MultiPlan Corporation

Hello and welcome to today's Multiplan Corporation first quarter 2023 earnings conference. My name is Bailey and I'll be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star followed by one on your telephone keypad. I would now like to hand the conference over to Shawna Gassick, AVP of Investor Relations. Thank you. Please go ahead.

Thank you, Bailey. Good morning and welcome to Multiplan's first quarter 2023 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 first quarter 2023 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 those 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 FCC. We will also be referring to several non gap measures, which we believe provide investors with a more complete understanding of multi plans, underlining operating results. An explanation of these non gap measures and reconciliations to the most terrible 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 our Chief Executive Officer, Dale White. Dale?

Thank you, Shawna. Good morning everyone and welcome to the call. I am excited to share with you today the meaningful progress we are making on a variety of fronts. It's an understatement to say we've been busy this quarter, so let me give you an update on our business results and progress against our guidance, our most recent contract renewal, and most importantly, our growth plan. First, we delivered results toward the higher ends of our revenue and adjusted EBITDA guidance ranges for the quarter. We will review the details of the quarter in a moment, But I wanted to underscore that the first half is playing out as we expected, and we are reaffirming our 2023 guidance. Second, on our fourth quarter earnings call, we indicated we would renew another multi-year contract with a larger customer in the first half of this year. I'm pleased to announce that we have completed this renewal in Q1. We now have renewed multi-year contracts with three of our larger customers since the third quarter of last year. As a result, our visibility in our business has materially improved and we are increasingly confident that our revenues are stabilizing and poised for growth over the next several years. As we communicated last quarter, the cumulative impact of contract renewals with these larger customers, including this latest renewal, is already incorporated in our 2023 guidance. Third, we are executing on our growth plan. We are on pace to launch several new products and enhancements within our core service lines this year. I am also pleased with the significant progress we have made forming our new data and decision science service line, which will be instrumental in expanding our footprint beyond our out-of-network claims processing and deepening our penetration in larger and growing markets like in-network, commercial health, and Medicare Advantage. In fact, we will soon be launching the first solution in this service line, which I will describe shortly. Finally, we continue to demonstrate our capital flexibility. For the second consecutive quarter, we allocated $100 million of our cash balance toward the reduction of our debt. In Q1, we repurchased $137.8 million of face value of our 5.75 senior unsecured notes in the open market. We also took advantage of our reinstated share buyback authorization to repurchase $5.7 million of our shares during the quarter. With $266 million of unrestricted cash at quarter end, we still have ample flexibility to pursue our capital priorities. Turning to our first quarter results, as shown on page four of the supplemental deck, revenues of $236.6 million and adjusted EBITDA of $156.3 million were both in the top half of our guidance ranges for the quarter. Revenues and adjusted EBITDA each declined about $5 million sequentially. The external environment showed further signs of normalization with volumes of both bill charges and identified savings in our core commercial health plan segment showing modest sequential growth, helping us absorb some of the anticipated headwind related to our contract renewals with our larger customers. Our adjusted EBITDA margin was 66%, down slightly from 67% in the prior quarter, but in line with our expectations. Let me provide a few business highlights from the quarter. We had one of the best quarters to date in our regional payer and TPA customer segments, with strong performance across our service lines. including network-based services and the payment and revenue integrity services that we acquired through Discovery Health Partners. We also had very strong revenues in the quarter in our Blues customer segment, and we added another Blue Cross Blue Shield plan. Our penetration in this segment is now over 55% of the Blues Association's 34 companies, with significant room to expand both within and outside this current base. We saw continued growth in our HST business, signing up another 181 employer groups comprising over 42,000 lives and bringing our total membership to 1.2 million lives. We expect HST's second half outlook to be very strong with new customers and one of a number of new add-on products about to launch. I'd like to turn to the progress we are making on our growth plan as detailed on page eight of our deck. As we announced last quarter, we are introducing four new organic products and enhancements in 2023, which we estimate will generate $50 to $100 million of incremental revenue over the next few years. The first of those, a balanced bill protection service, will launch as scheduled in June for customers of HST's value-driven health plan service. This new product manages a plan member's exposure to balanced billing to the benefit of the member, the plan, and the provider. It also removes a common barrier to adoption of reference-based pricing solutions for employers with less tolerance for the risk of balanced billing and the potential friction it creates between providers and members. Also on target to launch before year end are machine learning enhancements to both our NSA compliance services and our next generation of out-of-network pricing services. Both will now enable greater flexibility in managing out-of-network medical costs. These enhancements capitalize on our unique access to extensive provider, pricing, and claims data to optimally align our solutions with a payer's specific benefit plan and business objectives. And next quarter, we are adding a data mining component to our itemized bill review service, which leverages our expansive payment integrity analytics to help our customers find and address more billing errors in their complex high dollar claims prior to payment. This brings us to our exciting new data and decision science service line. This new service line will deliver decision analytics and software tools to allow our customers to manage the health risk of a population, benchmark important network contracts, assess their plan's financial performance, and use data, machine learning, and AI to achieve other important business imperatives. We've had numerous conversations with our existing customer base and know that this is an area where there is need, the need is high, and there are few available solutions. Our provider network, our connected technology platform, and expansive claims flows position us uniquely to deliver enriched and actionable data to our customers through market-leading products. The first of these products in our data and decision science service line, scheduled for launch in the third quarter of 2023, is a price transparency service that leverages the machine-readable payer and provider pricing data now required by regulation to be made public. We are thrilled by how differentiated our solution will be in the market. Not only will we aggregate this vast contracted rate information But more importantly, we will enrich it in ways that no other company can, by leveraging Multiplan's extensive demographic and affiliate data on 1.3 million contracted providers, by leveraging our pricing technology that enables comparison to Medicare, Median, and other financial benchmarks, and with our deep clinical billing expertise, which enables normalization across varying rate structures. With this data enrichment, we will drive value well beyond simply having access to publicly available, somewhat messy data set. Our roadmap includes sophisticated and strategic use cases that help our customers improve their competitive positions, such as benchmarking plan performance, driving network contracting strategies, and innovating network design. Our data and decision science service line will open up significant opportunities and is a critical part of our plan to expand our footprint beyond our out of network claim processing and deepen our penetration in large and growing markets like in-network commercial and Medicare Advantage. As you can see, we have been hard at work. We have strong customer demand and significant opportunities to grow our business. We are executing on a concrete plan to capture these opportunities, and the energy and enthusiasm inside the company is as high as I've ever seen it. But we get it. We understand we have to deliver results as we progress through this pivotal year. We are excited to discuss all of this and more at our Investor Day coming up on June 28th. With that, let me turn it over to Jim.