Claritev Corporation

Hello, everyone. Thank you for joining the Claritev Corporation second 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 on your telephone keypad to remove yourself from a question queue. In the interest of time, we ask that participants limit themselves to one primary question and one follow-up question each. I'll now hand over to your host, Sean Legassic, AVP of Investor Relations to begin. Thank you, Shauna. Please go ahead.

Thank you, Sammy. Good morning, and welcome to Clarity's second quarter 2025 earnings call. Joining me today are Travis Dalton, President and Chief Executive Officer, and Doug Garrett, Executive Vice President and Chief Financial Officer. This call is being webcasted to be accessed through the Investor Relations section of our website at Clarity.com. During our call, we will refer to the supplemental slide deck that is available in the investors portion of the website, along with the second 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 and 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 reconciliation to their comparable GAAP 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?

Good morning, everyone. Thank you for joining us today for our second quarter 2025 earnings call. I've been eagerly awaiting this call to share my excitement around our achievements during the second quarter, and more importantly, the forward momentum we're building for the remainder of the year and beyond. We're halfway through 2025, and Claritiv is truly delivering in the year of the turns. As you can see from our earnings release this morning, with year-on-year revenue growth in 2025, supporting our full-year guidance raise. I want to start off the call reiterating our guiding principles, clarity of purpose, alignment of talent, and focus on results, and how they shape the value we deliver to our clients as a fit for growth organization and allow us to think big when it comes to the healthcare ecosystem. These are driving the results you are seeing in supporting our full year expectations and the way up heading into next year. I will then walk through our market verticals and share key highlights for each. Finally, before turning the call over to Doug for a CFO update, I will provide some updates on our digital transformation, which is driving accelerated product development. We're pleased with our improved results and are building on the foundation of clarity, alignment, and focus heading into the second half of 25 and 26. We're clear on our purpose to make healthcare more affordable and transparent for all and thrilled with our new brand launch and progress. We have aligned the organization for growth around six market segments, five of which are new focus areas and continue to attract world-class technology, AI, and sales talent. Finally, we're focused on our improved operating model and metrics, some of which you're starting to see in our reporting externally. We will continue to build on this foundation as we move forward. As I noted, we recently aligned to six focused market verticals, each with a clearly accountable leader and sales incentives to serve existing clients and new opportunity. This has significantly enhanced our ability to capture white space within existing clients, develop new logo relationships, and expand our total addressable market. You're seeing that show up in results this quarter as we sign nine new logos and close on 135 opportunities and 16 million in annual contract value, achieving our quarterly targets. We're improving our operating model to take in new ideas, evaluate those, prioritize against product roadmaps and launch. Urgency is distilling the critical few from the many inputs focusing on completion with organization and energy. In just three short months, we've been able to go from concept to contract with our partners at Virgil in the Middle East. They see clear value with our advanced code editing products to produce efficiency, and this is a great example of a horizontal product serving a new vertical market. We're happy to be returning to top-line and bottom-line growth this quarter. We're also seeing the growth in our pipeline development. During the first half of 2025, we created over $130 million in new pipeline, and as of the end of Q2, our pipeline increased 77% compared to the start of the year. The mix within the pipeline is consistent with our prior quarter, with roughly half from existing client white space and the rest from net new opportunity. We are confident in our foundation principles and our fitness for growth. All the transformational changes we are making are organized, structured, and producing results. The collective mindset of our entire associate base is zoned in on our five key pillars as we communicate the value of our broad base of products through each of our market verticals. We have moved to a merit-based performance management approach, and every level of the organization is aligned and measured against the key objectives of the company centered around world-class delivery, new market expansion, and technology and data advancement. These, aligned with our market verticals, are creating real value. Now let's take a look at Q2 in each of our six market verticals. I have told the team repeatedly to keep the main thing the main thing, and that is an intense focus on our existing core client base and product sets. Not only do they provide the majority of our revenue today, but we believe have material growth potential as we continue to innovate in other products and market verticals. So let me start by talking about our core and historical client set. At the core of Claritiv are our payer and TPA client relationships. Our teams remain steadfast in providing world-class service and solutions to not only maintain the current level of offerings, but introduce new ones into the client white space. And our clients are seeing the value. we're excited to share that we recently renewed a top five client for a five year period ahead of schedule. That is on top of the top 20 client that we renewed for five years earlier in Q2, which we announced on our last earnings call. We also had a nice organic sale with our pro-pricer solution to an existing client for an incremental 6 million in annual contract value and a white space win with data eyesight. Our core is secure and we aren't just holding on. We are proactively seeking growth in this area. In our TPA segment, we're pleased to share that we've signed a significant agreement with an existing client that meaningfully expands its adoption of our network and analytics solutions. Most notably, this agreement includes the enterprise-wide deployment of Bed Insights, replacing a key competitor's platform. This is a 10-year subscription-based contract with minimum total contract value of $81 million and carries additional upside potential of $20 million or more over the term. Importantly, this marks the largest win to date for Ben Insights in our data and decision science suite, underscoring the growing demand and competitive strength of our solutions in the marketplace. This is how I see the market starting to evolve. With subscription-based pricing, bundling licensed software solutions with licensed software support like Penn Insights. This allows us to continue to build a predictable recurring revenue base while also aligning with our clients and partners on upside potential and value sharing. I'm also very excited to note we're attracting new clients as well with five new payer and TPA logos in Q2, including a new blue client logo win. The broker and employer market continues to seek innovative solutions to manage healthcare costs while improving employee satisfaction and outcomes. Key milestones in Q2 in this market include hosting our first regional Claritiv Broker Summit. Eleven organizations attended the conference, which yielded over $1 million in new pipeline and closed opportunity. We are here and more aggressively pushing the competition. We also launched a premier broker incentive program targeting top national brokers to drive a greater reach for our products, including VDHP. We also won a new logo and closed our second direct-to-employer win, which will serve as our pilot client to build and test new integrated functions for our Venn Insights products with Oracle Human Capital Management. This is an exciting early development for us. When I joined the company over a year ago, it was immediately apparent to me the value our talent and solutions could bring to the provider market, particularly in rural America, where healthcare providers seek transparency and analytic solutions to optimize their operations and financial performance. Since we launched into the provider market, we formed an alliance with the National Rural Health Association, tested our thesis with several pilot programs, and eventually developed our CompleteView platform, which provides comprehensive transparency analytics that help providers understand their position in the market and optimize their cost structure. I'm excited to announce that in Q2, we signed three new provider logos, selling not only CompleteView, but network access and other data analytics products. Our pipeline is continuing to grow as we aggressively go to market bring value to providers across the country. Next, international expansion represents a significant growth opportunity with overseas healthcare challenges being similar to those in the U.S. It represents another market vertical where our products and solutions can provide immediate value. Claritive solutions in the Middle East, North Africa region provide improvement in claims and payment accuracy, reduction in burdensome appeals, reduction in administrative resources, transparency to all parties, and standard and custom population health insights. As announced back in May, we've established an operational agreement with Virgil Holdings and closed on our first contract with its subsidiary, ClaimsCare RCM, making our entry into key Gulf Cooperative Council countries within MENA. The breadth of our service offerings is allowing its relationship to bear even more fruit as the two sides continue to explore other solutions and efficiencies that can be developed in the region. We also plan to use this model to expand our proven solutions to more new geographies and possibly develop new offerings that would be applicable back in the U.S. market. U.S. and state government health care programs also represent significant opportunities for our transparency and cost management solutions. Our vision is very much aligned with government initiatives on price transparency services and reducing fraud, waste, and abuse. We stand ready to participate in meaningful discussions on thought leadership on these topics and execute on any such optimization projects and solutions. Finally, strategic partnerships are a key growth channel to create scale for our solutions and products. We continue to advance our partnership with ECHO on payment offerings and sign three new clients in Q2. We are pursuing payments in a much more strategic and targeted way. The three wins this quarter were all competitive and our value proposition and delivery capability stood out. The pipeline for this service is strong and we are starting to see inbound requests for this service from our existing clients. In addition to the Lantern Partnership we announced on the last earnings call, we recently announced the integration of CompleteView into the Athena marketplace. Now Athena Health's network of healthcare providers is empowered with CompleteView's insightful analytics of publicly available pricing records. The latter relationship also highlights another strength of some of our partnerships, namely the ability to drive high inbound demand for our products versus active outbound prospecting. This is also true for the accessibility of Bend Insights within the Oracle HCM Marketplace platform, where we have seven active joint client efforts. These partnerships can provide highly aligned value for us and our partners. Success in all of our markets relies on scalable and reliable technology platform and continuous pipeline of innovative products and enhancements. That is why the transformational shifting of our technology infrastructure, Oracle Cloud infrastructure, is so critical to our long-term growth. OCI has already shown 13% to 17% improvement in our client response time and upload and download speed as compared to prior on-premise processes. This creates a more stable environment for our solutions as we scale across multiple market verticals and geographies and allows us to innovate faster while delivering enhanced value to clients. We are on schedule for the completion of the migration project before the end of the year. Both our partnership with Oracle and the recent hiring of a new chief AI officer, Fernando Schwartz, will accelerate our AI strategy and enable us to deliver new products to market faster, at scale, and for less cost. AI is undeniably a transformational force that will change how we work across all industries. We already have a dozen active predictive AI initiatives with wide-ranging potential impact on operational productivity, revenue-generating models, and risk modeling, to name a few. And our team will use it responsibly. We have a governance policy in process, as well as having announced our membership in the Coalition for Health AI. advances responsible development deployment and oversight of ai in healthcare all of this progress and being fit for growth allows us to think big the impact of enhanced intelligence on the healthcare industry is closer than we think soon we can expect to see ai deliver autonomous coding automated prior authorization and document processing tools that will reduce claim denials and accelerate reimbursements these efficiencies create a trusted foundation that will soon support more patient-facing advances, like AI that streamlines clinical documentation and decision support. Imagine a world where the currently misaligned incentives start to come into balance with better data, clearer pricing, faster paths to free cash flow, and less administrative burden. That world is possible, and we will be tracking alongside its development with solutions that harness and enhance these efficiencies. With that, let me just say I'm having the most fun and I'm as motivated as I've ever been in my professional life. We have great clients, great people, and great purpose. We're now starting to see great results. Put that together and our future is very bright. I'll turn the call over to Doug to walk through our Q2 financial performance, impact from the recently passed One Big Beautiful Bill Act, and as well as our updated full year guidance. We'll then jump to Q&A before coming back to me for some closing remarks. Thank you.