MultiPlan Corporation

Welcome to today's Multiplan Corporation fourth quarter 2021 earnings conference call. My name is Jordan and I'll be coordinating your call today. If you'd like to register a question, you may do so by pressing star followed by one on your telephone keypad. I'm now going to hand over to Shauna Gassick, AVP of Investor Relations to begin. Shauna, please go ahead.

Thank you, Jordan. Good morning and welcome to Multiplan's fourth quarter 2021 earnings call. Joining me today is Dale White, Chief Executive Officer, and Jim Head, Chief Financial Officer. The call is being webcast and can be accessed through the investor relations section of our website at www.multiplan.com. During our call, we will refer to the supplemental slide deck that is available on the investor relations portion of our website, along with the fourth quarter 2021 earnings press release issued earlier this morning. Before we begin, I'd like to remind you that our remarks and responses to questions may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with our business, which are discussed in the risk vectors included in our inner report on Form 10-K that the fiscal year ended December 31, 2020, and our quarterly report on Form 10-Q for the fiscal quarter ended September 30, 2021 and other documents filed or to be filed with the SEC. Any such forward-looking statements represent management's expectations, beliefs, and forecasts based on assumptions and information available as of the date of this call. While we may elect to update such forward-looking statements at some point in the future, please note that we assume no obligation to do so. Certain financial measures we will discuss on this call are non-GAAP financial measures. We believe that providing these measures help investors gain a better and more complete understanding of our financial results and is consistent with how management views our financial results. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measure to the extent available without unreasonable effort is available in the earnings press release and in the slides included in the investor relations portion of our company's website. I would now like to turn the call over to our Chief Executive Officer, Dale White. Dale?

Donna, thank you. Good morning, everyone, and welcome to our fourth quarter 2021 earnings call. Before we get into the business in hand, on behalf of my 2,400 colleagues at Multiplan, I'd like to extend my congratulations and gratitude to Mark Tabak. In accordance with the company's previously announced Executive Transition Plan, At the end of January, Mark moved to chairman of the board, and I have moved into the chief executive role. Mark's vision, leadership, and untiring dedication has had immeasurable impact on the multi-plan success. And on a personal level, it has been my distinct privilege to work under Mark's leadership for the past 18 years. I look forward to working in partnership with him as he settles into the role of chairman. I would also like to extend my sincere appreciation to our former CFO, Dave Redman, who retired at the end of last year, and welcome our new CFO, Jim Head, who is on the call with me today. From the moment Dave assumed the role of CFO in 2010, he was a tremendous steward of the company's financial position and helped us steer Multiplan's growth. He instilled a mindset of cost control deep into Multiplan's DNA perpetuating our capacity to invest in the company's operating and intellectual capital and to seize on entrepreneurial opportunities. We wish Dave all the best in retirement. Jim Head assumed the CFO post in November after a 30-year career in investment banking. He's a proven leader with the right combination of financial expertise and a firm grasp of the unique dynamics in the healthcare industry. He has hit the ground running and I'm confident that he will build on the incredible legacy that Dave left behind. Okay, so moving on to the business at hand. The fourth quarter of 2021 was a capstone of one of the most successful years in this company's history, a year in which, despite numerous challenges in the external environment, we set new records in savings for our customers and in revenues and adjusted EBITDA for the company. Let me start by saying that we are very proud of the critical role we play in the healthcare ecosystem, generating savings for payers, employers, and consumers. In 2021 alone, we identified nearly $22 billion in potential savings on over $110 billion of medical charges processed. Our operating assets and platform, deep domain knowledge, our independence, extensive connectivity, and customizable capabilities reinforce our unique value in the marketplace and offer significant competitive advantages and establish the foundation that has enabled us to achieve our strong results. Our fourth quarter results yet again illustrate our strong momentum, marking a sixth consecutive quarter of solid performance as a public company. Revenues were $298.3 million. up 3.5 percent sequentially and up nearly 17 percent from the prior year quarter. Adjusted EBITDA was $223.6 million, up 2.4 percent sequentially and nearly 15 percent from the prior year quarter. Both revenues and adjusted EBITDA for the quarter were the highest in our company's history and at the top end of the guidance ranges we provided last November. For full year 2021, we grew revenues over 19% and we grew adjusted EBITDA over 18%. If you control for acquisitions, the declining impact of COVID-19 and public company costs, our organic growth was over 7% for revenues and over 11% for adjusted EBITDA. We delivered a best-in-class 75% adjusted EBITDA margin, reflecting the scale of our business and our relentless focus on operational excellence. We generated over $400 million of operating cash flow in 2021, and our levered free cash flow, fully burdened by taxes and interest expense, was over $320 million, bringing the three-year total to roughly $845 million and underscoring our strong capital generation and the financial flexibility we have to invest in, and grow the business. We achieved these strong results by single-mindedly pursuing our vision to promote affordability, efficiency, and fairness in healthcare for all stakeholders in the U.S. healthcare system. In 2021, we helped our payer customers serve more than 45 million unique plan members and more than 100,000 employers. representing a wide range of plan sponsors using Multiplan's comprehensive suite of services based on their preferences for health plan design. Our services helped over 25 million unique patients. Their health plan sponsors and the payers that serve them saved nearly $22 billion on over 175 million healthcare claims. As shown on page five of our supplemental deck, we identified savings for these stakeholders by over $3 billion in 2021, or 17 percent. Excluding savings contributed by the acquisition of HST, we grew savings by $1.5 billion, or 9 percent, by capturing additional claim volume and by more efficiently leveraging our services to deliver high rates of identified savings per dollar of billed charges. We were able to accomplish this even as COVID-19 pandemic continued to weigh on our claim mix by reducing volumes of higher charge claims for medical services like elective surgeries. Growth in identified savings is key to how we think about measuring the performance of our business because it represents the value we deliver to our customers, shows the value of enhancing the platform, and drives our revenue. Our results are the direct consequence of providing solutions that deliver value to all stakeholders in a very complex US healthcare system. Multi-Plan provides an independent means to adjudicating fair reimbursements between the providers of health services and the payers, plan sponsors, and consumers. We do this by seeking to identify rates that are acceptable to all stakeholders with solutions that contractually preclude or significantly diminish the potential for health plan members to suffer the financial hardship of receiving a balanced bill. In fact, because of our independence and our unique relationships with over 1.2 million providers, our services have always been a solution to mitigate the balance bill problem. We also play a critical role in helping contain the rapid and disproportionate growth of U.S. medical spend, of which roughly a third where $1.2 trillion is attributed to some form of waste or abuse that leads to overcharges. We do this by ensuring billing and payment accuracy with solutions that identify and remove improper and unnecessary charges before and after claims are paid or that identify and help restore and preserve underpaid premium dollars. Let me turn now to some of the business highlights for 2021. To say we had a busy year is putting it mildly. We grew the business. We integrated two acquisitions. We issued our single biggest software release to introduce new services to support our payers' compliance with the No Surprises Act. In our analytics-based services category, we grew identified savings by over 15% versus 2020. not counting the savings delivered by the value-driven health plan services of HST, which we acquired in late 2020. Some notable highlights include, starting in April, we implemented a program to bundle our prepayment integrity edits into the data eyesight pricing methodology to improve payment accuracy and savings, increasing savings in 2021 by nearly $15 million on behalf of over 80 customers. Over the year, we more than doubled the savings lift from our operational initiatives to improve negotiation performance, generating over $265 million in new savings for our customers. We had significant customer wins. For example, a plan administrator added a million new health plan members to its data eyesight-driven cost management program. A large payer expanded its use of data eyesight, and a number of regional health plans added or expanded data eyesight or other non-contracted pricing methodologies. We are very pleased with the adoption of our value-driven health plan services, which we believe represent the future of reference-based pricing. In 2021, we added 132 new employers and other health plan sponsors that together added over 163,000 new members to the program, bringing the total number of members to a million. the majority of these new plants, about 90 percent, are using the version of the program that integrates our professional provider network. We're the only reference-based pricing company that also owns a national independent provider network, and that network is accredited for credentialing quality by the National Committee for Quality Assurance. We believe the combination of our network, our pricing technology, our engagement tools deliver We believe the best reference-based pricing program in the market by a long shot. In our network-based services category, we grew identified savings in 2021 by about 6% through initiatives such as a regional blue plan added network access to improve cost management inside its service area. A new property and casualty bill review company added access to our network for medical bills stemming from injuries on the job. We added another two property and casualty payers in 2021, so expect to see network usage increase in this market segment. Not included in that 6% savings growth are a number of other 2021 network initiatives worthy of note. On the heel of last year's successful completion of a custom Medicare Advantage network bill, we were awarded three bill projects for 2023 enrollment, comprising as many as 100 counties in nine states. We deployed proprietary network pricing for a customer in support of its compliance with state surprise billing regulations in two states. Within our payment and revenue integrity services category, we grew identified savings by 9% over 2020, again, not counting the services added with the acquisition in early 2021 of Discovery Health Partners. This includes a 40% increase in savings identified through our secondary editing service. We had significant new implementations for this service, which is particularly suited to a payer's in-network claims. In fact, we have two additional in-network editing implementations planned for this year with a large customer, reflecting our ability to deepen our penetration in this important target market segment. We also had a number of significant client wins within our new post-payment and revenue integrity services. We were awarded expansion data mining business with an existing top 10 customer. We sold and implemented data mining with a national payer and are now piloting a custom data mining expansion program for another payer. We implemented pre- and post-payment integrity services for a Blue Cross plan with a total contract value of about $5 million. We added post-payment and or revenue integrity services with a number of other regional health plans, notably a regional health plan implementing coordination and benefits business expected to deliver $1 million in revenues over three years. And of course, we launched a new end-to-end service, and separate components to meet our customers' varying approaches and needs in complying with the No Surprises Act, which went into effect January 1 of this year. As we've mentioned previously, clients have relied heavily on us to help guide them through the complexities introduced by this new legislation. And we spent a great deal of this year, last year, deep in the trenches helping our customers identify strategies, and implement operational solutions to comply with the new rules. As of today, we have completed or are in process of implementing 94 NSA programs and have over 60 customer opportunities in the sales pipeline. With the regulation now live and the operational lift in both the customer environments and our platform well underway, the No Surprises Act does has begun to settle. To date, our larger customers have implemented their compliance approaches, and based on our current 2022 client commitments, we estimate up to a 2 percent net headwind to identify savings and revenues related to the NSA. The majority of that relates to just a few programs with customers who, for various reasons, have opted for different approaches to fulfill their compliance to the regulations. We believe there is potential for some of these customers to reconsider their decisions as the year progresses in which event we would recoup those revenues. Stepping back to the big picture, based on client adoption thus far, we are confident that the NSA will not significantly impact our claim volumes, our pay for performance fee structure, or our calculation of identified fees. Before I turn it over to Jim, there are a couple of other topics to cover off. First, we have received questions from investors about the status of the stockholder litigation brought against us and the defendants affiliated with our major investor, Churchill Capital. While we generally do not comment on litigation and are no longer a party to the case, we want to emphasize that we continue to believe this case is completely without merit and should be dismissed, and we will continue to work with Churchill and the other defendants to present a vigorous defense against these misleading claims. I would like to acknowledge our 2,400 multi-plan colleagues whose dedication and hard work enable us to maintain our highest levels of customer service and operational excellence. They deserve the credit for delivering yet another year of great results. I'd like to hand the call over to Jim. Jim will discuss our results and provide our outlook for 2022. Jim?