The Advisory Board Company Where Health Care Goes to Get Better

June 2012 William Blair Growth Stock Conference

©2012 THE ADVISORY BOARD COMPANY

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Legal Caveat This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be affected by many factors, including, among others, those described in the Company’s most recently issued earnings press release and under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s most recent filings on Form 10-K or 10-Q with the Securities and Exchange Commission. Consequently, actual operations and results may differ materially from those expressed in any forward-looking statements made by us. All forward-looking statements are qualified by those risk factors and are further qualified in all respects by the information disclosed in the Company’s filings with the Securities and Exchange Commission. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise, and does not intend to do so.

©2012 THE ADVISORY BOARD COMPANY

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Investment Thesis

1

Uniquely Positioned in Today’s Environment

2

Powerful Economic Model

3

Multiple Avenues of Growth

4 ©2012 THE ADVISORY BOARD COMPANY

Strong Financial Performance

4

Uniquely Positioned in Today’s Environment

5

Here Come the Boomers Older… 2011 U.S. Population Distribution by Age

Sicker…

Costlier

Discharges by Number of Chronic Conditions

Expenses per Adjusted Admission

78.0% of treated adults have multiple chronic conditions

75 M baby boomers

18.0% 17.3% 17.3% 16.0% 16.0% 14.2% 12.2% 7.8% 7.8%

0

©2012 THE ADVISORY BOARD COMPANY

$10,045

7.8% 7.8% 6.6% 6.6%

1

2

3

4

5

6

7+

$6,509 $4,588

1989

1999

2009

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Reform from All Corners Federal Government • Affordable Care Act • Pay-For-Performance • Value-Based Care

Activist Employers

Commercial Insurers Aggressively driving value and risk based arrangements

Patients as Consumers

92 %

©2012 THE ADVISORY BOARD COMPANY

Share of Per Capita Income Growth Devoted to Health Care

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A Singular Moment in Health Care “Perfect Storm” Creates Tremendous Opportunity Market Factors

Health System Imperatives

• Transformational Shift of Incentive Structures

• Physician alignment/ care coordination

• Massive Operational Change

• I.T./operational efficiency

• Advent of Consumerism and Choice

• Revenue cycle enhancements

• Explosion of Available Data

• Transition to value-based approach

Disruptive Change

Delivery System Reform

Intense need for Advisory Board research, software, and services

©2012 THE ADVISORY BOARD COMPANY

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Unparalleled Position for Today’s Challenges Built Over 30+ Years Large, Prestigious Membership Base

World-Class Insight and Intellectual Property

Deep Industry Connections

• ~3,700 global members

• Powerful research engine

• 4,200 CEOs

• All 17 of the U.S. News & World Report honor roll hospitals

• Profound institutional expertise

• 12,000+ Senior Executives

• Data asset comprising 45% of all U.S. admissions

• 17,000+ Product Leaders

• 99 of the 100 largest health systems

©2012 THE ADVISORY BOARD COMPANY

• 50,000+ Line Managers

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Insight-Driven Standardized Offerings

Key Attributes of Our 50+Discrete Programs • Distinct executive constituencies

• 12-36 month renewable memberships

• Separate agendas/performance metrics

• All-inclusive annual fees

Research Programs

Software-Based Programs

Management and Advisory Services Programs

©2012 THE ADVISORY BOARD COMPANY

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Research Memberships That Inflect Performance Multiple Channels for Best Practice Insight

Reports and Briefings 60+ reports 240,000+ studies distributed

250+ briefs

Meeting and Teleconferences

Access to Experts

Implementation Toolkits

Online Tools

250+ member presentations

Real-time access to expert research staff

80,000+ online users

19,000+ decision support users

Extensive library of best practices

200 online tools

2,300 onsites

130+ topics

1,000+ customized reports 2,200 technology assessments

©2012 THE ADVISORY BOARD COMPANY

200+ online meetings

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Impactful “Right-Answer” Software Hospital I.T. Systems

• Siloed Data • Multiple Source Systems

Web-Based Analytic Tools

• Insight on Key Metrics • Proven Tech Platform

• Hosted • Subscription-based

Ensuring Success Via Wrap-Around Support

©2012 THE ADVISORY BOARD COMPANY

• Dedicated Advisor

• ROI Toolkits

• User Training/Enfranchisement

• Cohort Benchmarking

• Annual User Summit

• Case Studies/White Papers

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Providing Returns Across All Key Verticals

Physician Alignment

Clinical Operations

Research Programs

Accountable/ Value-Based Care

Revenue Cycle

Software-Based Programs

Supply Chain

Workforce Management

Growth Strategy

Management and Advisory Services Programs

• Health System Strategy

• Crimson Market Advantage

• Clinical Integration

• Clinical Operations

• Crimson Practice Management

• Southwind Practice Management

• IT Strategy

• Crimson Continuum of Care

• Care Transformation Engagement

• Financial Strategy

• Crimson Care Registry

• Medical Home Engagement

©2012 THE ADVISORY BOARD COMPANY

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Driving Deep Value to Members Memorial Hermann Healthcare System is working with ABC across multiple programs to drive impact in their work with more than 2,000 physicians.

“

“

The Advisory Board’s services are a key component of understanding and explaining healthcare quality and costs in a meaningful way to our physicians and leaders. It is a breakthrough in how we work with our physicians on quality.

15% Improvement on ALOS

14% Improvement on Mortality Rates

2% Improvement on 30-day Readmissions

©2012 THE ADVISORY BOARD COMPANY

$3.5+ MM In Savings

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Powerful Economic Model

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Offering a Unique Value Proposition Focusing On the Standardized Terrain…

…Establishes Compelling Member ROI

$250,000–$1,500,000

Low

Advisory Board Terrain Degree of Variable Cost

$106,901 Management Consulting/ Custom Software Development

High High

Low

Degree of Standardization

©2012 THE ADVISORY BOARD COMPANY

Average Advisory Value of Just Board Member Fee One Best Practice

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Delivering Measurable Results Driving Bottom Line Impact

FAIRVIEW SOUTHDALE used the Surgery Performance Program to reduce physician variation in supplies, realizing nearly $500K in annualized savings

WELLSPAN used the Revenue Cycle Performance Program to identify and re-bill lost accounts yielding $1.4M incremental revenue in 100 days

JOHNS HOPKINS BAYVIEW MEDICAL CENTER used Nursing Operations Performance Program to eliminate $1M in premium labor

FAIRVIEW HOSPITAL used Crimson to reduce Medicare length of stay for annualized savings of $2.5M

HENRY FORD MACOMB HOSPITAL used Crimson to help physicians improve LOS and resource utilization, achieving annualized savings of over $800K

ST. MARY MEDICAL CENTER used Crimson to improve Core Measures compliance, resulting in $500K of pay-for performance incentive payments

SOUTHEASTERN REGIONAL used the Revenue Cycle Performance Program to reduce denials yielding $5.4M of incremental revenue

ACADEMIC MEDICAL CENTER Used our best practice research to mount aggressive contracting negotiations on implants which yielded $1M in savings

©2012 THE ADVISORY BOARD COMPANY

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Scalable Program Economics Year 1

Year 3

$5M

Research Memberships Economic Profile

$100K

$500K

$1.5M

$1.5M

$1M

Revenue

Costs of Service

Revenue

Costs of Service

Beyond Year 3

Largely fixed-cost programs; low variable costs Considerable margin growth potential as programs continue to scale in out years

$10M

Software-Based Memberships Economic Profile

$2M

$2M

$400K $3 M

Revenue

©2012 THE ADVISORY BOARD COMPANY

Costs of Service

$3M Revenue

Costs of Service

Variable

Fixed

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Predictable Renewals Yield Strong Visibility Member Renewal Rate

90%

91% 88% 89%

Composition of Annual Revenues

92% New Contracts

Renewals

Deferred Revenues

FY08 FY09 FY10 FY11 FY12 80%+ of Revenues Visible at Beginning of Calendar Year

©2012 THE ADVISORY BOARD COMPANY

Annual Revenues

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Multiple Avenues of Growth

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Serving Large and Growing Markets A Growing $3 Trillion Industry

New Services Expand Addressable Market

Health Expenditure Projections (Trillions)

$4.6

Best Practice Research

$3.0

2013

©2012 THE ADVISORY BOARD COMPANY

2020

Health Care Consulting Market

Health Care Software Services and Data Market

$10-15B

$20B+

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A Compelling Opportunity ~15,000 Immediate Prospects • U.S. Hospitals

New Customers

• Other U.S. Health Care • International Hospitals • U.S. Education • International Education

~3,700 Current Members

Cross Sell $3.8 Billion Current Opportunity

New Programs

50+ Current New Program Launches Programs • New Research Programs • New Software-Based Programs • New Management/Advisory Services Programs • New Data Programs

©2012 THE ADVISORY BOARD COMPANY

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Cross-Selling to Grow Relationships Average Advisory Board Spend

Cross-Sell Opportunity Case Study

Per Member

300-Bed Community Hospital $742K

$8M–$12M

$107K $52K

$40K 3/31/02

©2012 THE ADVISORY BOARD COMPANY

3/31/12

Related Professional Services Spend

3/31/02

3/31/12

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Member-Driven Product Development ORGANIC OFFERINGS LEVERAGING OUR RESEARCH ENGINE • 8,000+ C-Suite Relationships

4-5 25

• 2,000+ Conversations Weekly • Visibility into Members Strategy and Operating Plans • Increasing Access to Member Performance Data

30-40

New Products Launched Yearly New Programs Under Evaluation Industry Leaders as Charter Members

STRATEGIC ACQUISITIONS  Expand Capabilities  Enhance Speed to Market  Augment Tech Platform

©2012 THE ADVISORY BOARD COMPANY

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Extending our Reach in Other Markets Education

Non Provider Health Care

International

• Fragmented sector with common set of complex issues

• Growing health care spending and common operational issues

• High interest in provider issue set by non-provider health care companies

• Research ethic, willingness to collaborate

• Large appetite for lessons from U.S. health care

• Growing data asset a platform for potential new products

• Existing relationships with academic institutions

• Nascent data and analytics need in global health care systems

• Need for sales training and product development advice

• 2,000+ potential partners in North America

• 1,500+ potential partners in key international markets

• 2,000+ potential partners in key segments

Current Members include:

Current Members include:

Current Members include:

Brown University

Cambridge University Hospitals NHS Foundation Trust

GE Healthcare

Aga Khan Health Service

Eli Lilly

Duke University

University Hospital Zurich

Pfizer

Wake Forest University

New South Wales Department of Health

University of California at Berkeley

©2012 THE ADVISORY BOARD COMPANY

Medtronic, Inc.

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Strong Financial Performance

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Consistent Contract Value Growth Contract Value, as of 3/31

Contract Value per Member, as of 3/31

(Millions)

(Thousands) $106.9

$398 $304 $222

2009

©2012 THE ADVISORY BOARD COMPANY

$80.4

$86.9

$95.7

$253

2010

2011

2012

2009

2010

2011

2012

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Financial Performance Revenue

Adjusted EPS*

Adjusted EBITDA*

$2.40-$2.60 $77-$82 $420-$430 $345

$1.75

$42.4

$226

CY09 CY10 CY11 CY12(P)

CY09 CY10 CY11 CY12(P)

22-25 %

* Adjusted EBITDA excludes share-based compensation expense and certain one-time charges. Adjusted EPS excludes share-based compensation expense, amortization from acquisitions, and certain one-time charges. Please refer to the Appendix for a reconciliation to GAAP results.

©2012 THE ADVISORY BOARD COMPANY

$1.62

$47.4

$270

Projected 2012 Growth Rates

$2.08

$61.6

25-33 %

CY09 CY10 CY11 CY12(P)

15-25 %

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Robust Cash Flow $80-95 $84.0

$52.8 $41-45 $37.1 $23.8

CY09

$36.1 $26.0

CY10

Adjusted Net Income (Millions)*

CY11

CY12 (P)

Cash Flow from Operations (Millions)

• Cash flow substantially exceeds adjusted net income

• Utilized ~$90 million for acquisitions since 2008

• Repurchased >$320 million worth of shares since 2004

• Currently >$10 per share of cash on Balance Sheet

* Net income has been adjusted to exclude share-based compensation expense, acquisition-related amortization, and certain one-time charges. Please refer to the Appendix for a reconciliation to GAAP results.

©2012 THE ADVISORY BOARD COMPANY

29

Investment Thesis

1

Uniquely Positioned in Today’s Environment

2

Powerful Economic Model

3

Multiple Avenues of Growth

4 ©2012 THE ADVISORY BOARD COMPANY

Strong Financial Performance

The Advisory Board Company Where Health Care Goes to Get Better

June 2012 William Blair Growth Stock Conference

©2012 THE ADVISORY BOARD COMPANY