10-Q

Use these links to rapidly review the document
TABLE OF CONTENTS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

(Mark One)
ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2015
or
o	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 001-36841

INOVALON HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	47-1830316 (I.R.S. Employer Identification No.)
4321 Collington Road, Bowie, Maryland (Address of principal executive offices)	20716 (Zip Code)

(301) 809-4000
Registrant's telephone number, including area code

        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 o    No ý

        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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý    No o

        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 the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer o Non-accelerated filer ý
(Do not check if a
smaller reporting company) Smaller reporting company o

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

        As of May 7, 2015, the registrant had 25,364,803 shares of Class A common stock outstanding and 122,291,520 shares of Class B common stock outstanding.

INOVALON HOLDINGS, INC.

FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2015

TABLE OF CONTENTS

		Page
PART I—FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements		1
	Consolidated Balance Sheets as of March 31, 2015 (unaudited) and December 31, 2014		1
	(Unaudited) Consolidated Statements of Income for the three months ended March 31, 2015 and 2014		2
	(Unaudited) Consolidated Statements of Stockholders' Equity (Deficit) for the three months ended March 31, 2015		3
	(Unaudited) Consolidated Statements of Cash Flows for the three months ended March 31, 2015 and 2014		4
	(Unaudited) Notes to Consolidated Financial Statements		5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		30
Item 4.	Controls and Procedures		30
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings		32
Item 1A.	Risk Factors		32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		32
Item 3.	Defaults Upon Senior Securities		32
Item 4.	Mine Safety Disclosures		32
Item 5.	Other Information		32
Item 6.	Exhibits		33
SIGNATURES			35

PART I—FINANCIAL INFORMATION

Item 1.    Consolidated Financial Statements

INOVALON HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and par value amounts)

	March 31, 2015		December 31, 2014
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	793,114	$	162,567
Accounts receivable (net of allowances of $1,420 and $1,827 at March 31, 2015 and December 31, 2014, respectively)		65,641		43,938
Prepaid expenses and other current assets		5,738		6,015
Income tax receivable		—		6,797
Deferred income taxes		476		491
Total current assets		864,969		219,808
Non-current assets:
Property, equipment and capitalized software, net		52,347		50,962
Goodwill		62,269		62,269
Intangible assets, net		6,905		7,447
Other assets		1,941		2,083
Total assets	$	988,431	$	342,569
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	10,937	$	10,974
Accrued compensation		8,423		15,305
Other current liabilities		2,667		1,992
Deferred revenue		4,517		3,904
Income tax payable		2,554		—
Deferred rent		606		567
Credit facilities		17,500		18,750
Capital lease obligation		96		99
Total current liabilities		47,300		51,591
Non-current liabilities:
Credit facilities, less current portion		277,500		281,250
Capital lease obligation, less current portion		145		168
Deferred rent		2,471		2,619
Deferred income taxes		14,655		15,163
Total liabilities		342,071		350,791
Commitments and contingencies (Note 7)
Stockholders' equity (deficit):
Common stock, $0.000005 par value, 900,000,000 shares authorized, zero shares issued and outstanding at each of March 31, 2015 and December 31, 2014, respectively		—		—
Class A common stock, $0.000005 par value, 750,000,000 shares authorized, 25,364,803 and 11,109,285 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively		—		—
Class B common stock, $0.000005 par value, 150,000,000 shares authorized, 122,257,145 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively		1		1
Preferred stock, $0.0001 par value, 100,000,000 shares authorized, zero shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively		—		—
Additional paid-in-capital		451,123		110,317
Retained earnings		195,236		181,477
Treasury stock, at cost, zero shares at March 31, 2015 and 11,109,285 at December 31, 2014		—		(300,017	)
Total stockholders' equity (deficit)		646,360		(8,222	)
Total liabilities and stockholders' equity (deficit)	$	988,431	$	342,569

See notes to consolidated financial statements.

1

INOVALON HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited, in thousands, except per-share amounts)

	Three Months Ended March 31,
	2015			2014
Revenue	$	93,633		$	84,674
Expenses:
Cost of revenue		31,851			28,587
Sales and marketing		1,850			1,333
Research and development		5,411			6,048
General and administrative		24,258			19,934
Depreciation and amortization		4,915			4,855
Total operating expenses		68,285			60,757
Income from operations		25,348			23,917
Other income and (expenses):
Interest income		8			2
Interest expense		(1,103	)		(13	)
Income before taxes		24,253			23,906
Provision for income taxes		10,494			9,349
Net income	$	13,759		$	14,557
Basic net income per share	$	0.10		$	0.11
Diluted net income per share	$	0.10		$	0.11
Weighted average shares of common stock outstanding:
Basic		135,331			134,645
Diluted		138,902			136,776

See notes to consolidated financial statements.

2

INOVALON HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

(Unaudited, in thousands, except share amounts)

									Issued Class A Common Stock				Issued Class B Common Stock
	Preferred Stock				Common Stock												Treasury Stock											Total Stockholders' Equity (Deficit)
																							Additional Paid-in Capital			Retained Earnings
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Shares			Amount
Balance—December 31, 2014		—	$	—		—	$	—		11,109,285	$	—		122,257,145	$	1		(11,109,285	)	$	(300,017	)	$	110,317		$	181,477	$	(8,222	)
Issuance of common stock upon initial public offering, net of offering costs		—		—		—		—		14,255,518		—		—		—		—			—			359,170			—		359,170
Issuance of treasury stock upon initial public offering, net of offering costs		—		—		—		—		—		—		—		—		11,109,285			300,017			(20,115	)		—		279,902
Stock compensation expense		—		—		—		—		—		—		—		—		—			—			1,751			—		1,751
Net income		—		—		—		—		—		—		—		—		—			—			—			13,759		13,759
Balance—March 31, 2015		—	$	—		—	$	—		25,364,803	$	—		122,257,145	$	1		—		$	—		$	451,123		$	195,236	$	646,360

See notes to consolidated financial statements.

3

INOVALON HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

	Three Months Ended March 31,
	2015			2014
Cash flows from operating activities:
Net income	$	13,759		$	14,557
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense		1,751			386
Employee stock purchase plan expense		21			—
Depreciation		4,373			3,322
Amortization of intangibles		542			1,533
Deferred income taxes		(493	)		620
Loss on disposal of long-lived assets		4			5
Changes in assets and liabilities:
Accounts receivable		(21,703	)		(20,804	)
Prepaid expenses and other current assets		277			(1,020	)
Income taxes receivable		6,797			4,772
Other assets		(171	)		(846	)
Accounts payable		(1,685	)		311
Accrued compensation		(6,368	)		(867	)
Other liabilities		655			389
Deferred rent		(109	)		15
Deferred revenue		613			105
Income taxes payable		2,554			3,662
Net cash provided by operating activities		817			6,140
Cash flows from investing activities:
Purchases of property and equipment		(1,338	)		(1,619	)
Investment in capitalized software		(5,158	)		(4,475	)
Net cash used in investing activities		(6,496	)		(6,094	)
Cash flows from financing activities:
Proceeds from issuance of common stock, net of underwriters' discount		362,082			—
Proceeds from issuance of treasury stock, net of underwriters' discount		282,172			—
Payment of offering costs		(3,002	)		—
Repayment of credit facility borrowings		(5,000	)		—
Dividends paid		—			(2,730	)
Capital lease obligations paid		(26	)		(33	)
Proceeds from exercise of stock options		—			57
Net cash provided by (used in) financing activities		636,226			(2,706	)
Increase (decrease) in cash and cash equivalents		630,547			(2,660	)
Cash and cash equivalents, beginning of period		162,567			110,594
Cash and cash equivalents, end of period	$	793,114		$	107,934
Supplementary cash flow disclosure:
Cash paid during the period for:
Income taxes, net of refunds	$	1,583		$	190
Interest		1,076			—
Non-cash investing activities:
Capital lease obligations incurred		—			19
Accounts payable for purchases of and investment in property, equipment and capitalized software		1,557			403
Accrued compensation for investment in capitalized software		464			276
Offering costs not yet paid		2,180			—

See notes to consolidated financial statements.

4

INOVALON HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. ORGANIZATION AND BASIS OF PRESENTATION

        The accompanying unaudited consolidated financial statements have been prepared by Inovalon Holdings, Inc. (the "Company") in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial reporting and as required by Rule 10-01 of Regulation S-X. Accordingly, the unaudited consolidated financial statements may not include all of the information and notes required by GAAP for audited financial statements. In the opinion of the Company's management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of items of a normal and recurring nature, necessary to present fairly the Company's financial position as of March 31, 2015 and the results of operations and cash flows for the three month periods ended March 31, 2015 and 2014. The results of operations for the three month period ended March 31, 2015 are not necessarily indicative of the results to be expected for the full year. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities, disclosures of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenue and expenses during the reported period. Significant estimates made by management include, but are not limited to: revenue recognition, specifically selling prices associated with the individual elements in multiple element arrangements; accounts receivable allowances; estimates of the fair value of the Company's pre-IPO common stock and the related estimates of the fair value of stock-based awards; fair value of intangibles and goodwill; depreciable lives of property, equipment and capitalized software; and useful lives of intangible assets. Actual results could differ from management's estimates, and such differences could be material to the Company's consolidated financial position and results of operations.

        On February 18, 2015, the Company completed its initial public offering (IPO) of 22,222,222 shares of Class A common stock and, upon the underwriters' exercise of their option to purchase additional shares, issued an additional 3,142,581 shares of Class A common stock for a total of 25,364,803 shares issued. All of the shares issued in the IPO were primary shares offered by the Company as none of the Company's stockholders sold any shares in the IPO. The offering price of the shares sold in the IPO was $27.00 per share, resulting in net proceeds to the Company, after underwriters' discounts and commissions and other expenses, payable by the Company, of approximately $639.1 million.

        The Company is a leading technology company that combines advanced cloud-based data analytics and data-driven intervention platforms to achieve meaningful impact in clinical and quality outcomes, utilization, and financial performance across the healthcare landscape. The value that the Company delivers to its clients is achieved by turning data into insights and those insights into action. Through the Company's large proprietary datasets, advanced integration technologies, sophisticated predictive analytics, and deep subject matter expertise, the Company delivers seamless, end-to-end platforms that bring the benefits of big data and large-scale analytics to the point of care. The Company's analytics platforms identify gaps in care, quality, data integrity, and financial performance, in its clients' datasets. The Company's data-driven intervention platforms enable clients to take the insights derived from the analytics and implement unique, patient-level solutions, drive impact and enhance patient engagement.

5

INOVALON HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(in thousands)

        Comprehensive Income—The Company's net income equals comprehensive income for all periods presented as the Company has no components of other comprehensive income. No accumulated comprehensive income has been recorded for any of the periods presented.

        Deferred IPO Issuance Costs—The Company capitalizes IPO costs, which primarily consist of direct incremental legal and accounting fees relating to the IPO. The IPO issuance costs were offset against IPO proceeds directly following the consummation of the offering that occurred during February 2015. As of March 31, 2015 there were no deferred IPO issuance costs and as of December 31, 2014, there was $2,888 deferred as prepaid expenses and other current assets.

        Recently Issued Accounting Standards—In May 2014, the Financial Accounting Standards Board ("FASB") issued updated guidance on revenue from contracts with customers. This revenue recognition guidance supersedes existing GAAP guidance, including most industry-specific guidance. The core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance identifies steps to apply in achieving this principle. This updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. On April 1, 2015, the FASB proposed deferring the effective date by one year to December 15, 2017 for annual reporting periods beginning after that date. The FASB also proposed permitting early adoption of the standard, but not before the original effective date of December 15, 2016. The Company is currently evaluating the potential impact of this guidance on the Company's financial disclosures and results, including whether the Company elects retrospective, or modified retrospective, method adoption.

        In April 2015, the FASB issued Accounting Standards Update No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs." This standard amends existing guidance to require the presentation of debt issuance costs in the balance sheet as a deduction from the carrying amount of the related debt liability instead of a deferred charge. It is effective for annual reporting periods beginning after December 15, 2015, but early adoption is permitted. The Company is currently evaluating the impact that the adoption of this standard will have on the Company's financial disclosures and results.

3. NET INCOME PER SHARE (in thousands, except per share amounts)

        Holders of all outstanding classes of common stock participate ratably in earnings on an identical per share basis as if all shares were a single class. Basic earnings per share ("EPS") is computed by dividing net income by the weighted average number of shares of common stock, Class A common stock and Class B common stock outstanding during the period. Diluted EPS is computed by dividing net income by the sum of the weighted average number of shares of common stock outstanding and potentially dilutive securities outstanding during the period under the treasury stock method.

        Potentially dilutive securities include stock options and restricted stock units ("RSUs").

        Under the treasury stock method, dilutive securities are assumed to be exercised at the beginning of the periods and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Securities are excluded from the computations of diluted earnings per share if their effect would be anti-dilutive to EPS.

6

INOVALON HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

3. NET INCOME PER SHARE (in thousands, except per share amounts) (Continued)

        The following table reconciles the weighted average shares outstanding for basic and diluted EPS for the periods indicated:

	Three Months Ended March 31,
	2015		2014
Net income	$	13,759	$	14,557
Weighted average shares used in computing basic net income per share		135,331		134,645
Net income per share—basic	$	0.10	$	0.11
Net income		13,759		14,557
Weighted average shares used in computing basic net income per share		135,331		134,645
Effect of dilutive stock options		3,482		2,131
Effect of dilutive RSUs		89		—
Weighted average shares used in computing diluted net income per share		138,902		136,776
Net income per share—diluted	$	0.10	$	0.11

        The computation of diluted EPS does not include 23 and zero unvested RSUs, on a weighted average basis, for the three months ended March 31, 2015 and 2014, respectively, because their inclusion would have an anti-dilutive effect on EPS under the treasury stock method.

        During September 2014, the Company completed a holding company reorganization. As part of the reorganization, the Company implemented a multi-class stock structure. The Company has retrospectively presented the impact on EPS of this reorganization by calculating EPS based on the newly authorized, issued and outstanding Class A and Class B common stock. Class A and Class B common stock shares were outstanding during the three months ended March 31, 2015. Only shares of Class B common stock were outstanding during the three months ended March 31, 2014.

7

INOVALON HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

4. PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE (in thousands)

        Property, equipment and capitalized software consisted of the following:

	March 31, 2015			December 31, 2014
Office and computer equipment	$	24,358		$	23,844
Leasehold improvements		12,028			11,999
Purchased software		10,400			9,916
Capitalized software		43,619			39,432
Furniture and fixtures		4,978			4,894
Land		390			390
Building		1,750			1,750
Work in process		3,218			2,917
Total		100,741			95,142
Less: accumulated depreciation and amortization		(48,394	)		(44,180	)
Property, equipment and capitalized software, net	$	52,347		$	50,962

        The Company leases certain office equipment under capital lease agreements, with bargain purchase options at the end of the lease term. Leased office equipment included in property and equipment and capitalized software, net, at March 31, 2015 and December 31, 2014 was $766 and $961, respectively.

        Depreciation expense for the three months ended March 31, 2015 and 2014 was $4,373 and $3,322, respectively. Amortization of the capital leases included in depreciation expense was $27 and $22 for the three months ended March 31, 2015 and 2014, respectively. At March 31, 2015 and December 31, 2014, the Company had unamortized capitalized software costs, including costs classified as work in progress, of $30,406 and $28,417, respectively.

        At March 31, 2015 and December 31, 2014, work in process consisted primarily of purchased software licenses, computer equipment, and capitalized software, which was not placed into service.

5. GOODWILL AND INTANGIBLE ASSETS (in thousands, except years)

Goodwill

        There was no change in the carrying amount of goodwill during the three months ended March 31, 2015.

8

INOVALON HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

5. GOODWILL AND INTANGIBLE ASSETS (in thousands, except years) (Continued)

Intangible Assets

        Intangible assets were as follows:

	March 31, 2015
	Gross		Accumulated Amortization			Net		Weighted Average Remaining Useful Life (years)
Proprietary software technologies	$	16,077	$	(16,077	)	$	—		—
Trademark		360		(360	)		—		—
Database		6,500		(3,609	)		2,891		4.5
Customer relationships		13,650		(9,636	)		4,014		10.2
Total	$	36,587	$	(29,682	)	$	6,905

	December 31, 2014
	Gross		Accumulated Amortization			Net		Weighted Average Remaining Useful Life (years)
Proprietary software technologies	$	16,077	$	(15,796	)	$	281		0.3
Trademark		360		(360	)		—		—
Database		6,500		(3,447	)		3,053		4.8
Customer relationships		13,650		(9,537	)		4,113		10.4
Total	$	36,587	$	(29,140	)	$	7,447

        Amortization expense for the three months ended March 31, 2015 and 2014 was $542 and $1,533, respectively.

        Estimated future amortization expense of intangible assets, based upon the Company's intangible assets at March 31, 2015, is as follows:

Year ending December 31:	Amount
Remainder of 2015	$	783
2016		1,044
2017		1,044
2018		1,044
2019		814
Thereafter		2,176
Total	$	6,905

6. CREDIT FACILITIES (in thousands)

        On September 19, 2014, the Company entered into a Credit and Guaranty Agreement, with a group of lenders including Goldman Sachs Bank USA, as administrative agent, to provide credit facilities in the aggregate maximum principal amount of $400,000, consisting of a senior unsecured term

9

INOVALON HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

6. CREDIT FACILITIES (in thousands) (Continued)

loan facility in the original principal amount of $300,000 (the "Term Loan Facility"), and a senior unsecured revolving credit facility in the maximum principal amount of $100,000 (the "Revolving Credit Facility"), (together with the Term Loan Facility, the "Credit Facilities").

        Credit facilities consisted of the following:

	March 31, 2015		December 31, 2014
Revolving Credit Facility	$	—	$	—
Term Loan Facility		295,000		300,000
Total Credit Facilities		295,000		300,000
Less: current portion		17,500		18,750
Non-current Credit Facilities	$	277,500	$	281,250

        The Revolving Credit Facility, with a maximum principal amount of $100,000, became available to the Company on February 18, 2015, upon the consummation of its IPO.

        As of, March 31, 2015 and December 31, 2014, the Company was in compliance with the financial covenants of the Credit Facilities.

        Scheduled maturity of the Credit Facilities as of March 31, 2015 follows:

Year ending December 31:	Amount
(Remainder of) 2015	$	13,750
2016		15,000
2017		30,000
2018		45,000
2019		191,250
Total	$	295,000

        During the three months ended March 31, 2015, the Company paid $5,000 for the scheduled maturity of the outstanding principal on the Credit Facilities.

10

INOVALON HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

7. COMMITMENTS AND CONTINGENCIES (in thousands)

        Operating Leases—The Company leases office space under operating lease arrangements, some of which contain renewal options. Future non-cancellable lease payments as of March 31, 2015 were as follows:

Year ending December 31,	Amount
(Remainder of) 2015	$	4,866
2016		6,295
2017		6,073
2018		4,855
2019		844
Total	$	22,933

        Total expense under operating leases was $1,627, and $1,887 during the three months ended March 31, 2015 and 2014, respectively. Certain operating leases contain rent escalation clauses, which are recorded on a straight-line basis over the initial term of the lease, with the difference between the rent paid and the straight-line rent recorded as a deferred rent liability. Lease incentives received from landlords are recorded as deferred rent liabilities and are amortized on a straight-line basis over the lease term as a reduction to rent expense. The deferred rent liability was $3,077 and $3,186 at March 31, 2015 and December 31, 2014, respectively.

        Capital Leases—The total capital lease liability at March 31, 2015 and December 31, 2014 was $241 and $267, respectively, which approximates fair value due to the short duration of the obligations.

        Litigation—From time to time the Company is involved in various litigation matters arising out of the normal course of business. The Company consults with legal counsel on those issues related to litigation and seeks input from other experts and advisors with respect to such matters. Estimating the probable losses or a range of probable losses resulting from litigation, government actions and other legal proceedings is inherently difficult and requires an extensive degree of judgment, particularly where the matters involve indeterminate claims for monetary damages, may involve discretionary amounts, present novel legal theories, are in the early stages of the proceedings, or are subject to appeal. Whether any losses, damages or remedies ultimately resulting from such matters could reasonably have a material effect on the Company's business, financial condition, results of operation, or cash flows will depend on a number of variables, including, for example, the timing and amount of such losses or damages (if any) and the structure and type of any such remedies. The Company's management does not presently expect any litigation matters to have a material adverse impact on the consolidated financial statements of the Company.

8. STOCK-BASED COMPENSATION (in thousands, except share and per share amounts, and percentages)

        On February 18, 2015, the date of the completion of the Company's IPO, the Company's 2015 Omnibus Incentive Plan (the "2015 Plan") became effective. The 2015 Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), to the Company's employees and any parent and subsidiary employees, and for the grant of non-qualified stock options, stock appreciation rights, restricted stock, RSUs, dividend

11

INOVALON HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

8. STOCK-BASED COMPENSATION (in thousands, except share and per share amounts, and percentages) (Continued)

equivalent rights, cash-based awards (including annual cash incentives and long-term cash incentives), and any combination thereof to the Company's employees, directors, and consultants and to employees, directors, and consultants of certain affiliated entities. The Company has reserved for issuance under the 2015 Plan shares of its Class A common stock equal to the sum of: (i) 7,335,430 shares of Class A common stock; and (ii) the number of shares of its Class A common stock in respect of the number of shares of its common stock underlying awards granted under the Company's 2007 Long-Term Incentive Plan, which was terminated upon completion of the IPO (6,940,055 as of March 31, 2015) that are forfeited, canceled, or expire (whether voluntarily or involuntarily).

Restricted Stock Units

        On March 5, 2015, the Company granted 76,273 RSUs pursuant to the 2015 Plan. The awards granted vest ratably over five years on each anniversary of the award grant date and upon vesting the Company will deliver to the holder shares of the Company's Class A common stock under the 2015 Plan. Pursuant to the terms of the awards, any unvested shares terminate upon the RSU holders' separation from the Company. The grant date fair value of the RSUs was $2,337, in aggregate, or $30.64 per RSU. The Company will recognize share-based compensation expense following the straight-line method, net of estimated forfeitures over the requisite service period. The Company estimates future forfeitures at the date of grant and revises the estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Employee Stock Purchase Plan

        On February 18, 2015, the date of the completion of the Company's IPO, the 2015 Employee Stock Purchase Plan ("2015 ESPP") became effective. The 2015 ESPP provides for six-month purchase periods (commencing each March 1 and September 1) and that the purchase price for shares of Class A common stock purchased under the 2015 ESPP will be 85% of the fair market value of the Company's Class A common stock on the last day of the applicable offering period. Eligible employees will be able to select a rate of payroll deduction between 1% and 15% of their base cash compensation subject to a maximum payroll deduction per offering period of $7,500. The 2015 ESPP is intended to qualify as an employee stock purchase plan under Section 423 of the Code. The Company reserved 1,833,857 shares of Class A common stock for issuance under the 2015 ESPP.

12

INOVALON HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

8. STOCK-BASED COMPENSATION (in thousands, except share and per share amounts, and percentages) (Continued)

        For the three months ended March 31, 2015 and 2014, the Company recorded stock-based compensation expense of $1,772 and $386, respectively. Stock-based compensation expense was included in operating expenses as follows:

	Three Months Ended March 31,
	2015		2014
Cost of revenue	$	28	$	—
Sales and marketing		15		—
Research and development		362		—
General and administrative		1,367		386
Total stock-based compensation expense	$	1,772	$	386

13

Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations

        The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the Securities and Exchange Commission (the "SEC") on March 31, 2015. Unless we otherwise indicate or the context requires, references to the "Company," "Inovalon," "we," "our," and "us" refer to Inovalon Holdings, Inc. and its consolidated subsidiaries.

Note Regarding Forward-Looking Statements

        This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements contained in this Quarterly Report other than statements of historical fact, including but not limited to statements regarding our future results of operations and financial position, our business strategy and plans, market growth, and our objectives for future operations, are forward-looking statements. The words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

        Factors that may cause actual results to differ from expected results include, among others:

•

our future financial performance, including our ability to continue and manage our growth;

•

our ability to retain our client base;

•

the effect of the concentration of our revenue among our top clients;

•

our ability to innovate and adapt our platforms and toolsets;

•

the effects of regulations applicable to us, including regulations relating to data protection and data privacy;

•

the ability to protect the privacy of our clients' data and prevent security breaches;

•

the effect of competition on our business; and

•

the efficacy of our platforms and toolsets.

        Forward-looking statements are only current predictions and are subject to known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from those anticipated by such statements. These factors include, among other factors, those set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, under the heading Part I, Item 1A, "Risk Factors".

        You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although

14

we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. We are under no duty to, and we disclaim any obligation to, update any of these forward- looking statements after the date of this Quarterly Report or to conform these statements to actual results or revised expectations.

Overview

        We are a leading technology company that combines advanced cloud-based data analytics and data-driven intervention platforms to achieve meaningful impact in clinical and quality outcomes, utilization, and financial performance across the healthcare landscape. We deliver value to our clients by turning data into insights and those insights into action. Currently, our clients include health plans, hospitals, physicians, patients, pharmaceutical companies and researchers.

        Our large proprietary datasets, advanced integration technologies, sophisticated predictive analytics, and deep subject matter expertise allow us to provide seamless, end-to-end platforms that bring the benefits of big data and large-scale analytics to the point of care. Our data analytics platforms identify gaps in care, quality, data integrity, and financial performance in our clients' datasets. Our data-driven intervention platforms enable our clients to take the insights derived from the analytics and implement unique, patient-level solutions, drive impact and enhance patient engagement.

        We generate the substantial majority of our revenue through the sale or subscription licensing of our cloud-based data analytics and data-driven intervention platform services. Since our inception, we have experienced significant growth.

        Our revenue for the three months ended March 31, 2015, was $93.6 million, representing 11% growth over the three months ended March 31, 2014. Net income for the three months ended March 31, 2015 was $13.8 million, representing 14.7% of revenue. For the three months ended March 31, 2015, we generated Adjusted EBITDA of $32.0 million, representing a 9% increase over the same period in the prior year and a 34.2% Adjusted EBITDA margin. Non-GAAP Net Income for the three months ended March 31, 2015 was $15.1 million, representing 16.1% of revenue. Adjusted EBITDA, Adjusted EBITDA margin, and Non-GAAP Net Income are measures that are not presented in accordance with GAAP. For a reconciliation of net income to Adjusted EBITDA and Non-GAAP Net Income, and definitions of the measures including why they are useful, see "Non-GAAP Financial Measures," provided below.

        On February 18, 2015, we completed our initial public offering (IPO) of 22,222,222 shares of Class A common stock and, upon the underwriters' exercise of their option to purchase additional shares, issued an additional 3,142,581 shares of Class A common stock for a total of 25,364,803 shares issued. All of the shares issued in the IPO were primary shares offered by us as none of our stockholders sold any shares in the IPO. The offering price of the shares sold in the IPO was $27.00 per share, resulting in net proceeds to us, after underwriters' discounts and commissions and other expenses payable by us, of $639.1 million. Our Class A common stock is currently traded on the NASDAQ Global Select Market under the symbol "INOV."

15

Quarterly Key Metrics

        We review certain metrics quarterly, including the key metrics shown in the table below. We believe that these metrics are indicative of our overall level of analytical activity and the underlying growth in our business.

	As of March 31,
	2015		2014
Quarterly Key Metrics (in thousands)(1)(5):
MORE2 Registry® dataset metrics
Unique patient count(2)		121,918		111,390
Medical event count(3)		9,656,623		8,572,846
Trailing 12 month Patient Analytics Months (PAM)(4)		17,829,812		13,616,461

(1)

MORE² Registry® dataset metrics and Trailing 12 month PAM, each of which is presented in the table, are key operating metrics that management uses to assess our level of operational activity. While we believe that each of these metrics is indicative of our overall level of analytical activity and the underlying growth in our business, increases or decreases in these metrics do not necessarily correlate to proportional increases or decreases in revenue, Adjusted EBITDA, net income or Non-GAAP Net Income. For instance, although increased levels of analytical activity historically have corresponded to increases in revenue over the long term, differences in fees charged for different analytical packages exist and differences in how analytics trigger the applicability of our data-driven intervention platforms may result in increases in analytical activity that do not result in proportional increases in revenue, Adjusted EBITDA, net income or Non-GAAP Net Income (and vice versa). Accordingly, while we believe the presentation of these operating metrics is helpful to investors in understanding our business; these metrics have limitations and should not be considered as substitutes for analysis of our financial results reported under GAAP. In addition, we believe that other companies, including companies in our industry, do not present similar operating metrics and that there is no commonly accepted method of calculating these metrics, which may reduce their usefulness as comparative measures.

(2)

Unique patient count is defined as each unique, longitudinally matched, de-identified natural person represented in our MORE² Registry® as of the end of the period presented.

(3)

Medical event count is defined as the total number of discrete medical events as of the end of the period presented (for example, a discrete medical event typically results from the presentation of a patient to a physician for the diagnosis of diabetes and congestive heart failure in a single visit, the presentation of a patient to an emergency department for chest pain, etc.).

(4)

PAM is defined as the sum of the analytical processes performed on each respective patient within patient populations covered by clients under contract. As used in the metric, an "analytical process" is a distinct set of data calculations undertaken by us which is initiated and completed by our analytical platform to examine a specific question such as whether a patient is believed to have a condition such as diabetes, or worsening of the disease, during a specific time period.

(5)

Patient population statements of work and data analytics and data-driven intervention revenue mix are annual metrics; as such we provide these metrics on an annual basis.

16

Trends and Factors Affecting Our Future Performance

        A number of factors influence our growth and performance. We see many of these factors as being more quantitatively driven, such as the rate of growth of the underlying data counts within our datasets, the ongoing investment in innovation, and our level of analytical activity. Additionally, there are several factors that influence our growth and performance that are less quantitatively driven, including seasonality, macro-economic forces, and trends within healthcare (such as payment models, incentivization, and regulatory oversight), that can be driven by changes in federal and state laws and regulations, as well as private sector market forces.

        Growth of Datasets.    Healthcare costs in the United States have been increasing significantly for many years. This rise in healthcare costs has driven a broad transition from consumption-based payment models to quality and value-based payment models across the healthcare landscape. As a result, the specific disease and comorbidity status, clinical and quality outcomes, resource utilization, and care details of the individual patient have become increasingly relevant to the various constituents across the healthcare delivery system. Concurrently, the count and complexity of diseases, diagnostics, and treatments—as well as payment models and regulatory oversight requirements—have soared. In this setting, granular data has become critical to determining and improving quality and financial performance in healthcare. Our MORE² Registry® is our largest principal dataset and serves as a proxy for our general growth of datasets. The growth of our datasets that inform our analytical capabilities and comparative analytics is a key aspect of our provision of value to our clients and is indicative of our overall growth and capabilities.

        Innovation and Platform Development.    Our business model is based upon our ability to deliver value to our clients through the combination of advanced, cloud-based data analytics and cloud-based data-driven intervention platforms focused on the achievement of meaningful and measureable improvements in clinical and quality outcomes, utilization, and financial performance in healthcare. Our ability to deliver this value is dependent in part on our ability to continue to innovate, design new capabilities, and bring these capabilities to market in an enterprise scale. Our continued ability to innovate our platform and bring differentiated capabilities to market is an important aspect of our business success, and accordingly, we expect investment in innovation to increase as a percentage of revenue when examined on a full year basis, although, timing of investment may vary from quarter to quarter. Our investment in innovation includes costs for research and development, capitalized software development, and capital expenditures related to hardware and software platforms on which our data

17

analytics and data-driven interventions capabilities are deployed as summarized below (in thousands, except percentages).

	Three Months Ended March 31,
	2015			2014
Investment in Innovation:
Research and development(1)	$	5,411		$	6,048
Capitalized software development(2)		4,508			3,624
Research and development infrastructure investments(3)		100			1,084
Total investment in innovation	$	10,019		$	10,756
As a percentage of revenue
Research and development(1)		6	%		7	%
Capitalized software development(2)		5	%		4	%
Research and development infrastructure investments(3)		—	%		1	%
Total investment in innovation		11	%		12	%

(1)

Research and development primarily includes employee costs related to the development and enhancement of our service offerings.

(2)

Capitalized software development includes capitalized costs incurred to develop and enhance functionality for our data analytics and data-driven intervention platforms.

(3)

Research and development infrastructure investments include strategic capital expenditures related to hardware and software platforms under development or enhancement.

        Data Analytics and Data-Driven Intervention Mix.    Our business and operational models are highly scalable and leverage variable costs to support revenue generating activities. Our data analytic service costs are less variable in nature and require lower incremental capital expenditures. As a result, following initial development and deployment investments, our big data analytics platform and data technology capabilities allow us to process significant volumes of transactions with lower incremental costs. Conversely, our data-driven intervention service costs are generally variable in nature and require incremental costs to generate additional revenue. As a result, the mix of our data analytics and data interventions activities affects our financial performance. Over the past several years the percentage of our business which is derived from data and analytics subscription fees has been increasing, as has the portion of the data-driven intervention platform services that are fully automated. Key metrics and measures regarding data analytics and data-driven intervention mix are presented annually, as such we provide key metrics and measures for data analytics and data-driven intervention mix on an annual basis.

        Client and Analytical Process Count Growth.    Our business is generally driven by the number of underlying patients for which our analytics and data-driven intervention platforms are being utilized. In addition to this patient count, however, the number of specific analytical processes and data-driven interventions services for which any one specific patient population is engaged, is also a driver. As such, increasing the size, number, and analytical portfolio penetration of populations for which we provide our analytics and data-driven intervention platform services is important to the overall growth of our business. In general, as the application of our analytics and data-driven intervention platform services deliver value, our clients often engage with us to utilize additional analytics and data-driven intervention platform services. Our ability to deliver demonstrable value, retain clients, add new clients, and realize growth within existing clients affects our financial performance. As such, on an annual basis

18

we track the number of patient populations for which we are engaged to provide data analytics and provide data-driven intervention services (each engagement memorialized with a contracted statement of work, or SOW).

        In addition, we track the number of analytical processes that we run on patients each month in fulfillment of our client contracts, as totaled for the trailing 12 months. We believe that PAM is indicative of our overall level of analytical activity, and we expect our period-to-period comparisons of our PAM to be indicative of underlying growth of our business, although changes in levels of analytical activity do not always directly translate to changes in financial performance of our business. Differences in fees charged for different analytical packages exist and differences in how analytics trigger the applicability of our data-driven intervention platforms may result in increases in analytical activity that do not result in proportional increases in revenue, Adjusted EBITDA, net income or Non-GAAP Net Income (and vice versa). Therefore, in situations in which a new engaged client SOW is initiated for analytical processes that have a higher than average fee rate, revenue could expand disproportionately faster than the increase in PAM.

        Seasonality.    We typically experience the highest level of revenue in the second quarter of each year, which coincides with specific accreditation and regulatory deadlines. In particular, as a result of certain data filing deadlines established by CMS, state departments of health, and the National Committee for Quality Assurance, or NCQA, clients typically engage us to perform higher levels of data-driven analytics and data-driven interventions during the first two quarters of each year when compared to other quarters of the year. Conversely, the third quarter of the year has relatively few such deadlines and, as such, typically has lower levels of analytics engagement activity than other quarters of the year.

        Macro-Economic and Macro-Industry Trends.    Our clients are affected, sometimes directly, and sometimes counter-intuitively, by macro-economic trends such as economic growth (or economic recession), inflation, and unemployment. Further, industry trends in federal and state laws and regulations, as well as emerging trends in private sector payment models, affect our clients' businesses and their need for technologies and services to support these challenges. These factors have various effects on our business, and on occasion have resulted in the slowing or cessation of the decision-making process by clients adopting our technologies and services. On the other hand, changes in macro-economic trends and the industry landscape have accelerated the need for our technologies and services from time-to-time, particularly as regulators introduce complex requirements with which our clients must comply.

        Shift to Fully Automated Data-Driven Intervention Platform Services.    We view the decreased proportion of revenue derived from partially automated data-driven intervention platform services as a positive reflection of our cloud-based interconnectivity and automation capabilities. The proportion of our revenue derived from pure cloud-based data analytics and fully automated data-driven intervention platform services revenue is expected to continue to expand over time as a percentage of total revenue as a result of our continued expansion of our cloud-based interconnectivity technologies and the continued expansion of interconnectivity within the healthcare landscape. In order to drive value for our clients and serve them irrespective of their level of connectivity, we continue to provide cloud-based partially automated data-driven intervention platform services, converting the performance of such services to cloud-based fully automated data-driven intervention platform services wherever possible. As the healthcare infrastructure becomes more interconnected and our integration and interconnectivity technologies continue to expand, we believe that we will be able to achieve more rapid implementation, and greater value impact, at more efficient costs.

19

Critical Accounting Policies

        Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with GAAP. In connection with the preparation of our consolidated financial statements, we are required to make assumptions and estimates about future events, and apply judgments that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. We base our assumptions, estimates, and judgments on historical experience, current trends, and other factors we believe to be relevant at the time we prepare our consolidated financial statements. The accounting estimates used in the preparation of our consolidated financial statements will change as new events occur, as more experience is acquired, as additional information is obtained, and as our operating environment changes. On a regular basis, we review the accounting policies, assumptions, and evaluate and update our assumptions, estimates, and judgments to ensure that our consolidated financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

        Critical accounting policies are those policies that affect our more significant judgments and estimates used in the preparation of our consolidated financial statements. For a more detailed discussion of our critical accounting policies, please refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, filed with the SEC on March 31, 2015.

Components of Results of Operations

Revenue

        We earn revenue through the sale or subscription licensing of our cloud-based data analytics and data-driven intervention platform services.

        Our cloud-based data analytics services are performed either at the beginning of a data-driven intervention process, which typically aligns with regulatory submission deadlines, or on a monthly basis, depending on the particular client's needs. Cloud-based data analytics revenue is driven primarily by the number of identified gaps in care, quality, data integrity, and financial performance identified in a client's dataset, the number of unique patients in a client's dataset, a minimum data analytics processing fee, and a contractually negotiated transactional price for each identified gap or unique patient. Subscription licensing revenue is driven primarily by the number of clients, the number of unique patients in a client's population dataset, the number of analytical services contracted for by a client, and the contractually negotiated price of such services.

        Cloud-based data-driven intervention platform service revenue represents revenue that is generated from fully automated processes (i.e., those processes that require no material variable-based labor components) and partially automated processes (i.e., those processes that require a degree of variable-based labor components). The Company expects the expanding emphasis on data-driven analytics services, and therefore the increased share of Inovalon revenue from such services, to continue on a year-to-year basis. As many of our analytical capabilities are designed to identify gaps in care, quality, utilization, compliance, and/or other gaps that may impact our clients' achievement of greater healthcare quality and financial performance, our cloud-based data driven intervention platform services revenue is driven primarily by the results of our cloud-based data analytics processes and our clients' desire to utilize our cloud-based data-driven intervention platforms to resolve such identified gaps. Informed by our analytics, our cloud-based data-driven intervention platforms are designed to enable the resolution of specific gaps through the aggregation of specific data or achievement of specific impact. Revenue from our intervention platform utilization is generally driven by the quantity

20

and type of completed interventions enabled by our platform, and a contractually negotiated transactional price for each such intervention.

Cost of Revenue

        Cost of revenue consists primarily of expenses for employees who provide direct contractual services to our clients, including salaries, benefits, discretionary incentive compensation, employment taxes, severance, and equity compensation costs. Cost of revenue also includes expenses associated with the integration, and verification of data and other service costs incurred to fulfill our revenue contracts. Cost of revenue does not include allocated amounts for occupancy expense and depreciation and amortization. Many of the elements of our cost of revenue are relatively variable and semi-variable, and can be reduced in the near-term to offset any decline in our revenue.

        Our business and operational models are designed to be highly scalable and leverage variable costs to support revenue generating activities. While we expect to grow our headcount over time to capitalize on our market opportunities, we believe our increased investment in automation, electronic health record integration capabilities, and economies of scale in our operating model, will position us to grow our revenue at a greater rate than our cost of revenue.

Sales and Marketing

        Sales and marketing expense consists primarily of employee-related expenses, including salaries, benefits, commissions, discretionary incentive compensation, employment taxes, severance, and equity compensation costs for our employees engaged in sales, sales support, business development, and marketing. Sales and marketing expense also includes operating expenses for marketing programs, research, trade shows and brand messages, and public relations costs. Our sales and marketing expense excludes any allocation of occupancy expense and depreciation and amortization.

        We expect our sales and marketing expenses to increase as we strategically invest to expand our business. We expect to hire additional sales personnel and related support personnel to capture an increasing amount of our market opportunity. As we scale our sales and marketing activities in the short to medium term, we expect these expenses to increase in both absolute dollars and as a percentage of revenue.

Research and Development

        Research and development expense (one component of our investment in innovation) consists primarily of employee-related expenses, including salaries, benefits, discretionary incentive compensation, employment taxes, severance, and equity compensation costs for our software developers, engineers, analysts, project managers, and other employees engaged in the development and enhancement of our service offerings. Research and development expense also includes certain third party consulting fees. Our research and development expense excludes any allocation of occupancy expense and depreciation and amortization. Research and development efforts that meet certain GAAP criteria are reclassified from expense to capital assets as internal-use software in support of our continuous investment in innovation and platform development.

        We expect to continue our focus on developing new data analytics and data-driven intervention platforms and enhancing our existing data analytics and data-driven intervention platforms. As a result, and exclusive of any capitalizable amounts attributable to our continuous investment in innovation, we expect our research and development expense to continue to increase in absolute dollars, although it may vary from period to period as a percentage of revenue.

21

General and Administrative

        Our general and administrative expense consists primarily of employee-related expenses including salaries, benefits, discretionary incentive compensation, employment taxes, severance, and equity compensation costs, for employees who are responsible for management information systems, administration, human resources, finance, legal, and executive management. General and administrative expense also includes occupancy expenses (including rent, utilities, communications, and facilities maintenance), professional fees, consulting fees, insurance, travel, and other expenses. Our general and administrative expense excludes depreciation and amortization.

        We expect our general and administrative expense to increase as we expand our business and incur incremental costs associated with being a public company. However, excluding certain increases as a result of being a public company, we expect our general and administrative expense to grow at a lower rate than revenue.

Depreciation and Amortization Expense

        Our depreciation and amortization expense consists primarily of depreciation of fixed assets, amortization of capitalized software development costs, and amortization of acquisition-related intangible assets.

Provision for Income Taxes

        Provision for income taxes consists of federal and state income taxes in the United States and foreign income taxes from the territory of Puerto Rico, including deferred income taxes reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

RESULTS OF OPERATIONS

        The following table set forth our consolidated statement of operations data for each of the periods presented (in thousands):

	Three Months Ended March 31,
	2015			2014
Revenue	$	93,633		$	84,674
Expenses:
Cost of revenue		31,851			28,587
Sales and marketing		1,850			1,333
Research and development		5,411			6,048
General and administrative		24,258			19,934
Depreciation and amortization		4,915			4,855
Total operating expenses		68,285			60,757
Income from operations		25,348			23,917
Other income and (expenses):
Interest income		8			2
Interest expense		(1,103	)		(13	)
Income before taxes		24,253			23,906
Provision for income taxes		10,494			9,349
Net income	$	13,759		$	14,557

22

        The following table sets forth our consolidated statement of operations data for each of the periods presented as a percentage of revenue:

	Three Months Ended March 31,
	2015			2014
Revenue		100	%		100	%
Expenses:
Cost of revenue		34	%		34	%
Sales and marketing		2	%		2	%
Research and development		6	%		7	%
General and administrative		26	%		24	%
Depreciation and amortization		5	%		6	%
Total operating expenses		73	%		72	%
Income from operations		27	%		28	%
Other income and (expenses):
Interest income		—	%		—	%
Interest expense		(1	)%		—	%
Income before taxes		26	%		28	%
Provision for income taxes		11	%		11	%
Net income		15	%		17	%

Three Months Ended March 31, 2015 and 2014

Revenue

	Three Months Ended March 31,				2014 to 2015 Change
	2015		2014		$		%
	(dollars in thousands)
Total revenue	$	93,633	$	84,674	$	8,959		11	%

        Three Months Ended March 31, 2015 compared with Three Months Ended March 31, 2014.    Revenue during the three months ended March 31, 2015 increased by approximately $9.0 million, or 11%, compared with the three months ended March 31, 2014. The increase was primarily attributable to an increase in revenue from new clients of $5.2 million along with a net increase of $3.8 million from existing clients.

Cost of Revenue

	Three Months Ended March 31,						2014 to 2015 Change
	2015			2014			$		%
	(dollars in thousands)
Cost of revenue	$	31,851		$	28,587		$	3,264		11	%
Cost of revenue as a percentage of revenue		34	%		34	%

        Three Months Ended March 31, 2015 compared with Three Months Ended March 31, 2014.    During the three months ended March 31, 2015, cost of revenue increased by approximately $3.3 million, or 11%, compared with the three months ended March 31, 2014. The $3.3 million increase in cost of

23

revenue was primarily due to an increase in employee related expenses and was proportionally consistent with the increase in revenue of $9.0 million or 11%, over the same period. The increase in employee related expenses was primarily due to providing data-driven intervention services as required by new and existing customers that leveraged insights enabled by our cloud-based data analytics. Cost of revenue as a percentage of revenue was 34% for the three months ended March 31, 2015 and 2014.

Sales and Marketing

	Three Months Ended March 31,						2014 to 2015 Change
	2015			2014			$		%
	(dollars in thousands)
Sales and marketing	$	1,850		$	1,333		$	517		39	%
Sales and marketing as a percentage of revenue		2	%		2	%

        Three Months Ended March 31, 2015 compared with Three Months Ended March 31, 2014.    During the three months ended March 31, 2015, sales and marketing expenses increased by approximately $0.5 million, or 39%, compared with the three months ended March 31, 2014. The increase was primarily attributable to increased employee related expenses of $0.2 million, which was driven by our investment in additional sales personnel to focus on adding new clients and capturing an increased amount of our market opportunity, along with an increase of $0.2 million in marketing program spend.

Research and Development

	Three Months Ended March 31,						2014 to 2015 Change
	2015			2014			$			%
	(dollars in thousands)
Research and development	$	5,411		$	6,048		$	(637	)		(11	)%
Research and development as a percentage of revenue		6	%		7	%

        Three Months Ended March 31, 2015 compared with Three Months Ended March 31, 2014.    During the three months ended March 31, 2015, research and development expense decreased by approximately $0.6 million, or 11%, compared with the three months ended March 31, 2014. The decrease of approximately $0.6 million was primarily attributable to growth in the capitalization of internal-use software development costs of $1.0 million compared to the prior period, which was partially offset by an increase of $0.3 million in employee-related expenses and certain third-party consulting fees, which includes an increase of $0.4 million in stock based compensation expense.

General and Administrative

	Three Months Ended March 31,						2014 to 2015 Change
	2015			2014			$		%
	(dollars in thousands)
General and administrative	$	24,258		$	19,934		$	4,324		22	%
General and administrative as a percentage of revenue		26	%		24	%

        Three Months Ended March 31, 2015 compared with Three Months Ended March 31, 2014.    During the three months ended March 31, 2015, general and administrative expense increased by

24

approximately $4.3 million, or 22%, compared with the three months ended March 31, 2014. Throughout the second half of 2014 and first quarter of 2015, we increased our investment in incremental personnel to support our growth and our transition from being a private to a public company. Our investment resulted in an increase in employee related costs of $4.2 million, which includes an increase of approximately $1.0 million related to stock-based compensation expense, for the three months ended March 31, 2015 compared to the prior year.

Depreciation and Amortization

	Three Months Ended March 31,						2014 to 2015 Change
	2015			2014			$		%
	(dollars in thousands)
Depreciation and amortization	$	4,915		$	4,855		$	60		1	%
Depreciation and amortization as a percentage of revenue		5	%		6	%

        Three Months Ended March 31, 2015 compared with Three Months Ended March 31, 2014.    During the three months ended March 31, 2015, depreciation and amortization expense was consistent with the three months ended March 31, 2014. Depreciation and amortization expense as a percentage of revenue, decreased to 5% of revenue for the three months ended March 31, 2015, as compared with 6% of revenue for the three months ended March 31, 2014. During the three months ended March 31, 2015 amortization of intangible assets decreased by approximately $1.0 million and was partially offset by increased amortization of capitalized software of $0.9 million, as compared with the three months ended March 31, 2014.

Interest Expense

	Three Months Ended March 31,						2014 to 2015 Change
	2015			2014			$		%
	(dollars in thousands)
Interest expense	$	1,103		$	13		$	1,090		8,385	%
Interest expense as a percentage of revenue		1	%		—	%

        Three Months Ended March 31, 2015 compared with Three Months Ended March 31, 2014.    During the three months ended March 31, 2015, interest expense increased by approximately $1.1 million compared with the three months ended March 31, 2014. The increase was attributable to interest expense on the $300.0 million Term Loan Facility borrowed on September 19, 2014.

Provision for Income Taxes

	Three Months Ended March 31,						2014 to 2015 Change
	2015			2014			$		%
	(dollars in thousands)
Provision for income taxes	$	10,494		$	9,349		$	1,145		12	%
Effective tax rate		43	%		39	%

        Three Months Ended March 31, 2015 compared with Three Months Ended March 31, 2014.    During the three months ended March 31, 2015, provision for income taxes increased by approximately

25

$1.1 million, or 12%, compared to the three months ended March 31, 2014. The increase was primarily driven by the effective tax rate of 43% for the three months ended March 31, 2015 compared to 39% in the same period of the prior year. The increase in our effective tax rate for the three months ended March 31, 2015 was attributable to a $0.6 million increase in expected state income taxes, net of federal income tax effect, driven by unfavorable state legislative changes as well as a state deferred tax expense adjustment of $0.5 million.

Liquidity and Capital Resources

Sources of Liquidity

        On February 18, 2015, we completed our IPO of 22,222,222 shares of Class A common stock and, upon the underwriters' exercise of their option to purchase additional shares, issued an additional 3,142,581 shares of Class A common stock for a total of 25,364,803 shares issued. All of the shares issued in the IPO were primary shares offered by us as none of our stockholders sold any shares in the IPO. The offering price of the shares sold in the IPO was $27.00 per share, resulting in net proceeds to us, after underwriters' discounts and commissions and other expenses payable by us, of approximately $639.1 million.

        Historically, our principal source of liquidity has been cash generated by operating activities. Our cash generated from operations has been sufficient to fund our growth, including our on-going investment in innovation and capital expenditures. In addition, during the three months ended March 31, 2015, we received net proceeds from our IPO of $639.1 million. As of March 31, 2015, including proceeds received upon completion of our IPO, we had a cash and cash equivalent balance of $793.1 million.

        We believe our current cash and cash equivalent balance, expected cash generated by operating activities and availability of cash under our Credit Facilities is sufficient to fund our operations, finance our strategic initiatives, and fund our investment in innovation and new service offerings, for the foreseeable future.

Debt

        As of March 31, 2015, we had outstanding indebtedness under our Credit Facilities and capital lease obligations of $295.0 million and $0.1 million, respectively, and had only capital lease obligations of $0.2 million as of March 31, 2014. As of March 31, 2015, we were in compliance with the covenants under the Credit Agreement.

Term Loan Facility

        As of March 31, 2015, the principal amount outstanding under the Term Loan Facility was $295.0 million. The Term Loan Facility has a five-year term. The Term Loan Facility is an amortizing facility with principal payments quarterly and interest payments monthly. A scheduled principal payment of $5.0 million and interest payments totaling $1.1 million were paid during the three months ended March 31, 2015.

Revolving Credit Facility

        Borrowings under the Revolving Credit Facility became available, subject to compliance with the terms and conditions set forth in the Credit Agreement, beginning (at our option) after the consummation of our IPO on February 18, 2015. No amounts were drawn against the Revolving Credit Facility during the three months ended March 31, 2015. The Revolving Credit Facility is scheduled to mature on March 31, 2020. The interest rate for the Revolving Credit Facility is LIBOR plus 1.25% per annum or the base rate plus 0.25% per annum (at our election).

26

Cash Flows

Operating Cash Flow Activities

        Cash provided by operating activities during the quarter ended March 31, 2015 was approximately $0.8 million, a decrease in cash inflow of approximately $5.3 million compared with the three months ended March 31, 2014. Cash provided by operating activities was driven by net income of approximately $13.8 million, as adjusted for the exclusion of non-cash expenses totaling approximately $6.2 million, which was partially offset by approximately $19.1 million related to the effect of changes in working capital and other balance sheet accounts.

Investing Cash Flow Activities

        Cash used in investing activities in the three months ended March 31, 2015 was approximately $6.5 million, an increase in cash outflow of approximately $0.4 million compared with the three months ended March 31, 2014. The increase in cash outflow was primarily due to an increase in the investment in capitalized software of approximately $0.7 million, which was partially offset by a decrease in purchases of property and equipment of approximately $0.3 million.

        We make investments in innovation, including research and development expense, capital software development costs, and research and development infrastructure investments, on a recurring basis. We expect our investment in innovation to increase in the foreseeable future to support our continued growth and new service offerings.

Financing Cash Flow Activities

        Cash provided by financing activities during the three months ended March 31, 2015 was approximately $636.2 million, an increase of approximately $638.9 million in cash inflow compared with the three months ended March 31, 2014. The cash provided by financing activities during the three months ended March 31, 2015 is primarily comprised of $641.3 million for the issuance of common stock in the IPO, and was offset by repayments of credit facility borrowings of $5.0 million.

Contractual Obligations

        The following table summarizes our future payments in cash, excluding the effects of time value, on contractual obligations by period as of March 31, 2015:

	Payments Due by Period
	(in thousands)
	Total		Less than 1 year		1 - 3 years		3 - 5 years		More than 5 years
Credit facilities(1)	$	295,000	$	17,500	$	41,250	$	236,250	$	—
Operating lease obligations		22,933		4,866		12,368		5,699		—
Total	$	317,933	$	22,366	$	53,618	$	241,949	$	—

(1)

We have cash interest requirements due on the Credit Facility at variable rates which are not included in the above table.

        Our existing operating lease agreements may provide us with the option to renew. Our future operating lease obligations would change if we entered into additional operating lease agreements and if we exercised renewal options.

        Contractual obligations represent future cash commitments and liabilities under agreements with third parties, and exclude purchase orders for goods and services. Purchase orders are not included in the table above. Our purchase orders represent authorizations to purchase rather than legally binding

27

agreements. The contractual commitment amounts in the table above are associated with agreements that are legally binding and enforceable, and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions and the approximate timing of the transaction.

Off-Balance Sheet Arrangements

        As of March 31, 2015, we did not have any off-balance sheet arrangements.

Non-GAAP Financial Measures

        We provide the measures Adjusted EBITDA, Adjusted EBITDA margin, and Non-GAAP Net Income as additional information for evaluating our operating results. These measures are not prepared in accordance with, or an alternative for, GAAP accounting and may be different from non-GAAP measures used by other companies.

        Investors frequently have requested information from management regarding depreciation, amortization other non-cash charges, such as stock-based compensation, as well as the impact of non-comparable items and management believes, based on discussions with investors, that these non-GAAP measures enhance investors' ability to assess our historical and projected future financial performance. While we believe these non-GAAP financial measures provide useful supplemental information to investors, there are limitations associated with the use of non-GAAP financial measures. For example, one limitation of Adjusted EBITDA is that it excludes depreciation and amortization, which represents the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our business. We compensate for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by reconciling the non-GAAP financial measures to their most comparable GAAP financial measures. Investors are encouraged to review the reconciliations of these non-GAAP financial measures to the comparable GAAP measures that are provided below.

        These non-GAAP measures include financial information that is prepared in accordance with GAAP and presented in our consolidated financial statements and are used to evaluate our business, measure our performance, develop financial forecasts and make strategic decisions and as an important factor in determining variable compensation. Reconciliations of net income, the most directly comparable GAAP financial measure, to Adjusted EBITDA and Non-GAAP Net Income are presented below.

Adjusted EBITDA and Adjusted EBITDA Margin

        We define Adjusted EBITDA as net income calculated in accordance with GAAP, adjusted for the impact of depreciation and amortization, interest expense, interest income, provision for income taxes, stock-based compensation, other non-comparable income and expenses, and certain legal costs. We have provided below a reconciliation of net income, which is the most directly comparable GAAP financial measure, to Adjusted EBITDA.

        Adjusted EBITDA margin is our calculation of Adjusted EBITDA divided by revenue calculated in accordance with GAAP.

        We use Adjusted EBITDA and Adjusted EBITDA margin as supplemental measures of performance to gain insight into operating effectiveness. We use Adjusted EBITDA and Adjusted EBITDA margin as a key metric to assess our ability to increase revenues while controlling expense growth and the scalability of our business model. We believe that the exclusion of the expenses eliminated in calculating Adjusted EBITDA and Adjusted EBITDA margin provides management and investors a useful measure for period-to-period comparisons of our core business and operating results

28

by excluding items that are not comparable across reporting periods or that do not otherwise relate to our ongoing operating results. Accordingly, we believe that Adjusted EBITDA and Adjusted EBITDA margin provide useful information to investors and others in understanding and evaluating our operating results. However, use of Adjusted EBITDA and Adjusted EBITDA margin as analytical tools has limitations, and you should not consider them in isolation or as substitutes for analysis of our financial results as reported under GAAP. In addition, other companies, including companies in our industry, might calculate Adjusted EBITDA and Adjusted EBITDA margin or similarly titled measures differently, which may reduce their usefulness as comparative measures.

        The following table presents a reconciliation of net income to Adjusted EBITDA for each of the periods indicated (in thousands):

	Three Months Ended March 31,
	2015			2014
Reconciliation of Net Income to Adjusted EBITDA:
Net income	$	13,759		$	14,557
Depreciation and amortization		4,915			4,855
Interest expense		1,103			13
Interest (income)		(8	)		(2	)
Provision for income taxes		10,494			9,349
EBITDA		30,263			28,772
Stock-based compensation		1,772			386
Other non-comparable items(a)		—			—
Professional service fees(b)		—			254
Adjusted EBITDA	$	32,035		$	29,412

(a)

Other "non-comparable items" include items that are not comparable across reporting periods or that do not otherwise relate to the Company's ongoing financial results. Non comparable items are excluded from Adjusted EBITDA in order to more effectively assess the Company's period over period and on-going operating performance.

(b)

Represents legal costs associated with the enforcement of a specific client contract. The legal process associated with this matter began in the first quarter of 2013 and concluded in the second quarter of 2014.

Non-GAAP Net Income

        We define Non-GAAP Net Income as net income adjusted to exclude tax-affected stock-based compensation expense, tax-affected amortization of acquired intangible assets, and tax-affected other non-comparable income and certain expenses.

        We use Non-GAAP Net Income as a supplemental measure of performance to gain insight into financial effectiveness. We use Non-GAAP Net Income as a key metric to assess our ability to increase revenues while controlling expense growth and the scalability of our business model. We believe that the exclusion of the expenses eliminated in calculating Non-GAAP Net Income provides management and investors a useful measure for period to period comparisons of our core business and financial results by excluding items that are not comparable across reporting periods or that do not otherwise relate to our ongoing financial results. Accordingly, we believe that Non-GAAP Net Income provides useful information to investors and others in understanding and evaluating our performance. However, use of Non-GAAP Net Income as an analytical tool has limitations, and you should not consider this measure in isolation or as a substitute for analysis of our financial results as reported under GAAP. In

29

addition, other companies, including companies in our industry, might calculate Non-GAAP Net Income or similarly titled measures differently, which may reduce their usefulness as comparative measures.

        The following table presents a reconciliation of net income to Non-GAAP Net Income for each of the periods indicated (in thousands):

	Three Months Ended March 31,
	2015			2014
Reconciliation of Net Income to Non-GAAP Net Income:
Net income	$	13,759		$	14,557
Stock-based compensation		1,772			386
Amortization of acquired intangible assets		542			1,533
Other non-comparable items(a)		—			—
Professional service fees(b)		—			254
Tax impact of add-back items(c)		(1,001	)		(867	)
Non-GAAP Net Income	$	15,072		$	15,863

(a)

Other "non-comparable items" include items that are not comparable across reporting periods or that do not otherwise relate to the Company's ongoing financial results. Non comparable items are excluded from Adjusted EBITDA in order to more effectively assess the Company's period over period and on-going operating performance.

(b)

Represents legal costs associated with the enforcement of a specific client contract. The legal process associated with this matter began in the first quarter of 2013 and concluded in the second quarter of 2014.

(c)

Assumes the tax rate applicable to the respective year.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk

        Market risk includes risks that arise from changes in interest rates, equity prices and other market changes that affect market sensitive instruments. Our primary market risk exposure is to changes in interest rates on our variable rate debt, which includes our Term Loan Facility and our Revolving Credit Facility. As of March 31, 2015, we had $295.0 million outstanding under our Term Loan Facility at an effective interest rate of 1.4%. As a result, if market interest rates were to increase by 1.0%, or 100 basis points, interest expense would decrease future earnings and cash flows, net of estimated tax benefits, by approximately $1.7 million annually, assuming that we do not enter into contractual hedging arrangements. As of March 31, 2015 there was no balance outstanding on the Revolving Credit Facility.

Item 4.    Controls and Procedures

Disclosure Controls and Procedures

        Our management, with the participation of our chief executive officer ("CEO") and chief financial officer ("CFO"), has evaluated the effectiveness of our disclosure controls and procedures, (as defined in Rules 13a- 15(e) and 15d- 15(e) under the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our CEO and CFO have concluded that, as of March 31, 2015, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized,

30

and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control

        There have been no changes in the our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the three months ended March 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

31

PART II—OTHER INFORMATION

Item 1.    Legal Proceedings

        From time to time, we may be involved in various legal proceedings and subject to claims that arise in the ordinary course of business. Although the results of litigation and claims are inherently unpredictable and uncertain, we are not currently a party to any legal proceedings the outcome of which, if determined adversely to us, are believed to, either individually or taken together, have a material adverse effect on our business, operating results, cash flows or financial condition. Regardless of the outcome, litigation has the potential to have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

Item 1A.    Risk Factors

        For a discussion of potential risks and uncertainties related to our Company see the information in Part I, Item 1A ("Risk Factors") of our Annual Report on Form 10-K for the year ended December 31, 2014. There have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

        None.

Use of Proceeds from Registered Securities

        On February 18, 2015, we completed our IPO of 22,222,222 shares of Class A common stock and, upon the underwriters' exercise of their option to purchase additional shares, issued an additional 3,142,581 shares of Class A common stock for a total of 25,364,803 shares issued. All of the shares issued in the IPO were primary shares offered by us as none of our stockholders sold any shares in the IPO. The offering price of the shares sold in the IPO was $27.00 per share, resulting in net proceeds to us, after underwriters' discounts and commissions and other expenses payable by us, of $639.1 million. All of the shares were sold pursuant to our registration statement on Form S-1, as amended (File No. 333-201321), that was declared effective by the SEC on February 11, 2015. Our Class A common stock is listed on the NASDAQ Global Select Market under the symbol "INOV".

        The principal purposes of our IPO were to create a public market for our Class A common stock and thereby enable future access to the public equity markets by us and our stockholders, and obtain additional capital. We intend to use the net proceeds to us from our IPO for working capital and other general corporate purposes; however, we do not currently have any specific uses of the net proceeds. Additionally, we may use a portion of the proceeds for acquisitions of complementary businesses, technologies, or other assets, or to repay outstanding indebtedness.

Item 3.    Defaults Upon Senior Securities

        Not applicable.

Item 4.    Mine Safety Disclosures

        Not applicable.

Item 5.    Other Information

        None.

32

Item 6.    Exhibits

EXHIBIT INDEX

Exhibit Number			Description of Document
	3.1		Second Amended and Restated Certificate of Incorporation. (Incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-1/A dated February 6, 2015)
	3.2		Second Amended and Restated Bylaws. (Incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form S-1/A dated February 6, 2015)
	10.1		2015 Omnibus Incentive Plan. (Incorporated by reference to Exhibit 10.5 to the Company's Registration Statement on Form S-1/A dated January 29, 2015)
	10.2		Form of Stock Option Award under the 2015 Omnibus Incentive Plan. (Incorporated by reference to Exhibit 10.6 to the Company's Registration Statement on Form S-1/A dated January 29, 2015)
	10.3		Form of Restricted Stock Award under the 2015 Omnibus Incentive Plan. (Incorporated by reference to Exhibit 10.7 to the Company's Registration Statement on Form S-1/A dated January 29, 2015)
	10.4		Form of Restricted Stock Unit Award under the 2015 Omnibus Incentive Plan. (Incorporated by reference to Exhibit 10.8 to the Company's Registration Statement on Form S-1/A dated January 29, 2015)
	10.5		Form of Stock Option Award under the 2015 Omnibus Incentive Plan (Section 16 Grantees). (Incorporated by reference to Exhibit 10.9 to the Company's Registration Statement on Form S-1/A dated January 29, 2015)
	10.6		Form of Restricted Stock Award under the 2015 Omnibus Incentive Plan (Section 16 Grantees). (Incorporated by reference to Exhibit 10.10 to the Company's Registration Statement on Form S-1/A dated January 29, 2015)
	10.7		Form of Restricted Stock Unit Award under the 2015 Omnibus Incentive Plan (Section 16 Grantees). (Incorporated by reference to Exhibit 10.11 to the Company's Registration Statement on Form S-1/A dated January 29, 2015)
	10.8		Employee Stock Purchase Plan. (Incorporated by reference to Exhibit 10.12 to the Company's Registration Statement on Form S-1/A dated January 29, 2015)
	10.9	*	Indemnification Agreement by and between Inovalon Holdings, Inc. and each of its directors and officers listed on Schedule A thereto.
	31.1	*	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2	*	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1	*	Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32.2	*	Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

33

Exhibit Number			Description of Document
	101.INS	*	XBRL Instance Document
	101.SCH	*	XBRL Taxonomy Extension Schema
	101.CAL	*	XBRL Taxonomy Extension Calculation Linkbase
	101.DEF	*	XBRL Taxonomy Extension Definition Linkbase
	101.LAB	*	XBRL Taxonomy Extension Label Linkbase
	101.PRE	*	XBRL Taxonomy Extension Presentation Linkbase

*

Filed herewith.

34

SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May 8, 2015	INOVALON HOLDINGS, INC.
	By:	/s/ KEITH R. DUNLEAVY, M.D.
		Keith R. Dunleavy, M.D.
		Chief Executive Officer and Chairman
	By:	/s/ THOMAS R. KLOSTER
		Thomas R. Kloster
		Chief Financial Officer

35

EX-10.9

Exhibit 10.9

INDEMNIFICATION AGREEMENT

This Indemnification Agreement (“Agreement”) by and between Inovalon Holdings, Inc. (“Inovalon”) and [officer/director] (“Indemnitee”) is entered into as of [              ], but is and becomes effective only upon the closing of Inovalon’s underwritten public offering of securities pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Effective Date”).

Recitals

A.Inovalon believes it is essential to retain and attract qualified directors and officers.

B.Indemnitee has agreed to serve, or to continue to serve, as a member of the Inovalon Board of Directors (“Board”), a director of an Inovalon affiliate, or an officer of Inovalon or an affiliate of Inovalon.

C.Both Inovalon and Indemnitee recognize the increased risk of litigation and other claims being asserted against directors and officers of public companies.

D.Inovalon’s Amended and Restated Certificate of Incorporation, as amended (the “Certificate”), allows, and Inovalon’s Amended and Restated Bylaws (the “Bylaws”) require, Inovalon to indemnify and advance expenses to its directors and officers to the extent permitted by Delaware General Corporation Law, as amended (the “Code”).

E.Indemnitee, in agreeing to serve or continue to serve, as a director or an officer of Inovalon is in part doing so in reliance on the indemnification provisions of the Certificate and Bylaws.

F.In recognition of Indemnitee’s need for (1) substantial protection against personal liability based on Indemnitee’s reliance on the Certificate of Incorporation, the Bylaws and the rights afforded under this Agreement, and (2) an inducement to provide effective services to Inovalon or an affiliate of Inovalon as a director or officer, Inovalon wishes to provide for the indemnification of Indemnitee and to advance expenses to Indemnitee to the fullest extent permitted by law, subject to certain exceptions contained in this Agreement, and, to the extent insurance is maintained by Inovalon, to provide for the continued coverage of Indemnitee under Inovalon’s directors’ and officers’ liability insurance policies.

Agreement

NOW, THEREFORE, in consideration of the mutual covenants and promises contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is acknowledged, the parties, intending to be legally bound, agree as follows:

1.     CERTAIN DEFINITIONS.

1.1.“Change in Control” means the occurrence of any of the following events:

(a)Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “Act”)) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Act), directly or indirectly, of securities of Inovalon representing more than 20% of the total voting power represented by Inovalon’s then outstanding Voting Securities, other than:

(i)a trustee or other fiduciary holding securities under an employee benefit plan of Inovalon;

(ii)a corporation owned directly or indirectly by the stockholders of Inovalon in substantially the same proportions as their ownership of stock of Inovalon; or

(iii)any current beneficial stockholder or group, as defined by Rule 13d-5 of the Exchange Act, including the heirs, assigns and successors thereof, that, as of the Effective Date, is the beneficial owner, within the meaning of Rule 13d-3 of the Exchange Act, of securities possessing more than 20% of the total combined voting power of Inovalon’s outstanding securities.

(b)There is (1) a sale of all or substantially all assets of Inovalon or (2) a merger, consolidation or similar transaction involving (directly or indirectly) Inovalon if, immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of Inovalon immediately prior thereto do not own, directly or indirectly, either (A) outstanding Voting Securities representing more than 50% of the combined outstanding voting power of the surviving entity in such merger, consolidation or similar transaction or (B) more than 50% of the combined outstanding voting power of the parent of the surviving entity in such merger, consolidation or similar transaction.

1.2.“Expenses” will be broadly construed and will include, without limitation, all direct and indirect costs of any type or nature whatsoever (including, without limitation, judgments, fines or penalties and all attorneys’, witness, or other professional fees and related disbursements, and other out-of-pocket costs of whatever nature), actually and reasonably incurred by Indemnitee in connection with the investigation, defense or appeal of a Proceeding, participation in a Proceeding as a witness or establishing or enforcing a right to indemnification under this Agreement, the Code or otherwise, and amounts paid in settlement by or on behalf of Indemnitee, but will not include any judgments, fines or penalties actually levied against Indemnitee for such individual’s violations of law.

1.3.“Independent Legal Counsel” means an attorney or firm of attorneys, selected in accordance with the provisions of Section 5, who have not otherwise performed services for Inovalon (or for any entity that as of the time of selection of the attorney or firm of attorneys is controlled by, controlling or under common control with Inovalon) or Indemnitee within the last three years (other than with respect to matters concerning

the rights of Indemnitee under this Agreement, or of other indemnitees under similar indemnity agreements).

1.4.“Proceeding” means and includes, without limitation, any threatened, pending, or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing, whether brought in the right of or by Inovalon or otherwise and whether of a civil, criminal, administrative or investigative nature, and whether formal or informal in any case, in which Indemnitee was, is or will be involved as a party or otherwise by reason of the fact that:

(a)Indemnitee is or was a director, officer, employee or agent of Inovalon;

(b)Indemnitee took an action while acting as director, officer, employee or agent of Inovalon; or

(c)Indemnitee is or was serving at the request of Inovalon as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, including as a deemed fiduciary thereto, and in any such case described above, whether or not serving in any such capacity at the time any Expense is incurred for which indemnification, reimbursement, or advancement of Expenses may be provided under this Agreement.

For the avoidance of doubt, an action by Indemnitee to enforce Indemnitee’s rights to indemnification under this Agreement will be a “Proceeding” for purposes of this Agreement.

1.5.“Voting Securities” means any securities of Inovalon which vote generally in the election of directors.

2.     SERVICES TO INOVALON.

Indemnitee will serve, at the will of Inovalon or under separate contract, if any such contract exists, as a director or officer of Inovalon or of an affiliate of Inovalon (including, but not limited to, any employee benefit plan of Inovalon) faithfully and to the best of Indemnitee’s ability so long as Indemnitee:  (a) remains an officer or director of Inovalon or an affiliate of Inovalon; and (b) if an employee of Inovalon or an affiliate of Inovalon, remains employed by Inovalon or such affiliate.  Indemnitee may at any time and for any reason resign from such position (subject to any contractual obligation that Indemnitee may be subject to apart from this Agreement), and Inovalon or any affiliate of Inovalon will have no obligation under this Agreement to continue Indemnitee in any such position.

3.     INDEMNITY OF INDEMNITEE.

Inovalon will hold harmless and indemnify Indemnitee to the fullest extent authorized or permitted by the Code, as the same may be amended from time to time (but only to the extent that such amendment permits Inovalon to provide broader indemnification rights than the Bylaws, the Certificate or the Code permitted prior to adoption of such amendment). These obligations and the other obligations of Inovalon in this Agreement apply regardless of whether the conduct giving rise to the obligations occurred before or occur after the date this Agreement

is executed. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any Proceeding relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, Indemnitee will be indemnified against all Expenses incurred in connection therewith. For these purposes, Indemnitee will be deemed to have been “successful on the merits” upon termination of any Proceeding or of any claim, issue or matter therein, by the winning of a motion to dismiss (with or without prejudice), motion for summary judgment, or settlement (with or without court approval).

4.     PARTIAL INDEMNIFICATION.

Indemnitee will be entitled under this Agreement to indemnification by Inovalon for a portion of the Expenses that Indemnitee becomes legally obligated to pay in connection with any Proceeding even if not entitled hereunder to indemnification for the total amount thereof, and Inovalon will indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.

5.     DETERMINATION OF ENTITLEMENT; CHANGE IN CONTROL.

(a)If there is a Change in Control of Inovalon then, with respect to all matters thereafter arising concerning the rights of Indemnitee to indemnification (including, but not limited to, any right to advancement of Expenses) under this Agreement, any other agreement with Inovalon providing for indemnification, the Certificate, Bylaws and applicable law (collectively, the “Indemnification Provisions”) as now or hereafter in effect, Independent Legal Counsel may be selected by Indemnitee and approved by Inovalon (which approval will not be unreasonably withheld or delayed). Such Independent Legal Counsel will render its written opinion within 90 days to Inovalon and Indemnitee as to whether and to what extent Indemnitee would be permitted to be indemnified under the Indemnification Provisions before and after the completion of the Change in Control and such opinion will be binding upon Inovalon and Indemnitee. Inovalon will pay the reasonable fees and expenses of the Independent Legal Counsel referred to above and will fully indemnify such counsel against any and all Expenses arising out of or relating to this Agreement or its engagement under this Agreement.

(b)In making any determination concerning Indemnitee’s right to indemnification, there will be a presumption that Indemnitee has satisfied the applicable standard of conduct, and Inovalon may overcome such presumption only by its adducing clear and convincing evidence to the contrary. Any determination by Inovalon (including without limitation by its directors or its stockholders) concerning Indemnitee’s right to indemnification that is adverse to Indemnitee may be challenged by Indemnitee in the Court of Chancery of the State of Delaware.  No determination by Inovalon (including without limitation by its directors or its stockholders) that Indemnitee has not satisfied any applicable standard of conduct will be a defense to any Claim by Indemnitee for indemnification or reimbursement or advance payment of Expenses by Inovalon hereunder or create a presumption that Indemnitee has not met any applicable standard of conduct.

(c)If the person or persons so empowered to make a determination under Section 5(b) fail to make the requested determination within ninety (90) days after any judgment, order, settlement, dismissal, arbitration award, conviction, acceptance of a plea of nolo contendere or its equivalent, or other disposition or partial disposition of any Proceeding

or any other event that could enable Inovalon to determine Indemnitee’s entitlement to indemnification, the requisite determination that Indemnitee is entitled to indemnification will be deemed to have been made.

6.     NOTIFICATION AND DEFENSE OF CLAIM.

As promptly as practicable, but in any event not later than thirty (30) days after receipt by Indemnitee of notice of the commencement of any Proceeding, Indemnitee will, if a claim in respect thereof is to be made against Inovalon under this Agreement, notify Inovalon of the commencement thereof, provided that the failure so to notify Inovalon will not relieve Inovalon from any liability which it may have to Indemnitee under this Agreement or otherwise. With respect to any such Proceeding as to which Indemnitee notifies Inovalon of the commencement thereof:

(a)Inovalon will be entitled to participate in the Proceeding at its own expense;

(b)except as otherwise provided below, Inovalon may, at its option and jointly with any other indemnifying party similarly notified and electing to assume such defense, assume the defense thereof, with counsel reasonably satisfactory to Indemnitee. After notice from Inovalon to Indemnitee of its election to assume the defense thereof, Inovalon will not be liable to Indemnitee under this Agreement for any Expenses subsequently incurred by Indemnitee in connection with the defense thereof except for reasonable costs of investigation or otherwise as provided below. Indemnitee will have the right to employ separate counsel in such Proceeding but the Expenses of such counsel incurred after notice from Inovalon of its assumption of the defense thereof will be at the expense of Indemnitee;  provided,  however, that the Expenses of Indemnitee’s separate counsel will be borne by Inovalon if (i) the employment of separate counsel by Indemnitee has been authorized by Inovalon and Inovalon has agreed in writing to bear such Expenses, (ii) Indemnitee reasonably will have concluded that there may be a conflict of interest between Inovalon and Indemnitee in the conduct of the defense of such Proceeding, or (iii) Inovalon in fact will not have employed counsel to assume the defense of such Proceeding or will at any time have ceased to actively pursue the defense thereof. Inovalon will not be entitled to assume the defense of any Proceeding brought by or on behalf of Inovalon or as to which Indemnitee will have made the conclusion provided for in clause (ii) above; and

(c)Inovalon will not be liable to indemnify Indemnitee under this Agreement for any amounts paid in settlement of any Proceeding effected without its written consent, which will not be unreasonably withheld or delayed. Inovalon will be permitted to settle any Proceeding except that it will not settle any Proceeding in any manner that would impose any penalty or limitation on Indemnitee without Indemnitee’s written consent, which may be given or withheld in Indemnitee’s sole discretion.

7.     EXPENSES.

Promptly following a request by Indemnitee for the advancement of Expenses, Inovalon will advance, prior to the final disposition of any Proceeding, all Expenses incurred by Indemnitee in connection with such Proceeding (through the final disposition of any such Proceeding from which all rights of appeal have either been exhausted or have lapsed) Indemnitee will qualify for

advances upon the execution and delivery to Inovalon of this Agreement, which will constitute an undertaking providing that Indemnitee undertakes to the fullest extent permitted by law to repay the advance (without interest) if and to the extent that Indemnitee is ultimately determined by a court of competent jurisdiction in a final judgment, not subject to appeal, that Indemnitee is not entitled to be indemnified by Inovalon. No other form of undertaking will be required other than the execution of this Agreement. Any advances and undertakings to repay under this Section will be unsecured and interest free. Prior to an ultimate determination by a court of competent jurisdiction in a final judgment, not subject to appeal, that Indemnitee is not entitled to be indemnified by Inovalon, Inovalon may not refuse to advance Expenses to Indemnitee under this Agreement on the grounds that Indemnitee has not satisfied any applicable standard of conduct or is not ultimately entitled to be indemnified, held harmless or exonerated under the other provisions of this Agreement.  Advances will be made without regard to Indemnitee’s ability to repay. Such advances are intended to be an obligation of Inovalon to Indemnitee hereunder and will in no event be deemed to be a personal loan. Without limiting the generality or effect of the foregoing, within thirty days after any request by Indemnitee, Inovalon will, in accordance with such request (but without duplication), (a) pay such Expenses on behalf of Indemnitee, (b) advance to Indemnitee funds in an amount sufficient to pay such Expenses, or (c) reimburse Indemnitee for such Expenses.

8.     ENFORCEMENT.

Any right to indemnification or advances granted by this Agreement to Indemnitee will be enforceable by or on behalf of Indemnitee in any court of competent jurisdiction if (a) the claim for indemnification or advances is denied, in whole or in part, or (b) no disposition of such claim is made within ninety (90) days of request therefor. Indemnitee, in such enforcement action, if successful in whole or in part, also will be entitled to be paid the Expense of prosecuting Indemnitee’s claim. Neither the failure of Inovalon (including its Board of Directors or its stockholders) to have made a determination prior to the commencement of such enforcement action that indemnification of Indemnitee is proper in the circumstances, nor an actual determination by Inovalon (including its Board of Directors or its stockholders) that such indemnification is improper will be a defense to the action or create a presumption that Indemnitee is not entitled to indemnification under this Agreement or otherwise.

9.     INSURANCE.

(a)Unless otherwise approved by the Board of Directors prior to a Change in Control, Inovalon will obtain and maintain during the term of this Agreement directors’ and officers’ liability insurance (“D&O Insurance”) with respect to which Indemnitee will be named as an insured. Notwithstanding any other provision of this Agreement, Inovalon will not be obligated to indemnify Indemnitee for Expenses that have been previously paid directly to Indemnitee by D&O Insurance; but payment made to Indemnitee under an insurance policy purchased and maintained by Indemnitee at Indemnitee’s own expense of any amounts otherwise indemnifiable or obligated to be made under this Agreement will not reduce Inovalon’s obligations to Indemnitee under this Agreement, except to the extent of the amounts actually recovered by the Indemnitee from the personal insurance policy that the Indemnitee does not otherwise repay or reimburse on the terms of such insurance policy. If Inovalon has D&O Insurance in effect at the time Inovalon receives from Indemnitee any notice of the commencement of a Proceeding,

Inovalon will give prompt notice of the commencement of such Proceeding to the insurers in accordance with the procedures set forth in the policy. Inovalon will thereafter take all reasonably necessary action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policy.

(b)In the event that (i) the D&O Insurance policy is renewed but the renewed policy does not provide for prior act’s coverage, (ii) Inovalon obtains a new D&O Insurance policy for any period following the termination of the prior D&O Insurance, and such new D&O Insurance policy does not provide for prior act’s coverage, or (iii) Inovalon does not renew the D&O Insurance policy or obtain a new D&O Insurance policy following the termination of a D&O Insurance policy, then unless otherwise determined by the Board of Directors, Inovalon will add to the D&O Insurance policy or the applicable successor D&O Insurance policy a run-off endorsement (the “Endorsement”) on the existing D&O Insurance policy (and in the case of (iii) above, do so prior to the termination of the existing D&O Insurance policy if necessary) or the applicable successor D&O Insurance policy subject to the same terms and conditions in all material respects. Unless otherwise approved by the Board of Directors prior to the date on which the Endorsement is obtained, the Endorsement will be non-cancelable and will provide for at least a six-year extended coverage period for any and all claims covered under the D&O Insurance policy. Inovalon will pay all premiums, commissions and other costs or charges incurred in obtaining the Endorsement.

(c)In the event of a Change of Control (other than, at the discretion of a majority of the Board) or Inovalon’s becoming insolvent, Inovalon will maintain in force any and all insurance policies then maintained by Inovalon in providing insurance—directors’ and officers’ liability, fiduciary, employment practices or otherwise—in respect of the individual directors and officers of Inovalon and its affiliates, or will replace all such policies with insurance coverage substantially comparable in scope and amount as the expiring policies, in each case for a fixed period of six years thereafter.

10.      SUBROGATION.

In the event of payment under this Agreement, Inovalon will be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who will execute all documents required and will do all acts that may be reasonably necessary to secure such rights, including the execution of such documents necessary to enable Inovalon effectively to bring suit to enforce such rights.

Inovalon’s obligation to indemnify, hold harmless, exonerate or advance Expenses hereunder to Indemnitee who is or was serving at the request of Inovalon as a director, officer, trustee, partner, managing member, fiduciary, employee or agent of any other enterprise will be reduced by any amount Indemnitee has actually received as indemnification, hold harmless or exoneration payments or advancement of expenses from such enterprise.  Notwithstanding any other provision of this Agreement to the contrary, (i) Indemnitee will have no obligation to reduce, offset, allocate, pursue or apportion any indemnification, hold harmless, exoneration, advancement, contribution or insurance coverage among multiple parties possessing such duties to Indemnitee prior to Inovalon’s satisfaction and performance of all its obligations under this Agreement, and (ii) Inovalon will perform fully its obligations under this Agreement without

regard to whether Indemnitee holds, may pursue or has pursued any indemnification, advancement, hold harmless, exoneration, contribution or insurance coverage rights against any person or entity other than Inovalon.

11.      CONTRIBUTION.

To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to the Indemnitee, Inovalon, in lieu of indemnifying the Indemnitee, will contribute to Indemnitee’s Expenses in connection with any claim relating to any Proceeding, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such proceeding in order to reflect:

(a)the relative benefits received by Inovalon and Indemnitee as a result of the events and transactions giving rise to such Proceeding; and

(b)the relative fault of Indemnitee and Inovalon (and its other directors, officers, employees and agents) in connection with the circumstances, events or transactions that gave rise to the Proceeding.

12.      NON-EXCLUSIVITY AND SURVIVAL OF RIGHTS.

(a)All agreements and obligations of Inovalon contained in this Agreement will continue during the period Indemnitee is a director, officer, employee or other agent of Inovalon (or is or was serving at the request of Inovalon as a director, officer, employee or other agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise) and will continue thereafter so long as Indemnitee will be subject to any possible Proceeding. The benefits hereunder will inure to the benefit of the heirs, executors and administrators and assigns of Indemnitee. The rights conferred on Indemnitee by this Agreement will not be exclusive of any other right Indemnitee may have or hereafter acquire under any statute, provision of the Certificate or Bylaws, agreement, vote of stockholders or disinterested directors, or otherwise, both as to action in Indemnitee’s official capacity and as to action in another capacity while holding office.

(b)The obligations and duties of Inovalon to Indemnitee under this Agreement will be binding on Inovalon and its successors and assigns until terminated in accordance with its terms. Inovalon will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to Inovalon or to all or substantially all of the business or assets of Inovalon, expressly to assume and agree to perform this Agreement and to indemnify Indemnitee to the fullest extent permitted by law.

(c)No amendment, alteration or repeal of this Agreement or of any provision hereof will limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by Indemnitee prior to such amendment, alteration or repeal. To the extent that a change in the Code, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Certificate, Bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee will enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy conferred in this Agreement is intended to be exclusive of

any other right or remedy, and every other right and remedy will be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, by Indemnitee will not prevent the concurrent assertion or employment of any other right or remedy by Indemnitee.

13.      SEVERABILITY.

Each of the provisions of this Agreement is a separate and distinct agreement and independent of the others, so that if any provision is held to be invalid for any reason, such invalidity or unenforceability will not affect the validity or enforceability of the other provisions. Furthermore, if this Agreement is invalidated in its entirety on any ground, then Inovalon nevertheless will indemnify Indemnitee to the fullest extent provided by the Certificate, Bylaws, the Code or any other applicable law.

14.      GOVERNING LAW.

This Agreement will be governed exclusively by and construed according to the laws of the State of Delaware, as applied to contracts between Delaware residents entered into and to be performed entirely within Delaware.

15.      AMENDMENT, MODIFICATION, WAIVER AND TERMINATION.

No amendment, modification, termination or cancellation of this Agreement will be effective unless signed in writing by both parties hereto;  provided,  however, that Inovalon will have the right to amend, modify, terminate or replace this Agreement if Inovalon amends, modifies, terminates or replaces its form of Indemnification Agreement for directors, officers, employees and other agents of Inovalon;  provided,  further, that such amended or modified agreement or such new agreement does not diminish in any material respect the rights of Indemnitee hereunder. No waiver of any of the provisions of this Agreement will be deemed or will constitute a waiver of any other provision hereof (whether or not similar) nor will such waiver constitute a continuing waiver.

16.      ENTIRE AGREEMENT.

This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings and negotiations, written and oral, between the parties with respect to the subject matter of this Agreement; provided,  however, that this Agreement is a supplement to and in furtherance of the Certificate, Bylaws, the Code and any other applicable law, and will not be deemed a substitute therefore, nor to diminish or abrogate any rights of Indemnitee thereunder.

17.      MONETARY DAMAGES INSUFFICIENT / SPECIFIC PERFORMANCE.

The parties agree that a monetary remedy for breach of this Agreement may be inadequate, impracticable, and difficult to prove and that such breach may cause Indemnitee irreparable harm.  Indemnitee may therefore enforce this Agreement by seeking injunctive relief and specific performance, without any necessity of showing actual damage or irreparable harm (since actual and irreparable harm will result if Inovalon does not specifically perform its obligations

under this Agreement).  Seeking injunctive relief or specific performance does not be preclude Indemnitee from seeking or obtaining any other relief to which Indemnitee may be entitled.  Indemnitee is entitled to specific performance and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity of posting bonds or other undertakings in connection therewith.  Inovalon acknowledges that in the absence of a waiver, a bond or undertaking may be required of Indemnitee by the applicable court, and Inovalon hereby waives any such requirement of a bond or undertaking.

18.      DETERMINATION OF GOOD FAITH/SAFE HARBOR.

For purposes of any determination of “good faith,” to the extent permitted under the Code, Indemnitee will be presumed to have acted in good faith if Indemnitee’s action is based on reliance on the records or books of account of Inovalon and its affiliates, including financial statements, or on information supplied to Indemnitee by the officers of Inovalon or its affiliates in the course of their duties, or on the advice of legal counsel for Inovalon or its affiliates or for the Board or counsel selected by any committee of the Board or on information or records given or reports made to Inovalon or its affiliates by an independent certified public accountant or by an appraiser, investment banker, compensation consultant, or other expert selected with reasonable care by Inovalon or its affiliates or by the Board or any committee of the Board.   The provisions of this Section will not be deemed to be exclusive or to limit in any way the other circumstances in which Indemnitee may be deemed to have met the applicable standard of conduct.  Whether or not the foregoing provisions of this Section are satisfied, it will in any event be presumed that Indemnitee has at all times acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of Inovalon.

19.      INTERPRETATION OF AGREEMENT.

It is understood that the parties hereto intend this Agreement to be interpreted and enforced so as to provide indemnification to Indemnitee to the fullest extent now or hereafter permitted by law.

20.      IDENTICAL COUNTERPARTS.

This Agreement may be executed in one or more counterparts, each of which will be deemed for all purposes to be an original but all of which together will constitute this Agreement.

21.      HEADINGS.

The headings of the Sections of this Agreement are inserted for convenience only and are not part of this Agreement or intended to affect the interpretation of this Agreement.

22.      NOTICES.

All notices, demands, and other communications required or permitted under this Agreement will be made in writing and will be deemed duly given if delivered by hand, against receipt, or mailed, postage prepaid, certified or registered mail, return receipt requested, and addressed to the parties at the Notice Addresses set forth on the signature page at the end of this Agreement.

Notice of change of address will be effective only when done in accordance with this Section.  All notices complying with this Section will be deemed received on the date of delivery or on the third business day after proper mailing.

[Signatures on Next Page]

Signed and delivered by the parties as of [                      ]:

INOVALON HOLDINGS, INC.

“Inovalon”

By:

Printed Name:

Title:

Notice Address:

4321 Collington Road

Bowie, Maryland  20716

Attn:  Legal & Compliance Department

Tel:  301-809-4000

Email:  legal@inovalon.com

INDEMNITEE:

By:

Printed Name:

Notice Address:

[ADDRESS]

[ADDRESS]

Tel:  [CONTACT TEL]

Email:  [CONTACT EMAIL]

Exhibit A

Name	Date
Keith R. Dunleavy, M.D.	February 18, 2015
Robert A. Wychulis	February 18, 2015
Thomas R. Kloster	February 18, 2015
Daniel L. Rizzo	February 18, 2015
Joseph R. Rostock	February 18, 2015
Shauna L. Vernal	February 18, 2015
Denise K. Fletcher	February 18, 2015
André S. Hoffmann	February 18, 2015
William J. Teuber	February 18, 2015

EX-31.1

QuickLinks -- Click here to rapidly navigate through this document

EXHIBIT 31.1

CERTIFICATION

I, Keith R. Dunleavy, M.D., certify that:

        1.     I have reviewed this Quarterly Report on Form 10-Q of Inovalon Holdings, Inc.;

        2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

        3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

        4.     The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

        (a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

        (b)   [Language omitted in accordance with SEC Release Nos. 34-47986 and 34-54942];

        (c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

        (d)   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

        5.     The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):

        (a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and

        (b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ KEITH R. DUNLEAVY, M.D.
Keith R. Dunleavy, M.D.
Chief Executive Officer and Chairman

Date: May 8, 2015

QuickLinks

EXHIBIT 31.1

CERTIFICATION

EX-31.2

QuickLinks -- Click here to rapidly navigate through this document

EXHIBIT 31.2

CERTIFICATION

I, Thomas R. Kloster, certify that:

        1.     I have reviewed this Quarterly Report on Form 10-Q of Inovalon Holdings, Inc.;

        2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

        3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

        4.     The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

        (a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

        (b)   [Language omitted in accordance with SEC Release Nos. 34-47986 and 34-54942];

        (c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

        (d)   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

        5.     The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):

        (a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and

        (b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ THOMAS R. KLOSTER
Thomas R. Kloster
Chief Financial Officer

Date: May 8, 2015

QuickLinks

EXHIBIT 31.2

CERTIFICATION

EX-32.1

QuickLinks -- Click here to rapidly navigate through this document

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the Quarterly Report of Inovalon Holdings, Inc. (the "Company") on Form 10-Q for the period ended March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Keith R. Dunleavy, M.D., the Chief Executive Officer and Chairman of the Company, certify, to my knowledge, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.

the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and



2.

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ KEITH R. DUNLEAVY, M.D.
Keith R. Dunleavy, M.D.
Chief Executive Officer and Chairman

Date: May 8, 2015

QuickLinks

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

EX-32.2

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the Quarterly Report of Inovalon Holdings, Inc. (the "Company") on Form 10-Q for the period ended March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Thomas R. Kloster, Chief Financial Officer of the Company, certify, to my knowledge, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.

the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and



2.

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ THOMAS R. KLOSTER
Thomas R. Kloster
Chief Financial Officer

Date: May 8, 2015

QuickLinks

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

XML

CREDIT FACILITIES (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015
CREDIT FACILITIES
Outstanding principal paid	$ 5,000
Unsecured debt | Line of Credit
CREDIT FACILITIES
Outstanding principal paid	$ 5,000

XML

NET INCOME PER SHARE (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Earnings per share - basic
Net income	$ 13,759	$ 14,557
Weighted average shares used in computing basic net income per share	135,331	134,645
Net income per share-basic	$ 0.10	$ 0.11
Earnings per share - diluted
Net income	$ 13,759	$ 14,557
Weighted average shares used in computing basic net income per share	135,331	134,645
Weighted average shares used in computing diluted net income per share	138,902	136,776
Net income per share-diluted	$ 0.10	$ 0.11
Stock options
Earnings per share - diluted
Effect of dilutive securities	3,482	2,131
Restricted stock units
Earnings per share - diluted
Effect of dilutive securities	89

XML

STOCK-BASED COMPENSATION (Details 3) (Employee Stock Purchase Plan, USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015
Employee Stock Purchase Plan
Purchase period	6 months
Fair value of the company's stock taken for purchase price calculation (as a percent)	85.00%
Maximum amount of deduction from payroll	$ 7,500
Common Class A
Employee Stock Purchase Plan
Shares reserved for future issuance	1,833,857
Minimum
Employee Stock Purchase Plan
Amount to be deducted from the payroll (as a percent)	1.00%
Maximum
Employee Stock Purchase Plan
Amount to be deducted from the payroll (as a percent)	15.00%

XML

NET INCOME PER SHARE

3 Months Ended

Mar. 31, 2015

NET INCOME PER SHARE

NET INCOME PER SHARE

3. NET INCOME PER SHARE (in thousands, except per share amounts)

        Holders of all outstanding classes of common stock participate ratably in earnings on an identical per share basis as if all shares were a single class. Basic earnings per share ("EPS") is computed by dividing net income by the weighted average number of shares of common stock, Class A common stock and Class B common stock outstanding during the period. Diluted EPS is computed by dividing net income by the sum of the weighted average number of shares of common stock outstanding and potentially dilutive securities outstanding during the period under the treasury stock method.

        Potentially dilutive securities include stock options and restricted stock units ("RSUs").

        Under the treasury stock method, dilutive securities are assumed to be exercised at the beginning of the periods and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Securities are excluded from the computations of diluted earnings per share if their effect would be anti-dilutive to EPS.

        The following table reconciles the weighted average shares outstanding for basic and diluted EPS for the periods indicated:

	Three Months Ended March 31,
	2015		2014
Net income	$	13,759	$	14,557
Weighted average shares used in computing basic net income per share		135,331		134,645
Net income per share—basic	$	0.10	$	0.11
Net income		13,759		14,557
Weighted average shares used in computing basic net income per share		135,331		134,645
Effect of dilutive stock options		3,482		2,131
Effect of dilutive RSUs		89		—
Weighted average shares used in computing diluted net income per share		138,902		136,776
Net income per share—diluted	$	0.10	$	0.11

        The computation of diluted EPS does not include 23 and zero unvested RSUs, on a weighted average basis, for the three months ended March 31, 2015 and 2014, respectively, because their inclusion would have an anti-dilutive effect on EPS under the treasury stock method.

        During September 2014, the Company completed a holding company reorganization. As part of the reorganization, the Company implemented a multi-class stock structure. The Company has retrospectively presented the impact on EPS of this reorganization by calculating EPS based on the newly authorized, issued and outstanding Class A and Class B common stock. Class A and Class B common stock shares were outstanding during the three months ended March 31, 2015. Only shares of Class B common stock were outstanding during the three months ended March 31, 2014.

XML

GOODWILL AND INTANGIBLE ASSETS (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Intangible Assets
Gross	$ 36,587		36,587
Accumulated Amortization	(29,682)		(29,140)
Net	6,905		7,447
Amortization expense
Amortization expense	542	1,533
Proprietary software technologies
Intangible Assets
Gross	16,077		16,077
Accumulated Amortization	(16,077)		(15,796)
Net			281
Proprietary software technologies | Weighted average
Intangible Assets
Weighted Average Remaining Useful Life			3 months 18 days
Trademark
Intangible Assets
Gross	360		360
Accumulated Amortization	(360)		(360)
Database
Intangible Assets
Gross	6,500		6,500
Accumulated Amortization	(3,609)		(3,447)
Net	2,891		3,053
Database | Weighted average
Intangible Assets
Weighted Average Remaining Useful Life	4 years 6 months		4 years 9 months 18 days
Customer relationships
Intangible Assets
Gross	13,650		13,650
Accumulated Amortization	(9,636)		(9,537)
Net	$ 4,014		4,113
Customer relationships | Weighted average
Intangible Assets
Weighted Average Remaining Useful Life	10 years 2 months 12 days		10 years 4 months 24 days

XML

GOODWILL AND INTANGIBLE ASSETS (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015
Goodwill
Change in the carrying amount	$ 0

XML

GOODWILL AND INTANGIBLE ASSETS (Details 3) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Estimated future amortization expense of intangible assets
Remainder of 2015	$ 783
2016	1,044
2017	1,044
2018	1,044
2019	814
Thereafter	2,176
Net	$ 6,905	$ 7,447

XML

CREDIT FACILITIES (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014	Sep. 19, 2014	Feb. 18, 2015
Credit Facilities
Total Credit Facilities	$ 295,000	$ 300,000
Less: current portion	17,500	18,750
Noncurrent Credit Facilities	277,500	281,250
Unsecured debt | Line of Credit
Credit Facilities
Total Credit Facilities	295,000
Maximum borrowing capacity			400,000
Unsecured debt | Term Loan
Credit Facilities
Total Credit Facilities	295,000	300,000
Maximum borrowing capacity			300,000
Unsecured debt | Revolving Credit Facility
Credit Facilities
Maximum borrowing capacity			$ 100,000	$ 100,000

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2015

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(in thousands)

        Comprehensive Income—The Company's net income equals comprehensive income for all periods presented as the Company has no components of other comprehensive income. No accumulated comprehensive income has been recorded for any of the periods presented.

        Deferred IPO Issuance Costs—The Company capitalizes IPO costs, which primarily consist of direct incremental legal and accounting fees relating to the IPO. The IPO issuance costs were offset against IPO proceeds directly following the consummation of the offering that occurred during February 2015. As of March 31, 2015 there were no deferred IPO issuance costs and as of December 31, 2014, there was $2,888 deferred as prepaid expenses and other current assets.

        Recently Issued Accounting Standards—In May 2014, the Financial Accounting Standards Board ("FASB") issued updated guidance on revenue from contracts with customers. This revenue recognition guidance supersedes existing GAAP guidance, including most industry-specific guidance. The core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance identifies steps to apply in achieving this principle. This updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. On April 1, 2015, the FASB proposed deferring the effective date by one year to December 15, 2017 for annual reporting periods beginning after that date. The FASB also proposed permitting early adoption of the standard, but not before the original effective date of December 15, 2016. The Company is currently evaluating the potential impact of this guidance on the Company's financial disclosures and results, including whether the Company elects retrospective, or modified retrospective, method adoption.

        In April 2015, the FASB issued Accounting Standards Update No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs." This standard amends existing guidance to require the presentation of debt issuance costs in the balance sheet as a deduction from the carrying amount of the related debt liability instead of a deferred charge. It is effective for annual reporting periods beginning after December 15, 2015, but early adoption is permitted. The Company is currently evaluating the impact that the adoption of this standard will have on the Company's financial disclosures and results.

XML

CREDIT FACILITIES (Details 2) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Scheduled maturity of the Credit Facilities
Total	$ 295,000	$ 300,000
Unsecured debt | Line of Credit
Scheduled maturity of the Credit Facilities
(Remainder of) 2015	13,750
2016	15,000
2017	30,000
2018	45,000
2019	191,250
Total	$ 295,000

XML

CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 793,114	$ 162,567
Accounts receivable (net of allowances of $1,420 and $1,827 at March 31, 2015 and December 31, 2014, respectively)	65,641	43,938
Prepaid expenses and other current assets	5,738	6,015
Income tax receivable		6,797
Deferred income taxes	476	491
Total current assets	864,969	219,808
Noncurrent assets:
Property, equipment and capitalized software, net	52,347	50,962
Goodwill	62,269	62,269
Intangible assets, net	6,905	7,447
Other assets	1,941	2,083
Total assets	988,431	342,569
Current liabilities:
Accounts payable	10,937	10,974
Accrued compensation	8,423	15,305
Other current liabilities	2,667	1,992
Deferred revenue	4,517	3,904
Income tax payable	2,554
Deferred rent	606	567
Credit facilities	17,500	18,750
Capital lease obligation	96	99
Total current liabilities	47,300	51,591
Noncurrent liabilities:
Credit facilities, less current portion	277,500	281,250
Capital lease obligation, less current portion	145	168
Deferred rent	2,471	2,619
Deferred income taxes	14,655	15,163
Total liabilities	342,071	350,791
Commitments and contingencies (Note 7)
Stockholders' equity (deficit):
Common stock
Preferred stock, $0.0001 par value, 100,000,000 shares authorized, zero shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively
Additional paid in capital	451,123	110,317
Retained earnings	195,236	181,477
Treasury stock, at cost, zero shares at March 31, 2015 and 11,109,285 at December 31, 2014		(300,017)
Total stockholders' equity (deficit)	646,360	(8,222)
Total liabilities and stockholders' equity (deficit)	988,431	342,569
Common Class A
Stockholders' equity (deficit):
Common stock
Common Class B
Stockholders' equity (deficit):
Common stock	$ 1	$ 1

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Cash flows from operating activities:
Net income	$ 13,759	$ 14,557
Adjustments to reconcile net income to net cash provided by operating activities:
Stock compensation expense	1,751	386
Employee stock purchase plan expense	21
Depreciation	4,373	3,322
Amortization of intangibles	542	1,533
Deferred income taxes	(493)	620
Loss on disposal of long lived assets	4	5
Changes in assets and liabilities:
Accounts receivable	(21,703)	(20,804)
Prepaid expenses and other current assets	277	(1,020)
Income taxes receivable	6,797	4,772
Other assets	(171)	(846)
Accounts payable	(1,685)	311
Accrued compensation	(6,368)	(867)
Other liabilities	655	389
Deferred rent	(109)	15
Deferred revenue	613	105
Income taxes payable	2,554	3,662
Net cash provided by operating activities	817	6,140
Cash flows from investing activities:
Purchases of property and equipment	(1,338)	(1,619)
Investment in capitalized software	(5,158)	(4,475)
Net cash used in investing activities	(6,496)	(6,094)
Cash flows from financing activities:
Proceeds from issuance of common stock, net of underwriters' discount	362,082
Proceeds from issuance of treasury stock, net of underwriters' discount	282,172
Payment of offering costs	(3,002)
Repayment of credit facility borrowings	(5,000)
Dividends paid		(2,730)
Capital lease obligations paid	(26)	(33)
Proceeds from exercise of stock options		57
Net cash provided by (used in) financing activities	636,226	(2,706)
Increase (decrease) in cash and cash equivalents	630,547	(2,660)
Cash and cash equivalents, beginning of period	162,567	110,594
Cash and cash equivalents, end of period	793,114	107,934
Supplementary cash flow disclosure:
Cash paid during the period for: Income taxes, net of refunds	1,583	190
Cash paid during the period for: Interest	1,076
Noncash investing activities:
Capital lease obligations incurred		19
Accounts payable for purchases of and investment in property, equipment and capitalized software	1,557	403
Accrued compensation for investment in capitalized software	464	276
Offering costs not yet paid	$ 2,180

XML

STOCK-BASED COMPENSATION (Details) (Common Class A)	Feb. 18, 2015	Mar. 31, 2015
Omnibus Incentive Plan 2015
STOCK BASED COMPENSATION
Shares reserved for future issuance	7,335,430
Long-term Incentive Plan 2007
STOCK BASED COMPENSATION
Shares reserved for future issuance		6,940,055

XML

ORGANIZATION AND BASIS OF PRESENTATION (Details) (Common Class A, USD $) In Millions, except Share data, unless otherwise specified	0 Months Ended
	Feb. 18, 2015
ORGANIZATION AND BASIS OF PRESENTATION
Shares issued	25,364,803
IPO
ORGANIZATION AND BASIS OF PRESENTATION
Shares issued	22,222,222
Share price (in dollars per share)	27.00
Proceeds from issuance of initial public offering shares	639.1
Over-Allotment Option
ORGANIZATION AND BASIS OF PRESENTATION
Shares issued	3,142,581

XML

STOCK-BASED COMPENSATION (Details 2) (Restricted stock units, USD $) In Thousands, except Share data, unless otherwise specified	0 Months Ended
	Mar. 05, 2015
Restricted stock units
Restricted Stock Units
Granted (in shares)	76,273
Vesting period	5 years
Grant Date Fair Value	$ 2,337
Grant date fair value (in dollars per share)	$ 30.64

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) (IPO, Prepaid expenses and other current assets, USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
IPO | Prepaid expenses and other current assets
Deferred IPO Issuance Costs
Deferred offering costs	$ 0	$ 2,888

XML

ORGANIZATION AND BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2015

ORGANIZATION AND BASIS OF PRESENTATION

ORGANIZATION AND BASIS OF PRESENTATION

1. ORGANIZATION AND BASIS OF PRESENTATION

        The accompanying unaudited consolidated financial statements have been prepared by Inovalon Holdings, Inc. (the "Company") in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial reporting and as required by Rule 10-01 of Regulation S-X. Accordingly, the unaudited consolidated financial statements may not include all of the information and notes required by GAAP for audited financial statements. In the opinion of the Company's management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of items of a normal and recurring nature, necessary to present fairly the Company's financial position as of March 31, 2015 and the results of operations and cash flows for the three month periods ended March 31, 2015 and 2014. The results of operations for the three month period ended March 31, 2015 are not necessarily indicative of the results to be expected for the full year. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities, disclosures of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenue and expenses during the reported period. Significant estimates made by management include, but are not limited to: revenue recognition, specifically selling prices associated with the individual elements in multiple element arrangements; accounts receivable allowances; estimates of the fair value of the Company's pre-IPO common stock and the related estimates of the fair value of stock-based awards; fair value of intangibles and goodwill; depreciable lives of property, equipment and capitalized software; and useful lives of intangible assets. Actual results could differ from management's estimates, and such differences could be material to the Company's consolidated financial position and results of operations.

        On February 18, 2015, the Company completed its initial public offering (IPO) of 22,222,222 shares of Class A common stock and, upon the underwriters' exercise of their option to purchase additional shares, issued an additional 3,142,581 shares of Class A common stock for a total of 25,364,803 shares issued. All of the shares issued in the IPO were primary shares offered by the Company as none of the Company's stockholders sold any shares in the IPO. The offering price of the shares sold in the IPO was $27.00 per share, resulting in net proceeds to the Company, after underwriters' discounts and commissions and other expenses, payable by the Company, of approximately $639.1 million.

        The Company is a leading technology company that combines advanced cloud-based data analytics and data-driven intervention platforms to achieve meaningful impact in clinical and quality outcomes, utilization, and financial performance across the healthcare landscape. The value that the Company delivers to its clients is achieved by turning data into insights and those insights into action. Through the Company's large proprietary datasets, advanced integration technologies, sophisticated predictive analytics, and deep subject matter expertise, the Company delivers seamless, end-to-end platforms that bring the benefits of big data and large-scale analytics to the point of care. The Company's analytics platforms identify gaps in care, quality, data integrity, and financial performance, in its clients' datasets. The Company's data-driven intervention platforms enable clients to take the insights derived from the analytics and implement unique, patient-level solutions, drive impact and enhance patient engagement.

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Accounts receivable, allowances
Accounts receivable, allowances (in dollars)	$ 1,420	$ 1,827
Common stock
Common stock, par value (in dollars per share)	$ 0.000005	$ 0.000005
Common stock, authorized shares	900,000,000	900,000,000
Common stock, issued shares	0	0
Common stock, outstanding shares	0	0
Preferred stock
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, Authorized shares	100,000,000	100,000,000
Preferred stock, issued shares	0	0
Preferred stock, outstanding shares	0	0
Treasury stock
Treasury stock shares	0	11,109,285
Common Class A
Common stock
Common stock, par value (in dollars per share)	$ 0.000005	$ 0.000005
Common stock, authorized shares	750,000,000	750,000,000
Common stock, issued shares	25,364,803	11,109,285
Common stock, outstanding shares	25,364,803	11,109,285
Common Class B
Common stock
Common stock, par value (in dollars per share)	$ 0.000005	$ 0.000005
Common stock, authorized shares	150,000,000	150,000,000
Common stock, issued shares	122,257,145	122,257,145
Common stock, outstanding shares	122,257,145	122,257,145

XML

PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE (Tables)

3 Months Ended

Mar. 31, 2015

PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE

Schedule of property, equipment and capitalized software

	March 31, 2015			December 31, 2014
Office and computer equipment	$	24,358		$	23,844
Leasehold improvements		12,028			11,999
Purchased software		10,400			9,916
Capitalized software		43,619			39,432
Furniture and fixtures		4,978			4,894
Land		390			390
Building		1,750			1,750
Work in process		3,218			2,917
Total		100,741			95,142
Less: accumulated depreciation and amortization		(48,394	)		(44,180	)
Property, equipment and capitalized software, net	$	52,347		$	50,962

XML

Document and Entity Information	3 Months Ended
	Mar. 31, 2015	May 07, 2015
Entity Registrant Name	Inovalon Holdings, Inc.
Entity Central Index Key	0001619954
Document Type	10-Q
Document Period End Date	Mar. 31, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	No
Entity Filer Category	Non-accelerated Filer
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1
Common Class A
Entity Common Stock, Shares Outstanding		25,364,803
Common Class B
Entity Common Stock, Shares Outstanding		122,291,520

XML

GOODWILL AND INTANGIBLE ASSETS (Tables)

3 Months Ended

Mar. 31, 2015

GOODWILL AND INTANGIBLE ASSETS

Schedule of intangible assets

	March 31, 2015
	Gross		Accumulated Amortization			Net		Weighted Average Remaining Useful Life (years)
Proprietary software technologies	$	16,077	$	(16,077	)	$	—		—
Trademark		360		(360	)		—		—
Database		6,500		(3,609	)		2,891		4.5
Customer relationships		13,650		(9,636	)		4,014		10.2
Total	$	36,587	$	(29,682	)	$	6,905

	December 31, 2014
	Gross		Accumulated Amortization			Net		Weighted Average Remaining Useful Life (years)
Proprietary software technologies	$	16,077	$	(15,796	)	$	281		0.3
Trademark		360		(360	)		—		—
Database		6,500		(3,447	)		3,053		4.8
Customer relationships		13,650		(9,537	)		4,113		10.4
Total	$	36,587	$	(29,140	)	$	7,447

Schedule of estimated future amortization expense of intangible assets

        Estimated future amortization expense of intangible assets, based upon the Company's intangible assets at March 31, 2015, is as follows:

Year ending December 31:	Amount
Remainder of 2015	$	783
2016		1,044
2017		1,044
2018		1,044
2019		814
Thereafter		2,176
Total	$	6,905

XML

CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
CONSOLIDATED STATEMENTS OF INCOME
Revenue	$ 93,633	$ 84,674
Expenses:
Cost of revenue	31,851	28,587
Sales and marketing	1,850	1,333
Research and development	5,411	6,048
General and administrative	24,258	19,934
Depreciation and amortization	4,915	4,855
Total operating expenses	68,285	60,757
Income from operations	25,348	23,917
Other income and (expenses):
Interest income	8	2
Interest expense	(1,103)	(13)
Income before taxes	24,253	23,906
Provision for income taxes	10,494	9,349
Net income	$ 13,759	$ 14,557
Basic net income per share	$ 0.10	$ 0.11
Diluted net income per share	$ 0.10	$ 0.11
Weighted average shares of common stock outstanding:
Basic	135,331	134,645
Diluted	138,902	136,776

XML

CREDIT FACILITIES

3 Months Ended

Mar. 31, 2015

CREDIT FACILITIES

CREDIT FACILITIES

6. CREDIT FACILITIES (in thousands)

        On September 19, 2014, the Company entered into a Credit and Guaranty Agreement, with a group of lenders including Goldman Sachs Bank USA, as administrative agent, to provide credit facilities in the aggregate maximum principal amount of $400,000, consisting of a senior unsecured term loan facility in the original principal amount of $300,000 (the "Term Loan Facility"), and a senior unsecured revolving credit facility in the maximum principal amount of $100,000 (the "Revolving Credit Facility"), (together with the Term Loan Facility, the "Credit Facilities").

        Credit facilities consisted of the following:

	March 31, 2015		December 31, 2014
Revolving Credit Facility	$	—	$	—
Term Loan Facility		295,000		300,000
Total Credit Facilities		295,000		300,000
Less: current portion		17,500		18,750
Non-current Credit Facilities	$	277,500	$	281,250

        The Revolving Credit Facility, with a maximum principal amount of $100,000, became available to the Company on February 18, 2015, upon the consummation of its IPO.

        As of, March 31, 2015 and December 31, 2014, the Company was in compliance with the financial covenants of the Credit Facilities.

        Scheduled maturity of the Credit Facilities as of March 31, 2015 follows:

Year ending December 31:	Amount
(Remainder of) 2015	$	13,750
2016		15,000
2017		30,000
2018		45,000
2019		191,250
Total	$	295,000

        During the three months ended March 31, 2015, the Company paid $5,000 for the scheduled maturity of the outstanding principal on the Credit Facilities.

XML

GOODWILL AND INTANGIBLE ASSETS

3 Months Ended

Mar. 31, 2015

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS

5. GOODWILL AND INTANGIBLE ASSETS (in thousands, except years)

Goodwill

        There was no change in the carrying amount of goodwill during the three months ended March 31, 2015.

Intangible Assets

        Intangible assets were as follows:

	March 31, 2015
	Gross		Accumulated Amortization			Net		Weighted Average Remaining Useful Life (years)
Proprietary software technologies	$	16,077	$	(16,077	)	$	—		—
Trademark		360		(360	)		—		—
Database		6,500		(3,609	)		2,891		4.5
Customer relationships		13,650		(9,636	)		4,014		10.2
Total	$	36,587	$	(29,682	)	$	6,905

	December 31, 2014
	Gross		Accumulated Amortization			Net		Weighted Average Remaining Useful Life (years)
Proprietary software technologies	$	16,077	$	(15,796	)	$	281		0.3
Trademark		360		(360	)		—		—
Database		6,500		(3,447	)		3,053		4.8
Customer relationships		13,650		(9,537	)		4,113		10.4
Total	$	36,587	$	(29,140	)	$	7,447

        Amortization expense for the three months ended March 31, 2015 and 2014 was $542 and $1,533, respectively.

        Estimated future amortization expense of intangible assets, based upon the Company's intangible assets at March 31, 2015, is as follows:

Year ending December 31:	Amount
Remainder of 2015	$	783
2016		1,044
2017		1,044
2018		1,044
2019		814
Thereafter		2,176
Total	$	6,905

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Comprehensive Income
Other comprehensive income	$ 0	$ 0
Accumulated Comprehensive Income
Accumulated comprehensive income	$ 0		$ 0

XML

CREDIT FACILITIES (Tables)

3 Months Ended

Mar. 31, 2015

CREDIT FACILITIES

Schedule of credit facilities

	March 31, 2015		December 31, 2014
Revolving Credit Facility	$	—	$	—
Term Loan Facility		295,000		300,000
Total Credit Facilities		295,000		300,000
Less: current portion		17,500		18,750
Non-current Credit Facilities	$	277,500	$	281,250

Schedule showing maturity of the credit facilities

        Scheduled maturity of the Credit Facilities as of March 31, 2015 follows:

Year ending December 31:	Amount
(Remainder of) 2015	$	13,750
2016		15,000
2017		30,000
2018		45,000
2019		191,250
Total	$	295,000

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2015

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Comprehensive Income

        Comprehensive Income—The Company's net income equals comprehensive income for all periods presented as the Company has no components of other comprehensive income. No accumulated comprehensive income has been recorded for any of the periods presented.

Deferred IPO Issuance Costs

        Deferred IPO Issuance Costs—The Company capitalizes IPO costs, which primarily consist of direct incremental legal and accounting fees relating to the IPO. The IPO issuance costs were offset against IPO proceeds directly following the consummation of the offering that occurred during February 2015. As of March 31, 2015 there were no deferred IPO issuance costs and as of December 31, 2014, there was $2,888 deferred as prepaid expenses and other current assets.

Recently Issued Accounting Standards

        Recently Issued Accounting Standards—In May 2014, the Financial Accounting Standards Board ("FASB") issued updated guidance on revenue from contracts with customers. This revenue recognition guidance supersedes existing GAAP guidance, including most industry-specific guidance. The core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance identifies steps to apply in achieving this principle. This updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. On April 1, 2015, the FASB proposed deferring the effective date by one year to December 15, 2017 for annual reporting periods beginning after that date. The FASB also proposed permitting early adoption of the standard, but not before the original effective date of December 15, 2016. The Company is currently evaluating the potential impact of this guidance on the Company's financial disclosures and results, including whether the Company elects retrospective, or modified retrospective, method adoption.

        In April 2015, the FASB issued Accounting Standards Update No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs." This standard amends existing guidance to require the presentation of debt issuance costs in the balance sheet as a deduction from the carrying amount of the related debt liability instead of a deferred charge. It is effective for annual reporting periods beginning after December 15, 2015, but early adoption is permitted. The Company is currently evaluating the impact that the adoption of this standard will have on the Company's financial disclosures and results.

XML

COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2015

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

7. COMMITMENTS AND CONTINGENCIES (in thousands)

        Operating Leases—The Company leases office space under operating lease arrangements, some of which contain renewal options. Future non-cancellable lease payments as of March 31, 2015 were as follows:

Year ending December 31,	Amount
(Remainder of) 2015	$	4,866
2016		6,295
2017		6,073
2018		4,855
2019		844
Total	$	22,933

        Total expense under operating leases was $1,627, and $1,887 during the three months ended March 31, 2015 and 2014, respectively. Certain operating leases contain rent escalation clauses, which are recorded on a straight-line basis over the initial term of the lease, with the difference between the rent paid and the straight-line rent recorded as a deferred rent liability. Lease incentives received from landlords are recorded as deferred rent liabilities and are amortized on a straight-line basis over the lease term as a reduction to rent expense. The deferred rent liability was $3,077 and $3,186 at March 31, 2015 and December 31, 2014, respectively.

        Capital Leases—The total capital lease liability at March 31, 2015 and December 31, 2014 was $241 and $267, respectively, which approximates fair value due to the short duration of the obligations.

        Litigation—From time to time the Company is involved in various litigation matters arising out of the normal course of business. The Company consults with legal counsel on those issues related to litigation and seeks input from other experts and advisors with respect to such matters. Estimating the probable losses or a range of probable losses resulting from litigation, government actions and other legal proceedings is inherently difficult and requires an extensive degree of judgment, particularly where the matters involve indeterminate claims for monetary damages, may involve discretionary amounts, present novel legal theories, are in the early stages of the proceedings, or are subject to appeal. Whether any losses, damages or remedies ultimately resulting from such matters could reasonably have a material effect on the Company's business, financial condition, results of operation, or cash flows will depend on a number of variables, including, for example, the timing and amount of such losses or damages (if any) and the structure and type of any such remedies. The Company's management does not presently expect any litigation matters to have a material adverse impact on the consolidated financial statements of the Company.

XML

STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2015

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

8. STOCK-BASED COMPENSATION (in thousands, except share and per share amounts, and percentages)

        On February 18, 2015, the date of the completion of the Company's IPO, the Company's 2015 Omnibus Incentive Plan (the "2015 Plan") became effective. The 2015 Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), to the Company's employees and any parent and subsidiary employees, and for the grant of non-qualified stock options, stock appreciation rights, restricted stock, RSUs, dividend equivalent rights, cash-based awards (including annual cash incentives and long-term cash incentives), and any combination thereof to the Company's employees, directors, and consultants and to employees, directors, and consultants of certain affiliated entities. The Company has reserved for issuance under the 2015 Plan shares of its Class A common stock equal to the sum of: (i) 7,335,430 shares of Class A common stock; and (ii) the number of shares of its Class A common stock in respect of the number of shares of its common stock underlying awards granted under the Company's 2007 Long-Term Incentive Plan, which was terminated upon completion of the IPO (6,940,055 as of March 31, 2015) that are forfeited, canceled, or expire (whether voluntarily or involuntarily).

Restricted Stock Units

        On March 5, 2015, the Company granted 76,273 RSUs pursuant to the 2015 Plan. The awards granted vest ratably over five years on each anniversary of the award grant date and upon vesting the Company will deliver to the holder shares of the Company's Class A common stock under the 2015 Plan. Pursuant to the terms of the awards, any unvested shares terminate upon the RSU holders' separation from the Company. The grant date fair value of the RSUs was $2,337, in aggregate, or $30.64 per RSU. The Company will recognize share-based compensation expense following the straight-line method, net of estimated forfeitures over the requisite service period. The Company estimates future forfeitures at the date of grant and revises the estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Employee Stock Purchase Plan

        On February 18, 2015, the date of the completion of the Company's IPO, the 2015 Employee Stock Purchase Plan ("2015 ESPP") became effective. The 2015 ESPP provides for six-month purchase periods (commencing each March 1 and September 1) and that the purchase price for shares of Class A common stock purchased under the 2015 ESPP will be 85% of the fair market value of the Company's Class A common stock on the last day of the applicable offering period. Eligible employees will be able to select a rate of payroll deduction between 1% and 15% of their base cash compensation subject to a maximum payroll deduction per offering period of $7,500. The 2015 ESPP is intended to qualify as an employee stock purchase plan under Section 423 of the Code. The Company reserved 1,833,857 shares of Class A common stock for issuance under the 2015 ESPP.

        For the three months ended March 31, 2015 and 2014, the Company recorded stock-based compensation expense of $1,772 and $386, respectively. Stock-based compensation expense was included in operating expenses as follows:

	Three Months Ended March 31,
	2015		2014
Cost of revenue	$	28	$	—
Sales and marketing		15		—
Research and development		362		—
General and administrative		1,367		386
Total stock-based compensation expense	$	1,772	$	386

XML

NET INCOME PER SHARE (Tables)

3 Months Ended

Mar. 31, 2015

NET INCOME PER SHARE

Schedule showing reconciliation of the weighted average shares outstanding for basic and diluted EPS

	Three Months Ended March 31,
	2015		2014
Net income	$	13,759	$	14,557
Weighted average shares used in computing basic net income per share		135,331		134,645
Net income per share—basic	$	0.10	$	0.11
Net income		13,759		14,557
Weighted average shares used in computing basic net income per share		135,331		134,645
Effect of dilutive stock options		3,482		2,131
Effect of dilutive RSUs		89		—
Weighted average shares used in computing diluted net income per share		138,902		136,776
Net income per share—diluted	$	0.10	$	0.11

XML

COMMITMENTS AND CONTINGENCIES (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Future non cancellable lease payments
(Remainder of) 2015	$ 4,866
2016	6,295
2017	6,073
2018	4,855
2019	844
Total	22,933
Operating Leases
Rent expense	1,627	1,887
Deferred rent credit	3,077		3,186
Capital Leases
Capital lease obligations	$ 241		$ 267

XML

STOCK-BASED COMPENSATION (Tables)

3 Months Ended

Mar. 31, 2015

STOCK-BASED COMPENSATION

Schedule of stock-based compensation expense

	Three Months Ended March 31,
	2015		2014
Cost of revenue	$	28	$	—
Sales and marketing		15		—
Research and development		362		—
General and administrative		1,367		386
Total stock-based compensation expense	$	1,772	$	386

XML

NET INCOME PER SHARE (Details 2) (Restricted stock units) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Restricted stock units
NET INCOME PER SHARE
Antidilutive securities excluded from the computation of diluted earnings per share	23	0

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (USD $) In Thousands, except Share data, unless otherwise specified	Common Class A Common Stock	Common Class A	Common Class B Common Stock USD ($)	Treasury Stock USD ($)	Additional Paid-in Capital USD ($)	Retained Earnings USD ($)	Total USD ($)
Balance at Dec. 31, 2014			$ 1	$ (300,017)	$ 110,317	$ 181,477	$ (8,222)
Balance (in shares) at Dec. 31, 2014	11,109,285		122,257,145	(11,109,285)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
Issuance of common stock upon initial public offering, net of offering costs					359,170		359,170
Issuance of common stock upon initial public offering, net of offering costs (in shares)	14,255,518
Issuance of treasury stock upon initial public offering, net of offering costs				300,017	(20,115)		279,902
Issuance of treasury stock upon initial public offering, net of offering costs (in shares)				11,109,285
Stock compensation expense					1,751		1,751
Net income						13,759	13,759
Balance at Mar. 31, 2015			$ 1		$ 451,123	$ 195,236	$ 646,360
Balance (in shares) at Mar. 31, 2015	25,364,803		122,257,145

XML

PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE

3 Months Ended

Mar. 31, 2015

PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE

PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE

4. PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE (in thousands)

        Property, equipment and capitalized software consisted of the following:

	March 31, 2015			December 31, 2014
Office and computer equipment	$	24,358		$	23,844
Leasehold improvements		12,028			11,999
Purchased software		10,400			9,916
Capitalized software		43,619			39,432
Furniture and fixtures		4,978			4,894
Land		390			390
Building		1,750			1,750
Work in process		3,218			2,917
Total		100,741			95,142
Less: accumulated depreciation and amortization		(48,394	)		(44,180	)
Property, equipment and capitalized software, net	$	52,347		$	50,962

        The Company leases certain office equipment under capital lease agreements, with bargain purchase options at the end of the lease term. Leased office equipment included in property and equipment and capitalized software, net, at March 31, 2015 and December 31, 2014 was $766 and $961, respectively.

        Depreciation expense for the three months ended March 31, 2015 and 2014 was $4,373 and $3,322, respectively. Amortization of the capital leases included in depreciation expense was $27 and $22 for the three months ended March 31, 2015 and 2014, respectively. At March 31, 2015 and December 31, 2014, the Company had unamortized capitalized software costs, including costs classified as work in progress, of $30,406 and $28,417, respectively.

        At March 31, 2015 and December 31, 2014, work in process consisted primarily of purchased software licenses, computer equipment, and capitalized software, which was not placed into service.

XML

PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE
Total	$ 100,741		$ 95,142
Less: accumulated depreciation and amortization	(48,394)		(44,180)
Property, equipment and capitalized software, net	52,347		50,962
Depreciation expense
Depreciation expense	4,373	3,322
Amortization of capital leases	27	22
Office and computer equipment
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE
Total	24,358		23,844
Leasehold improvements
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE
Total	12,028		11,999
Purchased software
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE
Total	10,400		9,916
Capitalized software
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE
Total	43,619		39,432
Furniture and fixtures
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE
Total	4,978		4,894
Land
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE
Total	390		390
Building
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE
Total	1,750		1,750
Work in process
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE
Total	3,218		2,917
Assets held under capital leases
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE
Property, equipment and capitalized software, net	766		961
Capitalized software and work in process
PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE
Total	$ 30,406		$ 28,417

XML

STOCK-BASED COMPENSATION (Details 4) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
STOCK BASED COMPENSATION
Stock-based compensation	$ 1,772	$ 386
Cost of revenue
STOCK BASED COMPENSATION
Stock-based compensation	28
Sales and marketing
STOCK BASED COMPENSATION
Stock-based compensation	15
Research and development
STOCK BASED COMPENSATION
Stock-based compensation	362
General and administrative
STOCK BASED COMPENSATION
Stock-based compensation	$ 1,367	$ 386

XML

COMMITMENTS AND CONTINGENCIES (Tables)

3 Months Ended

Mar. 31, 2015

COMMITMENTS AND CONTINGENCIES

Schedule of future non cancellable lease payments

Future non-cancellable lease payments as of March 31, 2015 were as follows:

Year ending December 31,	Amount
(Remainder of) 2015	$	4,866
2016		6,295
2017		6,073
2018		4,855
2019		844
Total	$	22,933