31, 2012			% of revenue		December 31, 2011			% of revenue		Change			% change
	(Successor)			(Predecessor)								(Predecessor)
Revenues, net	$	241,786		$	208,998		$	450,784		100	%	$	483,207		100	%	$	(32,423	)	(7	)%
Operating costs and expenses
Cost of revenues, excluding depreciation and amortization(a)	(141,558		)	(112,050		)	(253,608		)	(56	)%	(245,609		)	(51	)%	(7,999		)	3	%
Selling and marketing, excluding depreciation and amortization(b)	(30,958		)	(25,917		)	(56,875		)	(13	)%	(54,814		)	(11	)%	(2,061		)	4	%
General and administrative, excluding depreciation and amortization(c)	(13,042		)	(27,173		)	(40,215		)	(9	)%	(44,867		)	(9	)%	4,652			(10	)%
Allocation of costs from Predecessor Parent and affiliates(d)	—			(10,003		)	(10,003		)	(2	)%	(34,496		)	(7	)%	24,493			(71	)%
Depreciation	(6,700		)	(6,805		)	(13,505		)	(3	)%	(14,851		)	(3	)%	1,346			(9	)%
Amortization of developed technology and content	(15,470		)	(12,460		)	(27,930		)	(6	)%	(24,208		)	(5	)%	(3,722		)	15	%
Amortization of other identifiable intangible assets(e)	(19,527		)	(8,226		)	(27,753		)	(6	)%	(19,691		)	(4	)%	(8,062		)	41	%
Other operating expenses(f)	(49,622		)	(18,803		)	(68,425		)	(15	)%	(20,002		)	(4	)%	(48,423		)	242	%
Total operating costs and expenses	(276,877		)	(221,437		)	(498,314		)	(111	)%	(458,538		)	(95	)%	(39,776		)	9	%
Operating (loss) income	(35,091		)	(12,439		)	(47,530		)	(11	)%	24,669			5	%	(72,199		)	(293	)%
Interest expense to Predecessor Parent(g)	—			—			—			—	%	134			—	%	(134		)	(100	)%
Net interest (expense) income(h)	(49,014		)	3			(49,011		)	(11	)%	(63		)	—	%	(48,948		)	77,695	%
(Loss) income before income taxes	(84,105		)	(12,436		)	(96,541		)	(21	)%	24,740			5	%	(121,281		)	(490	)%
(Benefit from) provision for income taxes	29,993			4,803			34,796			8	%	(9,859		)	(2	)%	44,655			(453	)%
Net (loss) income	$	(54,112	)	$	(7,633	)	$	(61,745	)	(14	)%	$	14,881		3	%	$	(76,626	)	(515	)%


(k)	Interest earned or paid related to third party transactions.

~~(a)~~Discussion ~~Includes~~of ~~all~~year ~~personnel~~ended ~~and~~December ~~other~~31, ~~costs~~2013 ~~attributable~~(Successor) compared to aSuccessor ~~revenue~~fiscal ~~stream,~~Period ~~including~~from ~~but~~April ~~not~~20, ~~limited~~2012 to, ~~client~~December ~~support~~31, ~~client~~2012 ~~operations,~~and ~~product~~Predecessor ~~management,~~fiscal ~~royalties,~~Period ~~allocation~~from ofJanuary ~~technology~~1, ~~support~~2012 ~~costs administered by Thomson Reuters relating~~ to ~~market~~June ~~data~~6, ~~and professional service costs.~~2012

(b) Includes all personnel and other costs related to sales and marketing, including but not limited to, sales and marketing staff, commissions and marketing events.

(c) Includes all personnel and other costs related to general administration as well as costs shared across the organization, including but not limited to technology, finance and strategy.

(d) As described in Note 18 to the consolidated and combined financial statements included elsewhere in this Annual Report, we historically engaged in intercompany transactions with Thomson Reuters relating to certain support services, including

among others, finance, accounting, treasury, tax, transaction processing, information technology, legal, human resources, payroll, insurance and real estate management.

(e) Includes amortization of definite‑lived trade names, database content, publishing rights and acquired customer relationship assets.

(f) Successor Period includes costs incurred to transition the Company to a standalone business. These costs include nonrecurring expenses associated with data center migration, separating the infrastructure from Predecessor Parent, and the related consulting and professional fees. Predecessor Period includes Predecessor's disposal costs incurred as part of the Acquisition process (comprised of audit services, accounting and consulting services and legal fees), severance and retention bonuses relating to the Acquisition, and reserve for note receivable. See Note 14 to the consolidated and combined financial statements included elsewhere in this Annual Report.

(g) Prior to the Acquisition, certain of our Predecessor’s cash management transactions with Thomson Reuters were subject to written loan agreements specifying repayment terms and interest payments, under which Thomson Reuters was required to pay interest to our Predecessor equal to the average monthly rate earned by Thomson Reuters on its cash investments held with its primary U.S. banker. Interest on such loans is reflected in “Interest income from Predecessor Parent” in the combined statement of operations. These loan agreements were satisfied upon completion of the Acquisition.

(h) Interest earned or paid related to third party transactions.

Discussion of the combined year ended December 31, 2012 (Combined Predecessor fiscal period from January 1, 2012 to June 6, 2012 and Successor fiscal period from April 20, 2012 to December 31, 2012) compared to December 31, 2011 (Predecessor)

Revenues, net

Our net revenues were $~~450~~492.87 million for the ~~combined~~ year ended December 31, ~~2012,~~2013 compared to $~~483~~241.28 million ~~for~~in the ~~year~~period ~~ended~~from ~~December 31,~~April ~~2011~~20, an2012 ~~decrease~~(inception) ofto ~~$32.4~~December ~~million~~31, or2012 and 7%$209.0 million ~~This~~in ~~was primarily due to~~ the ~~adjustment~~Predecessor ~~that~~Period ~~reduced~~from ~~deferred~~January ~~revenue~~1, in2012 ~~the~~to ~~amount~~June of6, ~~$43~~2012.5 The ~~million~~total ~~during~~increase ~~2012~~was inprimarily ~~connection~~due ~~with~~to the ~~Acquisition.~~impact ~~Offsetting~~from the ~~adjustment~~$8.8 tomillion deferred revenue, ~~our~~adjustment ~~combined~~in ~~net~~2013 ~~revenues~~compared ~~increased~~to bythe $1143.15 million, ordeferred ~~2%,~~revenue adjustment in the 2012 asSuccessor ~~compared~~Period, ~~to 2011. The increase resulted from organic growth~~ in ~~all~~connection ofwith ~~our segments. Strong performance from~~ the ~~Payer~~Prior ~~segment’s~~Acquisition ~~revenue from the Employers/Health Plans~~ and ~~Pharma customer channels~~ due to ~~increased~~ implementation ~~revenue~~ and ~~sales~~migration of MarketScan solution, respectively, was partially offset by some unanticipated selling cycle delays and budget constraints among certain clients. Both the Hospital and Clinicians segments experienced an increase in revenue ~~primarily coming~~ from ~~Population~~large ~~Health~~contracts ~~and~~in ~~Intelligent~~state ~~Evidence solutions due to higher demand~~government. For a more detailed explanation of the variations in revenue for each of our segments, see the individual segment discussions below.

Cost of revenues, excluding depreciation and amortization

Our ~~combined~~ cost of revenues, excluding depreciation and amortization, was $~~253~~265.65 million for ~~2012,~~the asyear ended December 31, 2013 compared to $~~245~~141.6 million for ~~2011~~the period from April 20, an2012 ~~increase~~(inception) ofto December 31, 2012 and $8112.01 million in the Predecessor Period from January 1, or2012 3%to June 6, 2012. The ~~This~~total increase was primarily due ~~primarily~~to higher implementation and data migration costs related to ~~revenue~~new ~~growth~~projects, ~~excluding~~particularly ~~the~~on ~~adjustment~~several ~~related~~large state government contracts. In addition, we incurred higher maintenance costs of developed technology and content, royalties to ~~deferred~~Population Health content providers, telecommunications costs and other revenue ~~discussed~~related ~~above.~~costs as we transitioned to a standalone company, partially offset by a lower bonus accrual in 2013.

Selling and marketing expense, excluding depreciation and amortization

Our ~~combined~~ selling and marketing expense, excluding depreciation and amortization, was $56.92 million for ~~2012~~the year ended December 31, as2013 compared to $5431.80 million ~~for~~in ~~2011,~~the anperiod ~~increase~~from ofApril ~~$2.1 million~~20, or2012 ~~4%.~~(inception) ~~This~~to ~~was~~December ~~due~~31, ~~primarily~~2012 toand an$25.9 ~~increase~~million in ~~sales~~the ~~and~~Predecessor ~~marketing~~Period ~~efforts~~from toJanuary ~~improve~~1, ~~sales~~2012 onto ~~existing~~June ~~solutions~~6, ~~and~~2012, ~~offer~~primarily ~~newly~~due ~~launched~~to ~~platform~~a ~~solutions~~lower ~~such~~bonus asaccrual ~~Population~~in ~~Health and Payment Integrity~~2013.

General and administrative expense, excluding depreciation and amortization

Our ~~combined~~ general and administrative expense, excluding depreciation and amortization, was $4041.20 million for ~~2012~~the year ended December 31, as2013 compared to $4413.90 million in ~~for~~the ~~2011~~period from April 20, a2012 ~~decrease~~(inception) ofto December 31, 2012 and $427.72 million in the Predecessor Period from January 1, or2012 ~~10%.~~to June 6, 2012. The ~~decrease~~total increase was primarily due to aan ~~decrease~~increase in ~~the~~facilities ~~bonus~~related ~~accrual~~expense, oftelecommunications ~~$8.9 million~~costs, insalaries ~~2012~~and ~~compared~~related tocosts ~~2011~~for ~~because~~additional ofnew ~~strong~~hires ~~performance~~as inwe ~~2011.~~transitioned ~~The~~to ~~decrease~~a ~~was~~standalone company, partially offset by ~~higher~~a ~~costs~~lower ofbonus ~~enterprise~~accrual ~~systems~~in ~~of $2~~2013.~~2 million.~~

Allocation of costs from Predecessor Parent and affiliates

The allocation of costs from Predecessor Parent and affiliates was $10.0 million for 2012, compared to $34.5 million for 2011, a decrease of $24.5 million, or 71%. Following the completion of the Acquisition on June 6, 2012, these costs allocations related to certain support services provided by Predecessor Parent and affiliates ceased. As a standalone company, similar costs and expenses were incurred which are now recorded directly as cost of revenues, selling and marketing, and general and administrative expenses.

Depreciation and amortization

Our ~~combined~~ depreciation and amortization expense was $6987.26 million for ~~2012~~the year ended December 31, as2013 compared to $5841.87 million in ~~for~~the ~~2011,~~period anfrom ~~increase~~April ~~of $10.4 million~~20, or2012 ~~18%.~~(inception) ~~This overall increase was primarily due~~ to ~~higher~~December ~~depreciation~~31, 2012 and ~~amortization expense as a result of~~ $4927.2 5 million ofin ~~capitalized~~the ~~computer~~Predecessor ~~hardware~~Period ~~and~~from ~~developed~~January ~~technology~~1, ~~and content in~~ 2012 asto ~~well~~June as6, ~~the~~2012. ~~impact~~The oftotal ~~depreciation~~increase ~~and~~primarily ~~amortization~~ due to the ~~fair~~overall ~~value~~impact ~~adjustments~~of ~~including~~new ~~the~~computer ~~lengthening~~hardware ofand ~~useful~~other ~~lives~~property, ofand developed technology and content ~~and~~that ~~other~~were ~~identifiable~~placed ~~intangible~~in ~~assets~~service ~~such~~in as2013 ~~customer~~related ~~relationships~~to ~~and~~the ~~trade~~completion ~~names~~of asnew adata ~~result~~center ofand ~~the~~information ~~Acquisition.~~system infrastructure.

Other operating expenses

Our ~~combined~~ other operating expense was $6835.40 million for ~~2012~~the year ended December 31, as2013 compared to $2049.06 million ~~for~~in ~~2011~~the period from April 20, an2012 ~~increase~~(inception) ofto December 31, 2012 and $4818.4 8 million in the Predecessor Period from January 1, or2012 ~~242%.~~to June 6, 2012. The ~~increase~~total decrease was due to: ~~(1) a~~lower Acquisition-related expenses incurred in 2013. In 2013, other operating expenses included $1127.1 0 million ~~increase~~of inAcquisition ~~severance~~related ~~and~~costs, ~~retention~~consisting ~~bonuses~~of expenses incurred mainly related to ~~the~~data ~~Acquisition~~migration and the ~~disposal~~separation of ~~business~~our ~~activities~~IT ofinfrastructure from our Predecessor; ~~(2) a~~Parent and costs related to the Transitional Services Agreement with Thomson Reuters, $343.8 million ~~increase~~of inseverance ~~costs~~and ~~directly~~retention ~~related~~bonuses, to$1.3 ~~the~~million ~~Acquisition~~of asset write-offs and ~~related~~$2.9 ~~costs~~million ~~and~~of ~~non-recurring~~Sponsor ~~expenses~~advisory ~~incurred~~fees. asIn wethe ~~continue~~Successor toPeriod ~~operate~~of as2012, aother ~~standalone~~operating ~~company;~~expenses included $38.0 million of Prior Acquisition related costs (~~3) a~~mainly consisting of $112.5 0 million ~~management~~of ~~fee~~transaction ~~payable~~fees paid to Veritas Capital and the ~~Sponsor~~remainder ~~incurred~~related ~~after~~to ~~the~~direct ~~Acquisition;~~acquisition costs consisting of legal, finance, consulting and (4professional fees) a, $110.2 million ~~write~~of ~~off~~severances ~~from~~and ~~discontinued~~retention ~~product~~bonuses ~~solutions~~and by$1.5 ~~our~~million of Sponsor advisory fees. In the Predecessor inPeriod of 2012, other operating expenses included $9.8 million of disposal related costs of our Predecessor, $7.7 million of severances and retention bonuses and $1.2 million of costs related to discontinued services.

Goodwill impairment

We performed our annual goodwill impairment test during the fourth quarter of 2013 and concluded that our goodwill on all our reporting units is impaired because each of the reporting unit's carrying value exceeded its fair value due to lower-than-expected growth in revenue and cash flow in fiscal year 2013 resulting from certain selling cycle delays, particularly in the Government sector, uncertainty in the healthcare sector related to the PPACA , higher-than-expected costs due to significant investments in technology infrastructure, as well as an increase in the discount rate used in the discounted cash flow analysis as compared to the rate used in the prior year’s analysis. Accordingly, we recorded a total of $366.7 million of non-cash goodwill impairment charge in the fourth quarter of 2013.

Operating income (loss)

Our ~~combined~~ operating loss was $47359.53 million for ~~2012~~the asyear ~~compared~~ended toDecember 31, a2013 ~~combined~~compared to operating ~~income~~loss of $2435.71 million ~~for~~in ~~2011,~~the aperiod ~~decrease~~from ofApril ~~$72.2 million~~20, or2012 ~~292%.~~(inception) ~~The~~to ~~decrease~~December ~~was~~31, ~~primarily~~2012 ~~due~~and ~~to a~~ $3212.4 million ~~decrease~~ in ~~revenue due to~~ the ~~negative~~Predecessor ~~impact~~Period offrom ~~the~~January ~~adjustment~~1, in2012 ~~the~~to ~~fair~~June ~~value~~6, ~~of deferred revenue as a result of the Acquisition and the $39~~2012.~~8 million~~ The ~~increase in~~ total ~~operating~~decrease ~~expenses~~was primarily due to ~~an increase in costs directly related to~~ the ~~Acquisition~~goodwill ~~and related costs~~impairment, ~~and non-recurring expenses incurred~~ as ~~we continue to operate as a standalone company as~~ discussed above.

~~Without~~Net ~~the~~interest negative impact of the adjustment in deferred revenue, costs of acquisition and disposal of business activities of our Predecessor and non-recurring expenses we incurred as we continue to be a standalone company, the operating income increased by $20.8 million or 44% in 2012 compared to 2011. The increase was primarily due to the $11.0 million increase in revenue across all segments, $24.5 million decrease in allocation of costs from Predecessor Parent and a combined $2.1 million decrease in selling and marketing, and general and administrative expenses, excluding depreciation expense. These were partially offset by a $10.4 million increase in depreciation and amortization, a $1.2 million increase in other operating expenses related to write-offs from a discontinued product solution by our Predecessor in 2012, and an increase in cost of revenues, excluding depreciation and amortization.

~~Interest~~Our ~~income~~net interest expense was $70.6 million for the year ended December 31, 2013, compared to $49.0 million in the period from ~~Predecessor~~April ~~Parent~~20, 2012 (inception) to December 31, 2012. The increase was mainly due to twelve months of interest expense in 2013 compared to approximately seven months in 2012, offset by the interest rate being lower by 2.25% as

Upon completion of the Acquisition, the loan agreements that our Predecessor historically entered into with Thomson Reuters relating to intercompany cash management arrangements were satisfied in full. 47

45a result of refinancing of the Term Loan Facility in October 2012 and April 2013. In addition, there was additional interest on incremental borrowings under the Term Loan Facility and Revolving Credit Facility of $11.3 million and $30.0 million, respectively. Also, included in the 2013 interest expense was $3.3 million of loss on early extinguishment of debt as a result of the April 2013 refinancing.

~~Net~~Other ~~interest~~finance ~~(expense) income~~ costs

~~Our~~Other ~~net~~finance ~~interest~~costs ~~expense~~mainly ~~was~~represents ~~$49.0~~foreign ~~million~~exchange ~~for~~gains/losses ~~2012,~~ as ~~compared to~~ a deresult ~~minimis~~from ~~amount for 2011. This interest expense is primarily related to~~ our ~~issuance~~international ~~of long-term debt (including the $527~~operations.~~6 million~~ Also ~~under~~included ~~the Term Loan Facility and the $327.2 million of Senior Notes) to finance the Acquisition. Included~~ in ~~the~~other ~~interest expense were amortization of debt issue cost and deferred~~ finance costs ofare ~~$1.1 million~~bank charges and $1fees.6 million, respectively. In addition, on October 3, 2012, we refinanced our Senior Credit Facility, as a result of which the loans with certain lenders were determined to be extinguished. As a result, we recorded $6.7 million of loss on early extinguishment of long-term debt, which was included in Net interest (expense) income.

Benefit from income taxes

Our ~~combined~~ income tax benefit was $3484.89 million for ~~2012~~the year ended December 31, as2013 compared to a $930.9 0 million in ~~provision~~the ~~for~~period ~~2011~~from April 20, 2012 (inception) to December 31, 2012 and $4.8 ~~This~~million ~~change~~in ~~was~~the ~~primarily~~Predecessor ~~due~~Period from January 1, 2012 to ~~our~~June ~~lower~~6, ~~taxable~~2012. Income ~~income~~tax inbenefit for the year ended December 31, 2013, Successor Period from April 20, 2012 ~~compared~~to December 31, 2012 and Predecessor Period from January 1, 2012 to ~~the~~June ~~prior~~6, ~~year.~~2012 ~~The~~at an effective tax rate ~~for~~of ~~2012~~19.8%, ~~was~~35.7% 36and 38.6%, asrespectively, ~~compared~~are todifferent ~~40%~~from ~~for~~the ~~2011.~~amount ~~The~~derived ~~decrease~~by inapplying ~~effective~~the federal statutory tax rate ~~was~~of ~~primarily~~35%, mainly due to the impact of certain ~~Acquisition~~state ~~related~~taxes, ~~expenses~~non ~~incurred~~deductible ingoodwill ~~this~~impairment ~~period~~charge, ~~that~~and ~~were~~foreign ~~not~~rate ~~deductible~~differential.

Segment discussion

The following table summarizes our segment information for the ~~fiscal~~ years ended December 31, 2013, the period from April 20, 2012 (inception) to December 31, 2012 and ~~2011~~the Predecessor Period from January 1, 2012 to June 6, 2012:

(Dollars in thousands)	~~From~~Year ~~inception~~ended ~~(April 20, 2012) to~~ December 31, ~~2012~~2013		% of revenue	~~January 1, 2012 to June 6, 2012~~		From inception (April 20, 2012) to December 31, 2012		~~Combined year ended December 31, 2012~~	% of revenue		~~% of revenue~~	January 1, 2012 to June 6, 2012		~~Year ended December 31, 2011~~		% of revenue		~~Change~~			~~% change~~
	(Successor)		(Predecessor)											(Predecessor)
Commercial
Payer
Revenues	$	394,896	100	%		$	172,235		100	%		$	195,470			100	%
Revenues	$	136,922		$	106,482			$	243,404		100	%		$	245,065			$	(1,661	)	(1	)%
Segment operating income	140,173		35	%		42,036			24	%		55,206				28	%
Segment operating income	27,060			15,411				42,471			17	%		37,378				5,093			14	%
Government
Depreciation and amortization	10,978			9,539				20,517			8	%		23,795				(3,278		)	(14	)%
Revenues	97,806		100	%		36,763			100	%		46,316				100	%
Hospitals
Segment operating income (loss)	11,053		11	%		(228		)	(1	)%		10,654				23	%
Revenues	59,300			53,236				112,536			100	%		124,980				(12,444		)	(10	)%
Segment operating income	4,353			8,222				12,575			11	%		29,231				(16,656		)	(57	)%
Depreciation and amortization	6,352			5,520				11,872			11	%		9,323				2,549			27	%
Clinicians
Revenues	45,563			49,277				94,840			100	%		111,672				(16,832		)	(15	)%
Segment operating income	3,231			14,347				17,578			19	%		33,746				(16,168		)	(48	)%
Depreciation and amortization	4,840			4,206				9,046			10	%		5,941				3,105			52	%

~~Cost~~Commercial of operations, depreciation and amortization and operating income for our segments are based on figures that reflect depreciation of hardware and other tangible assets and amortization of developed technology and content, but exclude amortization of other identifiable intangible assets and other operating expenses because our CODM during both the Predecessor and Successor Periods did not consider these items when assessing performance. See Note 17 to the consolidated and combined financial statements included elsewhere in this Annual Report. segment

See Note 17 to the consolidated and combined financial statements included elsewhere in this Annual Report, for a reconciliation of segment financial information.

Payer segment

Revenues

Our ~~Payer~~Commercial segment ~~revenues~~revenue ~~were~~was $~~243~~394.49 million for ~~2012,~~2013 as compared to $~~245~~172.12 million ~~for~~in ~~2011,~~the aperiod ~~decrease~~from ofApril ~~$1.7 million~~20, or2012 ~~1%.~~(inception) ~~This~~to December ~~was~~31, ~~primarily~~2012 ~~due~~and to$195.5 million in the ~~adjustment~~Predecessor ~~that~~Period ~~reduced~~from ~~deferred~~January ~~revenue~~1, in2012 ~~the~~to ~~amount~~June of6, $92012.~~0 million~~ The intotal ~~connection~~increase ~~with~~was ~~the~~primarily ~~Acquisition.~~due ~~Offsetting~~to the ~~adjustment~~lower toimpact ~~deferred~~from ~~revenue,~~ the ~~revenues~~deferred ~~increased~~revenue byadjustment ($7.32 million, ~~or 3%,~~ in ~~2012~~2013 as compared to ~~2011~~$38.4 ~~The~~million ~~increase~~in ~~was~~the ~~primarily~~Successor ~~due~~Period toof an2012) ~~overall increase~~ in ~~revenue~~connection inwith the ~~Employers/Health~~Prior ~~Plans~~Acquisition and ~~Pharma~~partially ~~customer~~offset ~~channels,~~due ~~especially~~to ~~from~~some ~~Employers/Health~~cancellations ~~Plans~~and ~~new~~price ~~contract~~competition ~~implementation~~in ~~revenue.~~care management solutions.

~~Revenue~~Operating in the Employers/Health Plans customer channel increased from $123.5 million in 2011 to $133.0 million in 2012, or 8%, primarily due to new contract implementation partially offset by lower revenue from our Early Retirement Reinsurance Program (a decrease of $6.8 million) due to lower demand. Revenue in the Federal Government customer channel decreased to $38.8 million in 2012 from $55.4 million in 2011, or 30%, principally due to selling cycle delays and lower new sales and contract cancellations. Revenue in the State Government customer channel increased to $34.5 million in 2012 from $32.5 million in 2011, or 6%, principally due to the signing of large State government contracts. Revenue in the Pharma customer channel increased from $33.7 million in 2011 to $37.0 million in 2012, or 10%, primarily due to strong sales in our MarketScan solutions. income

~~Segment operating income~~48

Our ~~combined~~Commercial ~~cost~~segment ofoperating ~~operations,~~income ~~which~~was ~~includes~~$140.2 ~~depreciation~~million for ~~and~~2013 ~~amortization~~compared ~~expense,~~to ~~for~~$42.0 ~~the~~million ~~Payer~~in ~~segment~~the ~~was~~period ~~$200.9~~from ~~million~~April ~~for~~20, 2012 as(inception) ~~compared~~ to December 31, 2012 and $~~207~~55.72 million ~~for~~in ~~2011,~~the aPredecessor ~~decrease~~Period offrom ~~$6.8~~January ~~million~~1, or2012 ~~3%.~~to ~~The~~June ~~decrease~~6, in2012. ~~cost~~The oftotal ~~operations~~increase was ~~primarily~~mainly due to ~~lower~~the ~~depreciation~~increase ~~and~~in ~~amortization~~revenue asdiscussed ~~well~~above asand ~~cost~~higher ~~cutting~~costs ~~initiatives~~of ~~related~~operations toin ~~underperforming~~2012 ~~contracts~~as ~~within~~we ~~the~~transitioned ~~Federal~~to ~~and~~a ~~State~~standalone ~~Government customer channel~~company.

~~Our~~Government ~~combined depreciation and amortization expense for the Payer~~ segment was $20.5 million for 2012 as compared to $23.8 million for 2011, a decrease of $3.3 million, or 14%. This was primarily due to lower capital expenditure and the overall impact of the fair value adjustment of computer hardware and other property, and developed technology and content with estimated longer useful lives as a result of the Acquisition.

Our Payer segment operating income was $42.5 million for 2012, as compared to $37.4 million for 2011, an increase of $5.1 million, or 14%. This increase was due primarily to lower cost of operations and decreased depreciation and amortization expense, which more than offset the decline in revenue described above.

Hospitals segment

Revenues

Our ~~Hospitals~~Government ~~segment~~revenue ~~revenues~~was ~~were~~ $~~112~~97.58 million for ~~2012,~~2013 as compared to $~~125~~36.0 8 million ~~for~~in ~~2011,~~the aperiod ~~decrease~~from ofApril ~~$12.5 million~~20, or2012 ~~10%.~~(inception) ~~This~~to December ~~was~~31, ~~primarily~~2012 ~~due~~and to$46.3 million in the ~~adjustment~~Predecessor ~~that~~Period ~~reduced~~from ~~deferred~~January ~~revenue~~1, in2012 ~~the~~to ~~amount~~June of6, ~~$15~~2012.~~8 million~~ The intotal ~~connection~~increase ~~with~~was ~~the~~primarily ~~Acquisition.~~due ~~Offsetting~~to ~~the~~implementation ~~adjustment~~and tomigration ~~deferred~~ revenue, ~~the~~from ~~revenues~~large ~~increased~~state bygovernment ~~$3.3~~contracts ~~million,~~and orthe ~~3%,~~lower inimpact ~~2012~~from asthe ~~compared~~deferred torevenue ~~2011~~adjustment ($1.6 ~~The~~million ~~increase~~in ~~was~~2013 ~~primarily~~compared ~~due~~ to an$5.1 ~~increase~~million in ~~subscription~~the ~~revenue~~2012 ~~from~~Successor ~~Population~~Period) ~~Health~~in ~~solutions,~~connection ~~which~~with ~~were~~the ~~recently~~Prior ~~launched~~Acquisition.

~~Segment~~Operating ~~operating~~ income

Our ~~combined~~Government ~~cost~~operating ofincome ~~operations,~~was ~~which~~$11.1 ~~includes~~million ~~depreciation~~for ~~and~~2013 ~~amortization~~compared ~~expense,~~to ~~for~~an ~~the~~operating ~~Hospitals~~loss ~~segment was~~ of $~~100.~~0.2 million ~~for~~in ~~2012~~the asperiod ~~compared~~from toApril ~~$95.7~~20, ~~million~~2012 ~~for~~(inception) ~~2011~~to December 31, an2012 ~~increase~~and operating income of $410.37 million in the Predecessor Period from January 1, or2012 ~~4%.~~to June 6, 2012. The total increase was mainly due to the increase in ~~cost~~revenue ofdiscussed ~~operations~~above, ~~was~~offset ~~primarily~~by higher costs mainly due to ~~increased~~initiatives ~~cost~~to ofimprove ~~revenues~~sales from the ~~revenue~~federal ~~growth,~~and ~~without~~state ~~the~~government ~~write~~channels, ~~down~~such ofas ~~deferred~~Centers ~~revenue~~for ~~and~~Medicare ~~higher~~& ~~depreciation~~Medicaid ~~and~~Services, ~~amortization~~State ~~expense~~Medicaid agencies, as ~~described~~well ~~below~~as federally owned and operated healthcare facilities.

4749

~~Our~~Year ~~combined~~ended ~~depreciation~~December ~~and~~31, ~~amortization~~2013 ~~expense for the Hospitals segment was $11.9 million for 2012 as~~ compared to ~~$9.3~~Pro ~~million~~forma ~~for~~year ~~2011,~~ended anDecember ~~increase of $2.6 million~~31, or2012 27%. This was primarily due to new capital expenditure related to Population Health solutions and the overall impact of the fair value adjustment of computer hardware and other property, and developed technology and content with estimated longer useful lives as a result of the Acquisition.

Our Hospitals segment operating income was $12.6 million for 2012, as compared to $29.2 million for 2011, a decrease of $16.6 million, or 57%. The decrease in operating income was due primarily to the decrease in revenue and increase in operating expenses discussed above.



(Dollars in thousands)	Year ended December 31, 2013			% of revenue		Combined Year ended December 31, 2012			% of revenue		Change			% change
	(Successor)					(Pro forma) (a)
Revenues, net	$	492,702		100	%	$	445,231		100	%	$	47,471		11	%
Operating costs and expenses
Cost of revenues, excluding depreciation and amortization	(265,541		)	(54	)%	(253,608		)	(57	)%	(11,933		)	5	%
Selling and marketing, excluding depreciation and amortization	(56,157		)	(11	)%	(56,875		)	(13	)%	718			(1	)%
General and administrative, excluding depreciation and amortization	(41,042		)	(8	)%	(40,215		)	(9	)%	(827		)	2	%
Allocation of costs from Predecessor Parent and affiliates	—			—	%	(10,003		)	(2	)%	10,003			(100	)%
Depreciation	(21,219		)	(4	)%	(10,113		)	(2	)%	(11,106		)	110	%
Amortization of developed technology and content	(31,894		)	(6	)%	(25,702		)	(6	)%	(6,192		)	24	%
Amortization of other identifiable intangible assets	(34,460		)	(7	)%	(33,871		)	(8	)%	(589		)	2	%
Goodwill impairment	(366,662		)	(74	)%	—			—	%	(366,662		)	nm
Other operating expenses	(35,038		)	(7	)%	(12,973		)	(3	)%	(22,065		)	170	%
Total operating costs and expenses	(852,013		)	(173	)%	(443,360		)	(100	)%	(408,653		)	92	%
Operating income (loss)	(359,311		)	(73	)%	1,871			—	%	(361,182		)	nm
Net interest income (expense)	(70,581		)	(14	)%	(76,781		)	(17	)%	6,200			(8	)%
Other finance costs	(24		)	—	%	—			—	%	(24		)	nm
Income (loss) before income taxes	(429,916		)	(87	)%	(74,910		)	(17	)%	(355,006		)	474	%
Benefit from income taxes	84,927			17	%	26,360			6	%	58,567			222	%
Net loss	$	(344,989	)	(70	)%	$	(48,550	)	(11	)%	$	(296,439	)	611	%

~~Clinicians~~(a) ~~segment~~Pro Forma year ended December 31, 2012 information gives effect to the Prior Acquisition as if it had occurred on January 1, 2012. See “Unaudited Pro Forma Financial Information.”

Discussion of year ended December 31, 2013 (Successor) compared to Pro forma year ended December 31, 2012

Revenues, net

Our net revenues were $492.7 million for the year ended December 31, 2013 as compared to $445.2 million for the pro forma year ended December 31, 2012, an increase of $47.5 million or 11%. This increase was primarily due to the impact from the $8.8 million deferred revenue adjustment in 2013 compared to the $49.1 million deferred revenue adjustment in the pro forma 2012 period, in connection with the Prior Acquisition and due to implementation and migration revenue from large state government contracts in 2013. For a detailed explanation of the variations in revenue for each of our segments, see the individual segment discussions below.

Cost of revenues, excluding depreciation and amortization

Our cost of revenues, excluding depreciation and amortization, was $265.5 million for the year ended December 31, 2013 as compared to $253.6 million for the pro forma year ended December 31, 2012, an increase of $11.9 million, or 5%. This increase was primarily due to higher implementation and data migration costs related to new projects, particularly on several large state government contracts. In addition, we incurred higher maintenance costs of developed

technology and content, royalties to Population Health content providers, telecommunications costs and other revenue related costs as we transitioned to a standalone company, partially offset by a lower bonus accrual in 2013.

Selling and marketing expense, excluding depreciation and amortization

Our selling and marketing expense, excluding depreciation and amortization, was $56.2 million for the year ended December 31, 2013 as compared to $56.9 million for the pro forma year ended December 31, 2012, a decrease of $0.7 million, or 1%, primarily due to a lower bonus accrual in 2013.

General and administrative expense, excluding depreciation and amortization

Our general and administrative expense, excluding depreciation and amortization, was $41.0 million for the year ended December 31, 2013 as compared to $40.2 million for the pro forma year ended December 31, 2012, an increase of $0.8 million, or 2%. The increase was primarily due to an increase in facilities related expense, telecommunications costs, salaries and related costs for additional new hires as we transitioned to a standalone company, partially offset by a lower bonus accrual in 2013.

Depreciation and amortization

Our depreciation and amortization expense was $87.6 million for the year ended December 31, 2013 as compared to $69.7 million for the pro forma year ended December 31, 2012, an increase of $17.9 million or 26%. This increase was primarily due to the overall impact of new computer hardware and other property, and developed technology and content that were placed in service in 2013 related to the completion of the new data center and information system infrastructure.

Other operating expenses

Our other operating expense was $35.0 million for the year ended December 31, 2013 as compared to $13.0 million for the pro forma year ended December 31, 2012, an increase of $22.1 million. This decrease was primarily due to higher expenses incurred mainly related to data migration and the separation of our IT infrastructure that started in the second half of 2012.

Goodwill impairment

We performed our annual goodwill impairment test during the fourth quarter of 2013 and concluded that our goodwill on all our reporting units is impaired because each of the reporting unit's carrying value exceeded its fair value due to lower-than-expected growth in revenue and cash flow in fiscal year 2013 resulting from certain selling cycle delays, particularly in the government sector, uncertainty in the healthcare sector related to the Patient Protection and Affordable Care Act, higher-than-expected costs due to significant investments in technology infrastructure, as well as an increase in the discount rate used in the discounted cash flow analysis as compared to the rate used in the prior year’s analysis. Accordingly, we recorded a total of $366.7 million of non-cash goodwill impairment charge in the fourth quarter of 2013.

Operating income (loss)

Our operating loss was $359.3 million for the year ended December 31, 2013 as compared to an operating income of $1.9 million for the pro forma year ended December 31, 2012, a decrease of $361.2 million. The decrease was primarily due to the goodwill impairment, as discussed above.

Net interest expense

Our net interest expense was $70.6 million for the year ended December 31, 2013, as compared to $76.8 million for the pro forma year ended December 31, 2012, a decrease of $6.2 million or 8%. The decrease was mainly due to a 2.25% lower interest rate and decrease by $3.4 million of loss on extinguishment of debt as a result of refinancing of

the Term Loan Facility in October 2012 and April 2013. In addition, there was additional interest on incremental borrowings under the Term Loan Facility and Revolving Credit Facility of $11.3 million and $30.0 million, respectively.

Other finance costs

Other finance costs mainly represents foreign exchange gains/losses as a result from our international operations. Also included in other finance costs are bank charges and fees.

Benefit from income taxes

Our income tax benefit was $84.9 million for the year ended December 31, 2013 as compared to a benefit of $26.4 million for the pro forma year ended December 31, 2012, an increase of $58.6 million or 222%. Income tax benefit for the year ended December 31, 2013 and pro forma year ended December 31, 2012, at an effective tax rate of 19.8%, and 35.2%, respectively, are different from the amount derived by applying the federal statutory tax rate of 35%, mainly due to the impact of certain state income taxes, non deductible goodwill impairment charge, and foreign rate differential.

Segment discussion

The following table summarizes our segment information for the years ended December 31, 2013 and pro forma year end December 31, 2012:



(Dollars in thousands)	Year ended December 31, 2013		% of revenue		Year ended December 31, 2012		% of revenue		Change		% change
	(Successor)				(Pro forma)(a)
Commercial
Revenues	$	394,896	100	%	$	362,803	100	%	$	32,093	9	%
Segment operating income	140,173		35	%	92,340		25	%	47,833		52	%
Government
Revenues	97,806		100	%	82,428		100	%	15,378		19	%
Segment operating income (loss)	11,053		11	%	9,775		12	%	1,278		13	%


(a)	Pro Forma year ended December 31, 2012 gives effect to the Prior Acquisition as if it had occurred on January 1, 2012. See “Unaudited Pro Forma Financial Information.”

Commercial segment

Revenues

Our ~~Clinicians~~Commercial ~~segment~~revenue ~~revenues~~was ~~were~~ $94394.89 million for ~~2012~~the year ended December 31, 2013 as compared to $~~111~~362.78 million for ~~2011~~the pro forma year ended December 31, a2012, ~~decrease~~an increase of $1632.~~9 million,~~1 million or 159%. The ~~This~~total increase was primarily due to the ~~adjustment~~lower ~~that~~impact ~~reduced~~from the deferred revenue inadjustment ~~the amount of~~ ($~~18.~~7 .2 million in ~~connection~~2013 ~~with~~compared ~~the Acquisition. Offsetting the adjustment~~ to ~~deferred revenue, the revenues increased by~~ $143.83 million, orin ~~2%,~~the inpro forma 2012 asperiod) ~~compared~~in toconnection ~~2011.~~with ~~This~~the ~~increase~~Prior ~~was~~Acquisition ~~primarily~~and offset due to ansome ~~increase~~cancellations inand ~~subscription~~price ~~revenue~~competition ~~from~~in ~~Intelligent~~care ~~Evidence~~management solutions ~~due to higher demand~~.

~~Segment~~Operating ~~operating~~ income

Our ~~combined~~Commercial ~~cost~~operating ofincome ~~operations,~~was ~~which~~$140.2 ~~includes~~million for ~~depreciation~~the ~~and~~year ~~amortization~~ended ~~expense~~December 31, ~~for~~2013 ~~the~~as ~~Clinicians~~compared ~~segment~~to ~~was~~ $7792.3 million for ~~2012~~the aspro ~~compared~~forma toyear ~~$77.9~~ended ~~million for 2011~~December 31, a2012 ~~decrease~~an increase of $047.68 million, or 152%. The ~~decrease~~increase was mainly due to the increase in ~~cost~~revenue discussed above and higher costs of operations ~~was~~in ~~primarily~~2012 ~~due~~as we transitioned to ~~cost~~a ~~savings~~standalone ~~initiatives~~company.

~~Our combined depreciation and amortization expense for the Clinicians segment was $9.0 million for 2012 as compared to $5.9 million for 2011, an increase of $3.1 million, or~~ 52%. This was primarily due to capital expenditures during the year, which were partially offset by the overall impact of the fair value adjustment of computer hardware and other property, and developed technology and content with estimated longer useful lives as a result of the Acquisition.

~~Our~~Government ~~Clinicians~~ segment operating income was $17.6 million for 2012, as compared to $33.7 million for 2011, a decrease of $16.1 million, or 48%. The decrease in operating income was primarily due to the decrease in revenue and offset by the decrease in operating expenses, each as discussed above.

Revenues

Our Government revenue was $97.8 million for the year ended December 31, 2013 compared to $82.4 million for the pro forma year ended December 31, 2012, an increase of $15.4 million or 19%. The increase was primarily due to implementation and migration revenue from large contracts in state government and the lower impact from the deferred revenue adjustment ($1.6 million in 2013 compared to $5.8 million in the pro forma 2012 period) in connection with the Prior Acquisition.

Operating income

Our Government operating income was $11.1 million for the year ended December 31, 2013 compared to $9.8 million for the pro forma year ended December 31, 2012, an increase in operating income of $1.3 million or 13%. The increase was mainly due to the increase in revenue discussed above, offset by higher costs mainly due to initiatives to improve sales in the federal and state agencies, such as Centers for Medicare & Medicaid Services, state Medicaid agencies, as well as federally owned and operated healthcare facilities.

Non-GAAP Measures

Adjusted EBITDA Calculation

EBITDA is defined as net income before net interest (expense) income, provision for income taxes, and depreciation and amortization, and is used by management to measure the overall operating performance of the business at a consolidated and combined level. We also use EBITDA and Adjusted EBITDA as a measure to calculate certain financial covenants related to the Senior Credit Facility and as a factor in our tangible and intangible asset impairment testing. Adjusted EBITDA is calculated by adding to or subtracting from EBITDA items of expense and income as described below.

EBITDA and Adjusted EBITDA are supplemental measures of our overall performance and our ability to service debt that are not required by, or presented in accordance with, GAAP. EBITDA and Adjusted EBITDA are not measurements of our financial performance under GAAP and should not be considered as alternatives to net income or other performance measures derived in accordance with GAAP, or as alternatives to cash flow from operating activities as measures of our liquidity. In addition, our measurements of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Management believes that the presentation of EBITDA and Adjusted EBITDA and the ratios using EBITDA and Adjusted EBITDA included in this report provide useful information to investors regarding our results of operations because they assist in analyzing and benchmarking the performance and value of our business.

EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider such measures either in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are:


•	EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;


•	EBITDA and Adjusted EBITDA do not reflect our interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;


•	EBITDA and Adjusted EBITDA do not reflect our tax expense or the cash requirements to pay our taxes;


•	EBITDA and Adjusted EBITDA do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;


•	EBITDA and Adjusted EBITDA do not reflect pension and post-retirement obligations;


•	Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements; and


•	Other companies in our industry may calculate EBITDA and Adjusted EBITDA differently, limiting their usefulness as comparative measures.

Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as discretionary cash available to us to reinvest in the growth of our business or as a measure of cash that will be available to us to meet our obligations.

The following table is a reconciliation of our net loss to EBITDA and Adjusted EBITDA for the year ended December 31, 2014 and 2013, the combined year ended December 31, 2012, ~~and~~ the ~~year~~Successor ~~ended~~Period from inception (April 20, 2012) to December 31, ~~2011~~2012 and Predecessor Period from January 1, 2012 to June 6, 2012:

	Year ended December 31,			~~Combined~~Year ~~year~~ ended December 31,			~~From~~Combined ~~inception~~year ~~(April~~ended ~~20, 2012) to~~ December 31,			From inception (April 20, 2012) to December 31,		~~January 1, 2012 to June 6,~~			~~Year~~January ~~ended~~1, ~~December~~2012 31to June 6,
(Dollar in thousands)	~~2013~~2014			~~2012~~2013			2012			2012		~~2012~~			~~2011~~2012
	(Successor)						~~(Successor)~~					~~(Predecessor)~~			(Predecessor)
Net income (loss)	$	(344,989	)	$	(61,745	)	$	(54,112	)			$	(7,633	)	$	14,881
Net loss	$	(37,022	)	$	(344,989	)	$	(61,745	)	$	(54,112	)			$	(7,633	)
Provision for (benefit from) income tax	(84,927		)	(34,796		)	(29,993		)			(4,803		)	9,859
Benefit from income tax	(22,686		)	(84,927		)	(34,796		)	(29,993		)			(4,803		)
Interest income from Predecessor Parent	—			—			—					—			(134		)
Net interest expense (income)	69,616			70,581			49,011			49,014					(3		)
Net interest expense (income)	70,581			49,011			49,014					(3		)	63
Depreciation	22,350			21,219			13,505			6,700					6,805
Depreciation	21,219			13,505			6,700					6,805			14,851
Amortization of developed technology and content	38,752			31,894			27,930			15,470					12,460
Amortization of developed technology and content	31,894			27,930			15,470					12,460			24,208
Amortization of other identifiable intangible assets	45,402			34,460			27,753			19,527					8,226
Amortization of other identifiable intangible assets	34,460			27,753			19,527					8,226			19,691
EBITDA	116,412			(271,762		)	21,658			6,606					15,052
EBITDA	(271,762		)	21,658			6,606					15,052			83,419
Acquisition related and transition costs and other nonrecurring expenses(1)	13,203			30,815			70,449			48,164					22,285
Acquisition related and transition costs to a standalone company(1)	30,815			70,449			48,164					22,285			22,222
Allocation of costs from Predecessor Parent and Affiliates(2)	—			—			14,871			—					14,871
Allocation of costs from Predecessor Parent and Affiliates(2)	—			14,871			—					14,871			44,709
Estimated standalone costs(3)	—			—			(10,306		)	—					(10,306		)
Estimated standalone costs(3)	—			(10,306		)	—					(10,306		)	(23,090		)
Non-cash stock compensation expense	1,271			1,457			1,384			329					1,055
Non-cash stock compensation expense	1,457			1,384			329					1,055			1,349
Deferred revenue adjustments(4)	6,028			8,758			43,484			43,484					—
Deferred revenue adjustments(4)	8,758			43,484			43,484					—			—
Shared asset depreciation(5)	—			—			558			—					558
Shared asset depreciation(5)	—			558			—					558			1,538
Goodwill impairment(6)	—			366,662			—			—					—
Goodwill impairment(6)	366,662			—			—					—			—
Asset write-offs/retirements(7)	4,706			1,856			—			—					—
Asset write-offs/retirements(7)	1,856			—			—					—			—
Other(8)	2,875			2,929			1,719			(4,129		)			5,848
Other(8)	2,929			1,719			(4,129		)			5,848			424
Adjusted EBITDA	$	144,495		$	140,715		$	143,817		$	94,454				$	49,363
Adjusted EBITDA	$	140,715		$	143,817		$	94,454				$	49,363		$	130,571

49(1) The Successor Periods included retention incentives to key employees related to the Prior Acquisition and costs as we transition to a standalone company. The Predecessor Periods included disposal related costs and severances and bonuses in connection with the disposal. See Note 14 to the consolidated and combined financial statements, included elsewhere in this Annual Report.

(12) ~~The~~Includes ~~Successor~~allocation ~~periods~~of ~~included~~costs ~~retention~~from ~~incentives~~Predecessor toParent ~~key~~and ~~employees~~affiliates ~~related~~and tocost ~~the~~of ~~Acquisition~~revenues and ~~costs~~allocation asof wetechnology ~~transition~~support toadministered aby ~~standalone~~the ~~company. The~~ Predecessor ~~periods~~Parent ~~included~~relating ~~disposal~~to ~~related~~customer ~~costs~~data. ~~and~~These ~~severances~~allocations ~~and~~ceased ~~bonuses~~following ~~in connection with~~ the ~~disposal.~~completion ~~See~~of ~~Note 14 to~~ the ~~consolidated~~Prior ~~and~~Acquisition ~~combined~~on ~~financial~~June ~~statements~~6, ~~included elsewhere in this Annual Report~~2012.

(2) Includes allocation of costs from Predecessor Parent and affiliates and cost of revenues and allocation of technology support administered by the Predecessor Parent relating to customer data. These allocations ceased following the completion of the Acquisition on June 6, 2012.


(3)	Company standalone estimates for shared services costs.

(4) Amount of the reduction in deferred revenue as a result of the Prior Acquisition and acquisitions in 2014 that negatively impacted our revenue. We wrote down the value of our deferred revenue based on valuation analysis completed as a result of the ~~Acquisition~~acquisitions.


(5)	Portion of allocated costs in cost of revenues that represent depreciation.

(6) Goodwill impairment loss on all ~~three~~ reporting units. See Note 8 to the ~~consolidated and combined~~ financial statements, included elsewhere in this Annual Report.

(7) ~~Includes~~In 2014, includes $4,706 of asset write-off of advanced revenue share with a supplier. In 2013, includes $562 of write-offs and retirements of certain computer hardware and other assets, and $1,294 write-off of advanced revenue share with a supplier. See Note 16 to the consolidated and combined financial statements, included elsewhere in this Annual Report.

~~(8) Other mainly includes recurring management fees paid to the Sponsor in 2013 and non-cash vacation accrual true-up charges in connection with the Acquisition in 2012.~~54

50(8) Other mainly includes recurring management fees paid to the Sponsor in the successor periods and non-cash vacation accrual true-up charges in the period from April 20, 2012 to December 31, 2012, in connection with the Prior Acquisition.

Liquidity and Capital Resources

Cash flows

The following table summarizes our cash activities:

(In thousands)	Year ended December 31, ~~2013~~2014			~~Combined -~~ Year ended December 31, ~~2012~~2013			From inception (April 20, 2012) to December 31, 2012			~~January 1, 2012 to June 6, 2012~~	January 1, 2012 to June 6, 2012			~~Year ended December 31, 2011~~
	(Successor)						~~(Successor)~~			~~(Predecessor)~~	(Predecessor)			~~(Predecessor)~~
Net cash provided by (used in) operating activities	$	(145,~~365~~217	)	$	45(1,~~158~~365	)	$	27,352		$	~~17,806~~$	17,806		$	~~85,017~~
Net cash used in investing activities	(43142,~~785~~067		)	(143,~~290,957~~785		)	(1,280,672		)	~~(10,285~~	(10,285	)	)	~~(40,521~~		)
Net cash provided by (used in) financing activities	3199,~~765~~338			131,~~269,612~~765			1,277,125			~~(7,513~~	(7,513	)	)	~~(44,659~~		)

Operating activities

Cash provided by ~~(used in)~~ operating activities for the year ended December 31, ~~2013~~2014 was $(145.4)2 million as compared to cash ~~provided~~used byin operating activities of $451.24 million for the ~~combined~~ year ended December 31, ~~2012~~2013, aan ~~decrease~~increase of $46.56 million. The ~~decrease~~increase was mainly due to $2558.84 million ~~increase~~in higher payments to various suppliers in ~~interest~~2013 resulting from timing of cash payments related to ~~our~~various ~~debt~~costs ~~during~~we ~~the~~incurred ~~2013~~upon ~~period.~~completion of ~~This~~our ~~was~~transition ~~partially~~to a standalone company in 2013, offset in part by a $3010.26 million ~~increase~~decrease in cash receipts from customers ~~due~~and toa ~~improved~~$1.2 ~~efforts~~million increase in ~~collection~~interest ~~and~~payments adue to an aggregate increase of $50140.90 million ~~increase~~ in ~~payments~~the toborrowings ~~various~~under ~~suppliers~~the ~~mainly~~the ~~due~~Senior toCredit ~~timing~~Facility ofand ~~cash~~Additional ~~payments~~Notes.

Cash ~~provided~~used byin operating activities for ~~2012~~the year ended December 31, 2013 was $451.24 million as compared to ~~$85.0~~cash ~~million~~provided ~~for~~by ~~2011.~~operating ~~This~~activities ~~decrease~~ of $3927.84 million in ~~was~~the ~~primarily~~period ~~related~~from toApril ~~a decrease in net income~~20, ~~driven~~2012 by(inception) ~~Acquisition~~to ~~related~~December ~~costs~~31, ~~and~~2012 ~~activities~~ and ~~interest~~cash ~~payments.~~provided ~~Cash~~by ~~receipts~~operating ~~from~~activities ~~customers~~of ~~decreased by~~ $217.98 million in ~~2012~~the ~~compared~~Predecessor toPeriod ~~2011~~from ~~primarily~~January ~~due~~1, 2012 to ~~lower~~June ~~revenues~~6, 2012. WeThe ~~made~~total ~~interest~~decrease ~~cash~~was ~~payments~~mainly ofdue to a $3625.38 million increase in ~~2012~~interest payments related to our debt ~~used~~during tothe ~~partially~~2013 ~~fund~~period ~~the~~and ~~Acquisition~~a $50.9 ~~The~~million increase in ~~cash~~ payments ofto ~~$22.0~~various ~~million~~suppliers ~~directly~~mainly related to ~~other~~disentanglement ~~operating~~ costs, ~~including~~in ~~acquisitions/disposal~~2013. This ~~costs~~was ~~were~~partially ~~more than~~ offset by a $2130.42 million ~~decrease~~increase in cash ~~payments~~receipts tofrom ~~suppliers~~customers ~~and service providers~~ due to ~~timing~~improved ofefforts ~~payments~~in collection.

Investing activities

Cash used in investing activities for the year ended December 31, ~~2013~~2014 of $43142.81 million ~~was~~consisted ~~mainly~~of ~~due to~~ $43109.54 million inof capital expenditures related to a new data center, IT infrastructure and developed technology and content and $0.3 million notes receivable from VCPH Holding LLC as compared to $1,291.0 million for the combined year ended December 31, 2012, which mainly related to cash used to pay the purchase price of the ~~Acquisition in 2012 of $1~~Simpler,~~249.4~~ ~~million. Capital~~HBE ~~expenditures~~and ~~increased~~JWA byacquisitions and $132.97 million ~~due~~of tocapital anexpenditures ~~increase~~related in to computer hardware, ITand ~~infrastructure~~ and developed technology and content ~~as the Company transitioned into a standalone company~~.

Cash used in investing activities for the year ended December 31, ~~2011~~2013 of $4043.8 million was mainly due to $43.5 million ~~consist~~in capital expenditures related to a new data center, IT infrastructure and developed technology and content and $0.3 million of notes receivable from VCPH Holding LLC. Cash used in investing activities for the period from April 20, 2012 (inception) to December 31, 2012, mainly relates to the $1,249.4 million of purchase price of the Prior Acquisition and $31.3 million in capital expenditures related to IT infrastructure and developed technology and content. Cash used in investing activities for the Predecessor Period from January 1, 2012 to June 6, 2012, mainly relates to $10.3 million of capital expenditures related to computer hardware and other property and equipment, and developed technology and ~~contents~~content.

Financing activities

Cash provided by financing activities for the year ended December 31, ~~2013~~2014 was $3199.83 million. This amount consisted of a $30141.02 million ~~Revolving~~of ~~Credit~~aggregate ~~Facility~~proceeds ~~loan~~from ~~drawn~~borrowing ~~for~~under ~~working~~the ~~capital~~Senior ~~requirements,~~Term ~~$2.4~~Loan ~~million~~Facility ofand ~~additional~~Additional ~~capital~~Note ~~contribution~~used ~~from~~to partly finance the ~~Parent~~business acquisitions during the year, ~~and~~offset ~~net~~in ~~proceeds~~part ofby a $1130.30 million ~~from~~net ~~the~~payment ~~April~~on ~~2013~~the ~~refinancing,~~Revolving ~~partially offset~~

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byCredit Facility loan, a $56.31 million of principal repayment of the Senior Term Loan Facility, $54.81 million of ~~premium~~debt ~~payment~~issuance tocosts ~~lenders for the April 2013 Refinancing~~ and a $01.87 million principal payment of capital lease obligation.

Cash provided by financing activities for the ~~combined~~ year ended December 31, ~~2012~~2013 was $~~1,269~~31.68 million . ~~During~~This ~~2012,~~amount ~~cash~~consisted ~~provided~~of bya ~~financing~~$30.0 ~~activities~~million inRevolving ~~2012~~Credit ~~included~~Facility ~~$464.4~~loan ~~million~~drawn infor ~~cash~~working ~~from~~capital ~~equity contributions~~requirements, $~~842~~2.14 million ~~from~~of ~~the~~additional ~~issuance~~capital ofcontribution ~~debt~~from ~~(Term~~the ~~Loan~~Parent, ~~Facility~~ and ~~Notes)~~net ~~that~~proceeds ~~was~~of $11.3 ~~used~~million tofrom ~~pay~~ the ~~purchase~~April ~~price~~2013 ~~of the Acquisition~~refinancing, ~~which was~~ partially offset by $25.63 million of principal ~~payment~~repayment onof the Senior Term Loan Facility, $~~21.6 million of debt issuance costs and $~~5.28 million of premium payment to lenders for the ~~October~~April ~~2012~~2013 Refinancing~~. In~~ ~~addition,~~and ~~there was an increase of~~ $160.8 million inprincipal ~~the~~payment ~~net investment~~ of ~~the Predecessor Parent in our Predecessor and~~ a ~~$9.2~~capital ~~million~~lease ~~decrease in notes receivable from the Predecessor Parent~~obligation.

Cash ~~used~~provided inby financing activities for the combined year ended December 31, ~~2011~~2012 ~~amounted~~was $1,269.6 million. During 2012, cash provided by financing activities included $464.4 million in cash from equity contributions, $842.1 million from the issuance of debt (Term Loan Facility and Notes) that was used to pay the purchase price of the Prior Acquisition, which was partially offset by $442.76 million of principal payment on the Senior Term Loan Facility, $21.6 million of debt issuance costs and ~~due~~$5.2 million of premium payment to lenders for the ~~decrease~~October 2012 Refinancing. In addition, there was an increase of $5316.08 million in the net investment of the Predecessor Parent in our Predecessor and a $9.2 million decrease in notes receivable from the Predecessor Parent ~~of $8~~.4 ~~million.~~

Notes receivable from the Predecessor Parent refers to certain of our Predecessor's cash transactions with the Predecessor Parent, which were subject to written loan agreements specifying repayment terms and interest payments. The term of the agreement was one year and was automatically renewed from year to year unless one of the parties notified the other in writing of termination. These ~~loan~~notes ~~agreements~~receivable ~~were~~ satisfied on completion of the Prior Acquisition.

Liquidity and Capital Resources

We believe that our cash flows from operations and our existing available cash, together with our other available external financing sources, will be adequate to meet our future liquidity needs for the next year. Our principal liquidity needs will be to fund capital expenditures, provide working capital, meet debt service requirements and finance our strategic plans, including possible acquisitions. We expect to spend approximately $33 million on capital expenditures in 2015 (excluding acquisitions and related costs); however, actual capital expenditures may differ. For ongoing liquidity purposes, we primary intend to utilize our existing cash and cash equivalents, cash generated from operations and borrowings under our Revolving Credit Facility.

Our cash position is impacted by our billings from on-going services and subscription contracts. Typically, a significant ~~consideration~~portion onof the contract revenue is paid upfront and most contracts are renewed during the latter part of the fourth quarter. Many renewals are billed in December and January, which are normally collected in the first quarter of the following year. As such, we have historically experienced a low level of cash every third quarter of a calendar year, but that may vary depending on any new significant contracts driven by ~~State~~state government projects, concurrent with the start of the ~~State~~state government’s fiscal year.

We believe that our cash flows from operations and our existing available cash, together with our other available external financing sources, will be adequate to meet our future liquidity needs for the next year. We expect to spend approximately $40 million on capital expenditures in 2014 (excluding acquisitions and related costs); however, actual capital expenditures may differ. As of December 31, ~~2013~~2014, we had outstanding letters of credit of $07.35 million, which reduced the available line of credit to $1942.75 million.

Indebtedness

As of December 31, ~~2013~~2014, our principal outstanding indebtedness was $~~888~~992.10 million, consisting of ~~$531~~624.09 million from under the Term Loan Facility, $~~327~~367.2 million under the Notes ~~and $30~~.~~0 million from the Revolving Credit Facility.~~

A discussion of our outstanding indebtedness as of December 31, ~~2013~~2014 is below:

Senior Credit Facility

The Senior Credit Facility, as amended on April 2611, ~~2013~~2014, is with a syndicate of banks and other financial institutions and provides financing of up to $~~585~~679.07 million, consisting of the $~~535~~629.07 million Term Loan Facility, with a maturity of ~~seven~~five years, and the $50.0 million Revolving Credit Facility with a maturity of five years. As of December 31, ~~2013~~2014, the Company had an outstanding ~~revolving loan of $30.0 million and outstanding~~ letters of credit of $07.35 million, which, while not drawn, reduce the available line of credit under the Revolving Credit Facility to $1942.75 million.

5257

Borrowings under the Senior Credit Facility, other than swing line loans, bear interest at a rate per annum equal to an applicable margin plus, at Truven's option, either (a) a base rate determined by reference to the highest of (1) the prime rate of JPMorgan Chase Bank, N.A., (2) the federal funds effective rate plus 0.50% and (3) the one month Eurodollar rate plus 1.00%; provided, that the base rate for the Term Loan Facility at any time shall not be less than 2.25%, or (b) a Eurodollar rate adjusted for statutory reserve requirements for a one, two, three or six month period (or a nine or twelve month interest period if agreed to by all applicable lenders); provided that the Eurodollar base rate used to calculate the Eurodollar rate for the Term Loan Facility at any time shall not be less than 1.25%. Swing line loans will bear interest at the interest rate applicable to base rate loans, plus an applicable margin. In addition to paying interest on outstanding principal under the Senior Credit Facility, we are required to pay a commitment fee to the lenders under the Revolving Credit Facility in respect of the unutilized commitments thereunder at a rate equal to 0.50% (subject to reduction upon attainment of certain leverage ratios). We will also pay customary letter of credit fees and certain other agency fees. Truven may voluntarily repay outstanding loans under the Senior Credit Facility at any time without premium or penalty, other than customary “breakage” costs with respect to adjusted LIBOR loans. We are required to repay $1.36 million of the Term Loan Facility quarterly, through March 31, 2019, with any remaining balance due June 6, 2019.

All obligations under the Senior Credit Facility are guaranteed by Truven Holding and each of Truven's existing and future wholly-owned domestic subsidiaries ~~(of which there are currently none)~~. All obligations under the Senior Credit Facility and the guarantees of those obligations are collateralized by first priority security interests in substantially all of Truven's assets as well as those of each guarantor (subject to certain limited exceptions).

The Senior Credit Facility contains a number of covenants that, among other things, restrict, subject to certain exceptions, Truven's ability, and the ability of each of any restricted subsidiaries, to: sell assets; incur additional indebtedness; prepay other indebtedness (including the Notes); pay dividends and distributions or repurchase its capital stock; create liens on assets; make investments; make certain acquisitions; engage in mergers or consolidations; engage in certain transactions with affiliates; amend certain charter documents and material agreements governing subordinated indebtedness; change the business conducted by it and its subsidiaries; and enter into agreements that restrict dividends from subsidiaries.

In addition, the Senior Credit Facility requires Truven, to maintain a quarterly maximum consolidated senior secured leverage ratio in accordance with the debt covenants as long as the commitments under the Revolving Credit Facility remain outstanding (subject to certain limited exceptions). The Senior Credit Facility also contains certain customary representations and warranties, affirmative covenants and events of default. As Weof ~~were~~December in31, ~~compliance~~2014, ~~with~~the Consolidated ~~all~~Senior ofSecured ~~these~~Leverage ~~credit~~Ratio ~~facility~~and ~~covenants~~the asmaximum ofratio at December 31, ~~2013~~2014 were 3.7 and 4.5, respectively, and we were in compliance with all the Senior Credit Facility covenants.

On October 3, 2012, we entered into the First Amendment to the Senior Credit Facility with a syndicate of banks and other financial institutions with no changes in the terms and conditions other than the reduction of the applicable margin by 1.00%.

On April 26, 2013, we entered into the Second Amendment to the Senior Credit Facility (referred to as the "April 2013 Refinancing") with a syndicate of banks and other financial institutions to (i) increase the aggregate principal amount of the Term Loan Facility from $523.7 million to $535.0 million, (ii) reduce the applicable margin by 1.25%, (iii) with respect to the Term Loan Facility, determine the applicable margin in accordance with a pricing grid based on our consolidated total leverage ratio following delivery of financial statements at the end of each fiscal year or quarter, as applicable, after the second quarter of fiscal year 2013, (iv) revise the quarterly principal payments from $1,319.0 to $1,337.5 starting on June 30, 2013 and (v) extend the 1% repricing call protection from June 6, 2013 to October 26, 2013. There were no other changes to the terms and conditions.

On April 11, 2014, we entered into the Third Amendment (the "Third Amendment") to our Senior Credit Facility (the "Senior Credit Facility") for a $100.0 million increase in the Tranche B Term Loans, and increased the total amount available under the Senior Credit Facility to $679.7 million, consisting of a $629.7 million Term Loan Facility and a $50.0 million Revolving Credit Facility (which remained unchanged). The Company borrowed the entire $100.0 million principal amount of the Supplemental Tranche B Term Loans to finance the acquisition of Simpler, repay outstanding loans of $15.0 million in aggregate principal amount under its Revolving Credit Facility and pay fees and expenses

relating to the acquisition of Simpler. Under the terms of the Third Amendment, the Company must repay the principal amount of the Tranche B Term Loans in twenty consecutive quarterly installments beginning on June 30, 2014 and continuing through March 31, 2019 in the amount of $1.6 million each, and a final installment on June 6, 2019 in the amount of $597.8 million. The terms and conditions that apply to the Supplemental Tranche B Term Loans under the Third Amendment are substantially the same as the terms and conditions that apply to the existing Tranche B Term Loans under the Senior Credit Facility.

The Third Amendment also amended the Senior Credit Facility to make certain adjustments to the Consolidated Senior Secured Leverage Ratio applicable to the Company by increasing the maximum permitted ratios for certain periods from 2014 to 2016. During 2014, all domestic subsidiaries acquired by the Company became guarantors under the Senior Credit Facility.

10.625% Senior Notes due 2020

~~The~~Old ~~Notes,~~or ~~which~~Exchanged were issued under an indenture, dated June 6, 2012 (the “Indenture”), with The Bank of New York Mellon Trust Company, N.A. as trustee, bear interest at a rate of 10.625% per annum, payable on June 1 and December 1 of each year (commencing on December 1, 2012), and have a maturity date of June 1, 2020. On the same day, we entered into the first supplemental indenture (the “First Supplemental Indenture”), whereby Truven became a party to the Indenture as successor in interest to Wolverine. The Notes ~~are general unsecured senior obligations of Truven, fully~~

53Notes were issued on June 6, 2012, under an indenture (the "Indenture", as supplemented by the First Supplemental Indenture, whereby Truven became a party to the Indenture as successor in interest to Wolverine, and the Second Supplemental Indenture), with The Bank of New York Mellon Trust Company, N.A. as trustee, bear interest at a rate of 10.625% per annum, payable on June 1 and December 1 of each year, and have a maturity date of June 1, 2020.

The Notes are general unsecured senior obligations of Truven, fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by Truven Holding and each of Truven'’s existing and future wholly-owned domestic restricted subsidiaries ~~(of which there currently are none)~~ that is a borrower under or that guarantees the obligations under the Senior Credit Facility or any other indebtedness of Truven or any other guarantor.

Truven may redeem some or all of the Notes at any time prior to June 1, 2016 at 100% of the principal amount thereof, plus the applicable premium pursuant to the Indenture as of the applicable redemption date, plus accrued and unpaid interest and any additional interest to, but excluding, the applicable redemption date. Truven may redeem some or all of the Notes at any time on or after June 1, 2016 at 105.313% of the principal amount thereof, declining ratably to 100% of the principal amount thereof on or after June 1, 2018, plus, in each case, accrued and unpaid interest and any additional interest to, but excluding, the applicable redemption date. In addition, at any time prior to June 1, 2015, Truven (subject to certain conditions) may redeem up to 35% of the aggregate principal amount of the Notes using net cash proceeds from certain equity offerings at 110.625% of the aggregate principal amount of the Notes plus accrued and unpaid interest and any additional interest, to, but excluding, the applicable redemption date. If Truven experiences a change of control (as defined in the Indenture), it will be required to make an offer to repurchase the Notes at a price in cash equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest, and any additional interest, to, but excluding, the date of purchase.

The Indenture contains covenants limiting Truven and its wholly-owned restricted subsidiaries with respect to other indebtedness, investments, liens, dividends, purchases or redemptions of stock, transactions with affiliates, and mergers and sales of assets. The Indenture also contains covenants limiting the ability of wholly-owned restricted subsidiaries to guarantee payment of any indebtedness of Truven or any subsidiary guarantor and limiting ~~Truven~~the ~~Holding~~Company's business and operations. Following our series of acquisitions in 2014, all the domestic subsidiaries we acquired became guarantors of the Notes as a result of the guarantees of the Senior Credit Facility provided by such subsidiaries. The guarantees were entered into pursuant to the Third, Fourth and Sixth Supplemental Indentures. We were in compliance with all of these covenants as of December 31, ~~2013~~2014.

On June 5, 2013, we entered into the second supplemental indenture (the “Second Supplemental Indenture”), whereby the guarantee release provision in the Indenture, which allows guarantors to be released from their obligations under the Indenture upon the release or discharge of such guarantor’s guarantee of the Senior Credit Facility or the guarantee which resulted in the creation of the guarantee under the Indenture (subject to certain limitations), was amended to apply only to subsidiary guarantors and not to Truven Holding.

Pursuant to a registration rights agreement dated June 6, 2012, we agreed (i) to use commercially reasonable efforts to file with the SEC an exchange offer registration statement pursuant to which we would exchange the Notes issued in a private offering (the "Old Notes") (and related guarantees) for a like aggregate principal amount of new registered notes, which are identical in all material respects to the Old Notes, except for certain provisions, among others, relating to additional interest and transfer restrictions (the “Exchange Notes”) (and related guarantees) or (ii) under certain circumstances, to use commercially reasonable efforts to file a shelf registration statement with the SEC with respect to the Old Notes (and related guarantees), in each case by March 3, 2013. We did not file the required registration statement for the Notes by March 3, 2013, and consequently, we were required to pay additional penalty interest of 0.25% per annum for the 90 day period commencing March 4, 2013, and an additional 0.25% with respect to each subsequent 90 day period, in each case until and including the date the exchange offer is completed, up to a maximum increase of 1.00% per annum.59

OnPursuant ~~June~~to ~~26,~~a ~~2013, the exchange offer~~ registration ~~statement~~rights ~~was~~agreement ~~declared~~dated ~~effective~~June ~~by the SEC. On July 31~~6, ~~2013,~~2012 ~~Truven~~(the ~~accepted~~"Registration ~~for~~Rights ~~exchange all $327~~Agreement"),~~150~~ ~~aggregate~~we ~~principal~~exchanged ~~amount of~~ the Old Notes ~~tendered. As~~(and ofrelated ~~August~~guarantees) 1,for ~~2013,~~ the ~~interest~~Exchange ~~rate on the new~~ Notes ~~reverted to 10~~.~~625%.~~

~~Our~~Additional cash position is impacted by our billings from on-going services and subscription contracts. Typically, significant consideration on the contract is paid upfront and most contracts are renewed during the latter part of the fourth quarter. Many renewals are billed in December and January, which are normally collected in the first quarter of the following year. As such, we have historically experienced a low level of cash every third quarter of a calendar year, but that may vary depending on any new significant contracts driven by State government projects, concurrent with the start of the State government’s fiscal year.Notes

54The Additional Notes were issued pursuant to the Indenture dated June 6, 2012 governing the Old Notes and, together with the Additional Notes, the "Notes"), as supplemented by the Fifth Supplemental Indenture, dated as of November 12, 2014 (the "Fifth Supplemental Indenture") by and among Truven, the Guarantors and the Trustee. The Additional Notes form a single series with the Notes and have the same terms as the Notes and rank equal in right of payments.

Pursuant to the Registration Rights Agreement entered into with respect to the Additional Notes, Truven and the guarantors agreed to use their commercially reasonable efforts to file with the SEC and cause to become effective by May 11, 2015, a registration statement relating to an offer to issue new registered notes having terms substantially identical to the Additional Notes in exchange for the outstanding Additional Notes. In certain circumstances, the Truven and the guarantors may be required to use commercially reasonable efforts to file a shelf registration statement to cover resales of the Additional Notes. Truven may be required to pay additional interest to holders of the Addi

Truven Holding Corp.

Truven Health Analytics Inc.

(Exact name of registrant parent guarantor as specified in its charter)

(Exact name of registrant parent guarantor as specified in its charter)

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

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