Claritev Corporation

Hello, everyone, and thank you for joining the Claritev Report Corporation First Quarter 2025 Earnings Call. My name is Sammy, and I'll be coordinating your call today. During the presentation, you can register a question by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two. I would now like to hand the conference over to Shawna Gassick, AVP of Investor Relations. Thank you, and please go ahead.

Thank you, Sammy. Good morning and welcome to Claritiv's first quarter 2025 earnings call. Joining me today are Travis Dalton, Chairman and Chief Executive Officer and President, Doug Garris, Executive Vice President and Chief Financial Officer, and Will Mintz, Senior Vice President of Corporate Affairs and Strategy. This call is being webcast and can be accessed through the investor relations section of our website at claritiv.com. During our call, we will refer to the supplemental slide deck that is available in the investor's portion of our website, along with the first quarter 2025 earnings press release issued earlier this morning. Before we begin, a couple of reminders. Our remarks and responses to questions today may include forward-looking statements. These forward-looking statements represent management's beliefs and expectations only as of the date of this call. Actual results may differ materially from these forward-looking statements due to a number of risks. A summary of these risks can be found on the second page of the supplemental slide deck in a more complete description on our annual report on Form 10-K and other documents we file with the SEC. We will also be referring to several non-GAAP measures, which we believe provide investors with a more complete understanding of Clarity's underlining operating results. An explanation of these non-GAAP measures and reconciliations to their comparable gap measure can be found in the earnings press release and in the supplemental slide deck. With that, I would now like to turn the call over to Travis. Travis?

Thank you, Shawna, and good morning to everyone on the call. It's a pleasure to welcome you into 2025 and what we've termed here at Claritiv as the year of the term. We chose an aperture for our new logo because we believe that transparency and insights are critical parts of improving healthcare economics going forward. We will deliver those by focusing on affordability, transparency, and health plan optimization across the continuum. We have been busy and working to improve our speed to value across our breadth of scalable products and services. We continue to make and keep our commitments, improving our say-do ratio, including reaffirming our full-year guidance. I've said since joining in March of 2024 that we will be focused on an operating mechanism built upon clarity of purpose, alignment of talent, focus on results, fitness for growth, and opening new horizons for growth. This will allow us to transform into a health technology company that delivers not only continuous improvement, but breakthrough solutions over time. Our refreshed and revitalized management team and associates are fully committed. Clarity stems from our strategic vision to utilize technology, data, and insights to deliver affordability, transparency, and quality. I'm very pleased with our new corporate branding as Clarity and the feedback we have received from clients, partners, and stakeholders. It's a new day here at Clarity, and as I have told the team many times, the brand is earned and it will be embodied by all of us based on how we serve our clients. Alignment of talent and resources is critical and continues to be a focus for us. We are building a company with accountable leaders focused on a common goal with the autonomy to quickly make decisions. This will allow us to move with speed and go faster, not because we simply try harder, which we are and will, but because we have discerned the critical few priorities from the many inputs that hit the windshield daily. Furthermore, we are attracting world-class talent. For example, our new chief AI officer is already delivering strategic thinking to our digital transformation and product development. Our chief medical officer will collaborate across our product, sales, and technology teams to enhance and guide our core data and analytics network solutions to serve across the healthcare continuum. This includes interfacing with executives from hospital and health systems, payer networks, and other medical organizations to align Claritiv's products and services with their evolving needs. CMO role is one of several key positions we've hired recently to help accelerate our business transformation strategy, and I'm looking forward to the impact he and others will have on making the turn we need for sustainable growth. In terms of our focus on objectives, we launched a new performance management and goal-setting initiative. Every one of our associates knows the five key pillars of focus for our company and how each of their roles fits and the goals that are expected of them. We track progress and publish a regular scorecard. Some examples include total net revenue retention is at 98.6% within our full year revenue guidance range. Pipeline expansion is up 127% quarter over quarter. Average deal size is increasing. The average annual contract value growth of 35% quarter over quarter. Our competitive win rate climbed 32%. nearly doubling our prior year's percentage. Creating more opportunities, managing larger deal sizes, and improving win rates will be the leading indicators of our growth over time. We now have these metrics and others so we can actively measure and manage the company with rigor and discipline. You are what your record says you are, and we are keeping score to ensure accountability. We're also shaping up to be fit for growth. The strategic roadmap for our growth organization is now set. I was at our energizing sales kickoff session in early April, where we communicated our new growth organization structure, targets, and priorities for 2025, and resources to better monitor success and opportunities with our go-to-market process. Additionally, Doug will provide commentary on the progress of our digital transformation, which enables us to grow faster with agile products for new markets. Finally, we're advancing our horizons for growth. We have gone from essentially one market segment to a total of seven now across payer, provider, broker slash consultant, employer, government, partner, and international with an accountable leader over each. We have dramatically increased our addressable market and targets, which is starting to show up in our pipeline growth as a positive leading indicator. I'm thrilled with our progress and the results to start the year. Some other key highlights to share since the start of 2025 include. As I announced on our last call, we successfully completed a three-year renewal with our largest client at the end of last year. I'm also pleased to announce that we renewed a top 20 client at 13 million annual contract value for five years at current value and are progressing well with other early renewal conversations with significant clients. These renewals at current values are becoming proof points for the value we bring to our clients, not only with our core products, but expanding with our growth solutions as well. We have identified white space opportunities that will deliver value to existing clients. These opportunities represent a strong 42% of our 2025 active pipeline. We announced another key partnership yesterday with Lantern, specialty care platform that helps employers reduce costs and improve healthcare outcomes for surgery, cancer, and infusion care patients. We will be using Bend Insights to unify clinical and financial data to identify healthcare spending patterns and benefit plan design. We have an opportunity to deploy Bend Insights for employer groups comprising over 1.7 million covered lives. We have already expressed an interest in obtaining savings validation studies with unprecedented visibility and surgical cost variation and concrete opportunities for optimized care pathways and savings. These are the types of innovations that we are advancing in healthcare together. We are gaining traction in our data and decision sciences and continue to receive industry recognition for our products. Our Cirrus solution, which empowers supplemental carriers and benefits brokers with the ability to deliver unbiased, customized recommendations, won the 2025 Data Breakthrough Award as the data solution of the year for insurance. We continue to make strides with provider health systems and our friends at the National Rural Health Association, penetrating the market with CompleteView and other provider analytics solutions. Last week, Carlinville Hospital presented with us at Becker's Healthcare Conference, demonstrating competitive insights in the revenue maximization potential of our solutions, resulting in over 100 new leads. We closed on 179 opportunities in the first quarter and signed five new logos. New and or reactivated logos and employer groups are a major focus for us and represent 53% of our 2025 active pipeline. We launched six new product enhancements in Q1, quickening our pace. of enhancement and innovation across our product set. As we are now in the second quarter, we have more milestones to achieve. With the growth organization launched, our sales kickoff behind us, and a renewed market segment focus, we will continue our quick and pace by building out the pipeline and realizing faster conversion of bookings and revenue. One example for growth product is our value-driven health plan This product set continues to distinguish itself as a flagship initiative, now representing the largest segment of our 2025 active pipeline. Earlier this year, we enhanced the VDHP offering by integrating our prepay payment integrity solution, ACE, further strengthening its value proposition and are continuing to add new features to enhance the member experience. Later this year, we will introduce a new broker sales model designed to more clearly communicate our value and accelerate revenue. Another example is CompleteView. We continue to develop enhancements that bring additional clarity to providers facing increased market pressures to optimize their operations. The enhancements powered by Clarity's advancing digital infrastructure will not only bring greater transparency to market data, but do so in a easily searchable and digestible way to make such competitive pricing insights actionable and valuable for our clients. Finally, we recently announced our international business unit and partnership with Virgil Holdings in Abu Dhabi. I had the pleasure of working with Virgil directly while running a global business in my prior role before joining Claritiv. I came to Claritiv with a thesis that our solutions could serve a broader mission in global healthcare. Much of the world uses similar US-based coding standards and our tools are tailor-made to improve efficiency and optimize revenue cycle in key markets around the globe. We have a perfect world-class partner in Brazil to test and build these capabilities to drive material value. This is only the beginning. With that, let me take a moment to comment on the macro environment and the state of healthcare. In changing times and uncertain environments, the intersection of healthcare and IT is a good place to be. We sit squarely in that intersection and are supportive of the aims to improve transparency, reduce waste fraud abuse, and drive health care cost economics down. We feel that we are well positioned as costs continue to rise and the constituents of health care seek innovative ways to manage those costs with transparent insights. Employers will be looking for solutions that predict risks and improve benefits while managing costs. We believe our solutions are uniquely positioned to do just that. Healthcare remains a highly competitive environment with rising costs and demand for critical services. Those challenges have not changed. At the same time, developing data-driven insights around affordability, transparency, and quality, the areas where Clarity excels are more important than ever to lawmakers, clients, and patients across the nation. We have a depth of talent here at Clarityf and Will Mintz, our Chief Strategy Officer, joined us last year to work on hardening our corporate affairs and drive strategic planning and partnerships. Will has not only been instrumental in our partnership and digital transformation with Oracle, but also with our international expansion into the Middle East and North Africa. Will just came back from the MENA region and a group of us are going next week. I asked Will to come on and describe why we are so excited about this expansion potential.