MultiPlan (MPLN) 7 Nov 232023 Q3 Earnings call transcript

Welcome to the MultiPlan Corporation Third Quarter 2023 Earnings Conference Call. My name is Harry and I'll be your operator today. [Operator Instructions]I'd now like to turn the conference over to Shawna Gasik, AVP of Investor Relations. Thank you. Please go ahead.

Harry. you, Thank welcome and third XXXX quarter Good to call. earnings morning, MultiPlan's

and Chief is The and webcast at through www.multiplan.com. today our me section Executive Investor call be Relations the Dale being Officer. Joining website Financial White, Officer; of accessed Chief Jim is to Head,

morning.Before deck quarter issued portion During website, of we slide along to begin, XXXX on release available we with the refer call, is of this the third earnings couple our earlier press our supplemental the reminders. will that a Investor Relations

Our these second we a forward-looking referring and report which to these understanding An measures file call. remarks of MultiPlan's with investors as to underlying several also on represent and be more to of may a documents risks a explanation differ due in responses be this will to our those only results believe provide measures, operating description we and non-GAAP non-GAAP results. number the can other reconciliations Actual questions page and deck supplemental management's SEC.We statements. with Officer, Dale found White. and be the the comparable measure to of Executive the Chief to over today include supplemental from GAAP our of now their can turn Dale? expectations slide of I statements like earnings in more slide complete materially press Form would in that, statements These release the deck.With the call complete date XX-K may the annual forward-looking on forward-looking of found on risks. of summary A beliefs

and a time job year, the has become our welcome more new We call. then, financial to that I Good had our Shawna. visibility on you Well, and transform formalized time the to plan of year our company. of a expectations expectations, what quarters a have that four strategy informing the growth and you, unfortunate results and initiated Thank fallen stabilized we our difference last a the everyone, This execute makes. base challenging. short business since to transformation. no pivoting wasted revenue reset In morning,

report closer our making growth here of As to and to results Technologies, Benefits in executing I'm I BST, end Decision we services quarter with on excellent expectations XXXX. guidance, our with line Science EBITDA albeit accelerated Adjusted to met from results, of Science lower the the down or was our happy or potential the range, X% quarter savings. the line are increasing in business new the midpoint reflecting We deck. on tracking that pipeline number business Data quarter $XXX.X half XXXX. beyond.Starting of our in progress third integrating milestones X out now quarter, our several increases during more year of it confident our that accelerated expectation lower positioned came the we full quarter well with that quarter delivered plan third in also growth million on XXXX was launching our and stable, about prior the up With prior with at range, our our new sit to about ahead or year, and deliver of third million, a supplemental shown of are was our year schedule. Revenues that the even sequentially. but guidance, second by we growth driven growth both are of of in plan. achieved XXXX were initiatives investments our of X.X% visibility our million. quarter, & the growing, line. $XXX.X And that identified while Adjusted than line $X was impact with this guidance were we resume the back quarter new rolling and And XX% today, to in Revenues as in EBITDA in and Page product our third and

margin resets, prior as down for the quarter, progress. the to contract from EBITDA cost new to our in an margin XXXX.That's the exceeding year from revenues of growth plan on that investments as starting XX.X%, reflecting in was adjusted again, EBITDA declined good to prior business the expect segue due update XX.X% in revenues BST. our generate Our well XX.X% we impact a Adjusted

mentioned during new products delivered schedule. we or to of market I the several As ahead third the quarter, on

plan spanning each have on we growth fact, are deck. supplemental across now detailed X of X of which the our In objectives, initiatives delivered Page on

also a our XXXX deep We coming product us focus, map the drive new growth for and products in which already and is XXXX beyond. will road have our initiatives help pipeline into of

to expect of annualized machine giving the services, and to products our As new of years.Let are our the generating the smart on we which million noted Day, is to of completed the ahead third on to described table this X. that the schedule. October In beginning. breadth We objectives. during plan at our translate launched pricing Page we progress Pricer unrivaled business recommendations quarter first the expand combination the Pro successive quarter, unique $XXX integral claims growth with revenue product enhance initiatives larger solutions and the incremental me of are and is scoring of a in optimal Investor just of repricing route million million starting we core leverages the into revenue, at dynamically release third which arrive of the of our with the technology layering annual $X our the $XXX making, to to the X to our solution called onboarded next X, and customers over rows several learning on approximately base our plan this first of Pricer we customer Pro intelligently revenue

to to we the attach in Protection giving HST for Protection, and the onboarded Balance second as option lives January offered on plan year, our the Bill business. Bill number this These translate Protection releases we Balance new of flexibility, HST launched expect we over are value-driven Balance our $X Bill double planning product increase X, Pricer on that platform. XXXX. XXXX, including functionality service.Speaking to We quarter, For last call, of XX,XXX of revenue annualized noted customers earnings alone by Pro lives and this to we additional its our our health for incremental million services

will of we're into and our adding navigation integrating base care upselling services pharmacy build to For in BenInsights which HST customers. platform strategy with to BenInsights we our have been by a processing. the add leadership focused services our HST new our these and our box technology technology, XXXX, platform employer and to also intelligence descriptive, The to by predictive continuing analytics aspects employer acquisition prescriptive and fortifying and reporting HST benefit in of out solution on us our BST NSA-related enhance existing from for and customers.Next, came our claims

third at quarter, these and our sophisticated the aimed informed claims of compliance NSA with regulations. we the of Insights version the are of initiatives the first launched beta enabling our more During Both and rules-based better version portal. processing initiative

that payers of both advance service surprise to these, regulations. the state a with and to comply continue will we bill XXXX, helps we build plan For

with administration expand me we Amounts Payment the of or on their Additionally, QPAs.Let QPA Qualifying payers believe from assistance topic. will this us demand increased

be regulations. ruled XXXX, are of NSA for data the X filed for aware, complying courts at data Association. of the many increase by all schedule payers, based of with TMA for you continued as processing the will largely quarter ruled on logic. the CMA's that the few require of increased these as in providers and July must Medical court QTA As have a level, rulings to which on in rules, several price and the complexity This calculations payer's third The huge schedules favor final maintenance throughout the calculated when business book reversing in storage, Texas lawsuits claims. creation, planned And latest XXXX QPA ruling have dynamic allowed

to QPA planned to already for they telling be difficult including us built variety Our the us them of creating schedules, We've a assistance. level. into NSA customers will are to for and are this services do, looking at approaches very our

provide are we to assistance. well positioned So very that

to traction errors the high-dollar quarter. the the get Bill CMS a we inpatient Review adjudication TMA IBR any appeals significant outcome customers that and enhancements and one market the with be a us appeal, could of our on identify enhancements whether service facility Integrity couple in core in introduced XXXX.Wrapping Itemized is overpayments. addition latest up already of we ruling in QPA the to to of prevent a process are result, list IBR, third Payment the for reviews enhancements during billing service initiatives and of starting claims quarter, the service administration the depending our As NSA-related key during functionality or of

Our data IBR leveraging integrity most to ability our pursue. analytics to enhancements cases the include identify and by promising prioritize claim mine the to prepayment

service we be would the XXXX, X. from which row the our Page network-based bundle network of detailed attention services next-generation to offerings, channel.Moving our are payments direct-to-employer our service to of For including in initiatives that with a will the on customized model, to services expand to and lines, shifting pilot a are each targeted plan which our fourth initially

drive our services We've know, are line, to just made a Data help progress During services months the customers. to The Science quarter, we even marketing payer of through most sales ago, acquired though BST our introducing BST. a includes we rapidly strong. in building has products few been new no wasted And time these you new XXXX. solid acquired we pipeline growth the our Decision third & as which, reception

clearing this are payer PlanOptix Health. features suite expanding that simply as a for network It the first product functionality our the can up effort, open deepening that And would and this of a to goes the launched Medicare and & payers a insights new up our contracting solution us. of working we provider platform to our familiar that this helping every XXXX, and Science our customers. risk software number our scoring data service, which, I'm line through payment -- stand-alone Intelligence mandate pleased also This is strategies.For the deliver first process channel includes being critical of data data version Data claims.Also care the opportunity market Intelligence phases Search. secured X shortly. Advantage that expansion in a ingests our and beyond October, have standing transparency BXB In newly very a in ECHO offered price initiatives. add designing critical first and data released PlanOptix PlanOptix began July, is will transparency we of which on we which to quarter, This with value that up market already services the discussed, implementing of we penetration a Decision As to open market. service their of includes the required part launched to our uses PlanOptix, claim and to health solution, we models sales price our will in-network announce and as to during pipeline have is to build third partnership our we customer we new through for we with previously begin

For see, the progress continue our growth with we on on of rollout the extremely as can have focus our you we pleased exciting objectives. I'm of plan each XXXX, very been service customer base.So, busy, X this but made new we to have to

Our initiatives on XXXX are track.

product creating initiatives XXXX sales thanks We more we already MultiPlan team to of ton of at are progress, our a of We work rest a of making in ways the our lot ahead are of to team, have revenues dedication motion, MultiPlan. are grow but us, some already still which colleagues. our our our the and of setting X,XXX

relentless said have continue place. about here, over like our will to several that, turn our execution, all strategy I'd CFO, I is be day-to-day and the execution.With to call in From As Jim it's Head. the we in times, to Jim?

good Thanks, Dale, morning, everyone. and

and year follow on the to commenting pleased by want quarter the with Dale's capital really with how financial a the solid planned.I'm that progressing I'll allocation. start and and results. to echo view fourth Before I up by execution review we're providing I sheet I'll outlook, update begin, in as finish we're an that balance on our of quarter going quarterly our our through just

meaningful declining the Page 'XX, million, growth portion $XXX.X to with on of shown supplemental a volume us headwind contract As renewals third our revenues as the helped QX annual were X% larger year-over-year approximately of customers. deck, quarter absorb related X% from of X

growth delivered revenues from Importantly, to quarter increased second our resume expectation half. prior as X% in the we the on

substituted from to flat revenues sequentially, prior BST to X.X% services sequentially BST, strong up prior in declined day contribution about the $X third of volumes, quarter business or million, were X despite X% QX.Turning from quarter increasing sequentially sequential incremental million. driven quarter, from our $X.X year a lower activity by Integrity revenues X.X% from $XXX.X prior additional which quarter clinical down less declined million Excluding the million revenues from revenues. the about and were in year business. by X% & on and were down Revenue about prior X% revenues decline about supplemental deck, services X% the of shown revenues $X.X or relatively year by million Payment were but $X.X -- services year sequentially. was negotiation less partially the about inclusive network-based were The analytics of revenues primarily declined and service network-based Page Analytics-based line, as X quarter from revenues prior than X%

lower can a after identified exhibit We quarter-to-quarter third services, flattish reflect also strong sequential Integrity first potential a plateaued a Revenue performance.Our had despite which savings half. which our revenues quarter shift medical in cost revenues in for QX lumpy utilization, quarter in

detailed the of at charges top deck, As 'XX to of $XX.X X% processed from the QX billion. medical by supplemental funnel, declined X Page on the

or as deck, our sequentially yield point but sequentially claims identified savings shown percentage increased revenue savings stable of QX category, health billion. supplemental this was potential by billion, reflecting core commercial and revenue X% PSAV revenue operators. X was X very 'XX were the publicly our highest sequentially core look identified just the is model as Page revenues to a in of effectively of both PSAV on $X.X processed for billion, potential shown approximately PEPM. our includes payers overall less our savings to the from our X% in revenue performance of of percentage HST.As our X% for core from on with increased identified and Also, reported $X.X medical which In Given savings just some hospital X $XX.X Identified the traded point. the utilization more and plan 'XX, QX flat, potential increased plans $X.X lag, trends savings basis point, to health X% quarter for of mixed to savings charges quarter declined second since the health our commercial that billion. savings care this consistent Page model, revenues, X, XX% declining quarter, or Order basis yield which business, the declining strength

this reflected indicated, by changes in previously fully of renewals the product mix, impact have quarter.Turning expect rate look we the the quarter, As down, and the to what to third foreseeable contract driven with revenue up in for yield second stable run was we future, precisely modest and our the quarterly the in is expenses. we customer saw and or

up Third quarter prior $XX.X $X.X $XX.X EBITDA sequentially. up million the million, million and quarter were year expenses adjusted from

increases in in expenses to the our of XX% about headcount services which to business, investments was costs comparison, products and in our combination increase reflects driven core and new support IDR the sequential NSA of activities. the our For support by cost

of and the related integration, QX, XX% other business recur. enact similar cost expenses reflecting expense core contributed to absorbing was BST to post upfront full our in growth acquisition. 'XX, will in much expense our saw deliberate of plan investments upfront making by structure The first we the growth we're and which some costs BST in reflects was BST the which QX attribution not the quarter what to the increases of The

quarter sequentially. our expense down fourth normalize expenses with in to slightly trajectory We expect the

to free investment cost year budgeting are we complete our growth in versus actively 'XX the mitigate year $XXX.X and quarter EBITDA and prior XXXX, our for for and in the expenses inflationary pressures $XXX.X room structure in our core $XXX.X was million assessing in up we million As to QX. preempt million expense finish QX initiatives.Adjusted in

for guidance the business end lower and in affirmation towards QX core by EBITDA of landed driven in quarter, Our investments the third adjusted our the BST. the

in including XXX 'XX. our third versus down quarter basis QX XX.X% result, EBITDA a As points XX.X%, BST, adjusted margin, was

of 'XX our year with business and overall guidance. 'XX margin QX impact the margin.Turning our second the quarter consistent for full the BST, was and QX consolidated margin above in Excluding core to

revenues fourth expect the We $XXX in $XXX million quarter. to million of

our year million, the million narrowing the $XXX to prior are million revenue $XXX $XXX We XXXX of which to range no full XXXX range of guidance change at from million. our to guidance $XXX implies midpoint

quarter, $XXX the are a less projecting For in adjusted of fourth $XXX includes million drag we BST. EBITDA, to from which million

lower additional some in one-time for some be We drop-off related as of hiring and core than controls new business cost QX expect QX in expenses expenses BST. more in expenses adjusted to additional and to be should to by our offset EBITDA than costs NSA related a products

of our quarter, free was capital to while $XX.X to was management. drive and million. growth.Moving leverage EBITDA to the an our full on upward scales, million, track the expecting the implies to we the range midpoint year as EBITDA now we mentioned.Combination revenue, on modest we those in guidance. full confident are year XX% implies margin QX, in of million EBITDA that Moreover, and to expectations of of million, while achieve For balance In XXXX on relative impact million investments adjusted lift $XXX margin our million, we feel $XXX that our additional to EBITDA margin $XXX in XXXX, of closer third in remain consistent guidance XX% flow We our adjusted flow which reflects the adjusted operating full additional EBITDA reduction an cash $XX.X improvement the $XXX QX. our remain range still adjusted assumptions to year than annual making should to sheet a very adjusted for investments BST with cash have 'XX, at

first our quarters flow cash interest for the the payments. our and timing and given reminder, a are third higher As tax of typically quarters

X.Xx supplemental ended of cash with disciplined notes. ratios X.XX% our million As $XX with million of $XXX reflecting unrestricted unsecured total free operating million respectively.We capital. $XX million deck, shown on quarter cash, the cash our continue quarterly active used the $XX in Page our senior our face be XX and of from the X.Xx, the to by cash, and of were prior allocating about Net offset leverage of repurchase increase in value to of we flow up quarter, and

Over deployed debt repurchases. including million retirement, repurchases million on share $XX $XXX the million million last over M&A and on quarters, $XXX of X capital, $XXX have we on and

by Our last highest both the long-term priority XX, near-term. and to by M&A drive likely X acquisition priority as is followed value. debt Page long-term remains face the our we have $XXX organically and shown business, closely deemphasize in on investing reduction. of of That's Of note, previously over million in the value BST, That near-term, reduced growth the mentioned through we've we following the debt are M&A. to quarters.As and

to As Data a new of debt incremental our our result, retirement. you investments series organic services our platform, be but and expect of should products new Science critical core to should & capital expect support line. to Decision including towards making allocated near-term, our continue a bulk small generation you us the In

be to consistently assess a said, as We bigger small share repurchases picture. will back continue we've the our to to capital.Stepping limited will allocation of that but likely

this XXXX comments. our creating paramount -- Even making accelerated industry-leading rest execution over our balance bit we a XXXX, XXXX. absolutely to has fund are budgeting our wraps some a not margins, investments is team put our Admittedly, for we deliver very while cost capacity how our and as growth discipline into in as through head leadership action-oriented. to responded do now it's of turn part our to achieving but lost margins, adjusted us to on investments additional in call We've with our a of it nimble be looking we and around maintain exercise, we we expect pressure that Dale. to year position deliberately bit to adjustments near-term grow we're historical organization costs. business, prudently our road thinking it's how this growth. the on in I'll base, assured, delicate transformation Our EBITDA track, always It's have is of map.So a this put but to pleased back manages and in balance, to my up to and our ways and

Thanks, Jim.

have open a Before XX and we've dissipated on up. it in swing. We strategy that a tailwinds marching execution years growth the call to plan growth revenue coming picking We've stabilized that pivoted been questions, refreshed months. will path that are past for in the our journey quite repeating our headwinds the the are transformation. the initiatives we over a of bears remain are we and is we and and full working the on The of confident amplify down

expect As said more just on kindly for Investor the Day, XXXX.Operator, we for as I company. horizon you great Q&A? see a our company. our to better at Jim MultiPlan a diversified, will in faster-growing And call we open And things be and result, mentioned, the would as grow years, X stronger, within capitalized

Our the first is of of line Citigroup. today Instructions] question Grosslight [Operator Daniel from

go some to back that and want quarter comments the the utilization lag. you made on of this I to

there's Jim, mentioned, always lag. you As a

was to said providers had decline due I you're of implying volumes, sequential in what the kind think in So XQ.

seeing providers As like payers it seems we an increasing the XXXX, utilization. XQ look are towards and and

composition So, any curious that to. the is XQ XXXX? how detail can and utilization? if I'm And of additional that thinking around How about you're provide transferring you

Yes.

X first compared to raised So, of X% year. last XXXX. fourth about for quarters in the quarter it of the saw But year this in to savings. We maybe year the and bit we in the nice a half what a talk little of about first arc our portends uptick

is, we the it's that, et about to it consistent what be and was seems provider But, to ticking it -- And leading obviously, indicators, a hospitals, upwards. to We've saw calling at cetera. get been best a the higher we universe, actually that's look know the the in don't we with little pretty describe it to and cautious So saw whether plateauing. level. it's way the consolidating uptick. I always

feel our another It's business, So is falling, it's not that, level bad in going is But upswing upwards. just it I obviously, think ready not but and It's for grinding to not not call new doesn't down. but at what coming consolidating volume. we're backwards. a

for So we're but well on our next business, for year. that to not hanging our bodes -- hat that growth

for planning we're kind a got big planning flat not facility mix environment, physician low. maybe up process.As That's our but of then pertains side, we've big side. we've part to think business, I the on pretty slightly to on it of got of a just a our volume very the mix our the of mix and portion pretty

is you the see cetera, upswing what et us, in surgeries, out consistent So which is hospitals, seeing some et cetera. of we're actually volume, with

described. brimming to that closely very some of hospitals is have what So the

On physician side, it's flat. the relatively

new feels And does on good so, doesn't in bit to hospitals mix, the the consolidating summarize, -- about just feel call we risk see got little -- a the our the it downside. like given how a do across it's bit than we little what more board.So whether here. we've a plateau, slower upside It's

X% it. flattish slightly in that for of XXXX? growth Day Jim, X% you degradation? you're then Or you Got X%, lead rate in about at for too, would provided we And X% margin expect rate we and that mentioned, XQ there to as think hitting about guidance from to maybe right longer-term are or year that you some EBITDA we XXXX margin, about during is additional should that how be your Investor change looking to make utilization any need up. to Is there to just you And thinking think margin XXXX? that prevent 'XX? full think anything some might Or that additional as you run investments that the that about

Okay.

it let's into X So parts. break

the is utilization is, pieces go bigger are algorithm, to productivity improvements, those growth, part it of been. Day, our puzzle. has you of if Medical our the growth and back never inflation, membership a big Investor overall So answer

XXXX can't of -- we're and But, obviously, got because going investments that you February, in I here. come any we're to we've inflation, a and major make with forward, are I give uplift be ticks with say expecting us. -- not them. we'll overall in you been inconsistent our that it's and mid-XXs we puzzle.On think the point all not So our And that clear it helpful medical we're side, then willing it's in indicator long-term as But sharper I continuing But equate nadir expense also about super for productivity we've uptick improvements the statements of the think third view. aiming with to how type into look utilization margins. pieces really model, And are see guidance of our out margins quarter invest our terms opportunities, inconsistent that's that to can for in If we as at an in margins business, bigger we're the things. of we march upside. of is Daniel, deliberate. upwards, growth

no It queue [Operator today. Instructions] have in appears we further Okay. the questions

have from of -- JPMorgan. -- Madison the question virtually a So Corporation had MultiPlan line Aron we do this my have conclude just will of the apologies. We

second to the With of half around with you're noted doing?And BST. going to into incremental earlier them year? then assistance. margins? know to regards the Do to with you half that had then due we these and year that it's I what Is How into there to especially prepare payers anything about some next as margins think be investments you like investments your in to progression half, what of since ramp QPA you going think under XXXX, should that the you're for the you're more a working be making looks going it stuff provide to about the that could number to first up opportunity expect of first next quantify pressure in we

challengers TMA still what the the prohibiting calculated, in as was answer in X. early federal cases by the X across August, found first can is in the calculated just how calculating opinions ghost the payers and the addressed was primarily issues too TMA question. called from I and multiple it released part opportunity specialty going the to It's then the court the And forward the be The X X, size NSA-related QPA around Texas QPAs TMA in of rates, on requiring XXXX. like for court where prohibiting and to plan sponsors. QPA

decision So issues.We the believe number to these the its addressed set administration open documents to changes. update is it the of accommodate guidance appeal and

the between under try and communication In -- to October The being administration on process the the submitted of and rule XX of related from disputing the on parties proposed a disputes we'll process. are rule. be fact, for January, wait that I IDR final to the the requested think, the IDR those just comments the to efficiency beginning administration NSA has released focused of for decrease volume largely rules. by industry publication submitted proposed and Those for a then comments, have the the and

what with the it now, it's So the will as and work positioning we've have we to the company doing impact declare But in respond to still we're growing the XXXX. recognize NSA. early to already process work that the come continues in to done we're in -- to we've date complexity

Rishi, address And question. don't the just why I margin

think in and I making a our which first and there's act, to statement XXXX, we're which into lift business. position maintain ourselves the go is to be, margins go the help putting growth margins we're will trying opportunities. couple investments tailwinds, maintaining my new capture of these then balancing there's we would this As a in And

curve a don't that XXXX. I J as view in massive So

kind of I think it's just maintaining. more of

have some of got dissipating -- of of are things We're is BST top -- a beneficial that's to some get going increase, obviously, our down. in And mix we contributing as mix going our to some -- some And do line. the growth investments bit more positive, start volumes the us. slow those in We've starts going lift business. got to on as little we're the margin we've in our the and then one-timers that expansion

can In of you. we So QX that's a I think about providing XXXX. balancing is for think best the guidance, message act certainly the advance give any But nadir.

at in queue questions further no this have we And you. the time. Thank

MultiPlan call. third joining. you the earnings quarter Corporation conclude will So Thank XXXX all this for conference

lines. You may your now disconnect