MultiPlan Corporation

Thank you for your patience. The Multiplan Corporation third quarter 2023 earnings conference call will begin shortly. During the presentation, you will have the opportunity to ask a question by pressing star 1 on your telephone keypad. Welcome to the Multiplan Corporation third quarter 2023 earnings conference call. My name is Harry and I'll be your operator today. If you'd like to ask a question during the presentation, you may do so by pressing star one on your telephone keypad. I'd now like to turn the conference over to Shauna Gasek, AVP of Investor Relations. Thank you. Please go ahead.

Thank you, Harry. Good morning and welcome to Multiplan's third 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 third 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-GAAP measures, which we believe provide investors with a more complete understanding of Multiplan's underlining operating results. An explanation of these non-GAAP measures and reconciliations 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 our Chief Executive Officer, Dale White. Dale?

Thank you, Shawna. Good morning, everyone, and welcome to the call. What a difference a year makes. This time last year, I had the unfortunate job of informing you that our results had fallen short of our expectations and visibility had become more challenging. In the four quarters since then, we wasted no time pivoting the company. We stabilized our revenue base and reset financial expectations, formalized a new strategy to transform our business, and initiated a growth plan to execute on that transformation. As I sit here today, I'm happy to report that we are both tracking to our full year 2023 expectations and making excellent progress executing on our growth plan. We delivered third quarter results that were in line with our guidance and that met our expectation to resume growth in the back half of 2023. And during the quarter, we achieved several milestones in our growth plan with a number of new product initiatives rolling out on or ahead of schedule. With our business now stable, our visibility increasing, and our pipeline of new business growing, we are even more confident that we are well positioned to deliver accelerated growth in 2024 and beyond. Starting with our third quarter results, as shown on page four of the supplemental deck, revenues were $242.8 million. And while that was 3.1% lower than the prior year quarter, it was up about $5 million or 2% sequentially. Revenues came in at the midpoint of our third quarter guidance range, driven by increases in our identified potential savings. Adjusted EBITDA was $152.3 million, down about 12% from the prior year, but in line with the second quarter of 2023. Adjusted EBITDA was also in line with our third quarter guidance, albeit closer to the lower end of the range, reflecting the impact of accelerated investments this quarter in integrating benefits science technologies, or BST, and launching our new data and decision science services line. Our adjusted dividend margin was 62.7 percent, down from 64.2 percent the prior quarter, again reflecting cost-exceeding revenues for BST. Adjusted dividend margin declined from 68.7 the prior year due to the impact of our contract resets, as well as investments in the business that we expect to generate new revenue starting in 2024. That's a good segue to an update on our growth plan progress. As I mentioned during the third quarter, we delivered several new products to the market on or ahead of schedule. In fact, We have now delivered on initiatives spanning across each of our four growth plan objectives, which are detailed on page nine of the supplemental deck. We also have a deep pipeline of new products, and the roadmap for our 2024 product initiatives is already coming into focus, which will help us drive our growth in 2025 and beyond. As we noted at our investor day, This successive layering of new products into our revenue base is integral to our plan of generating 200 to $275 million of incremental annual revenue with our growth plan over the next several years. Let me expand on the progress we are making, starting with the initiatives to enhance our core services, which are described in the first three rows of the table on page nine. In the third quarter, we launched our smart scoring solution called ProPricer ahead of schedule. ProPricer leverages the combination of machine learning technology and the unrivaled breadth of our repricing solutions to intelligently and dynamically route claims to arrive at the optimal pricing recommendations, giving the customers unique business objectives. We completed the first release of this product during the third quarter and onboarded a larger customer on October 1st, which we expect to translate to approximately $6 million of annualized revenue. And that is just the beginning. For 2024, we're planning additional releases of ProPricer to increase its functionality and flexibility, including giving customers the option to attach our balance bill protection service. Speaking of balance bill protection, as we noted on our last earnings call, In the second quarter, we launched this new product for the value-driven health plan services offered on our HST platform. We onboarded 11,000 lives this year, and we expect that number to double by January 1, 2024. These lives alone translate to over $5 million of incremental annualized balance bill protection revenue for our HST business. For 2024, we're continuing to build out the HST platform with our employer solution in a box strategy by adding pharmacy and care navigation services, and also by integrating aspects of our Ben Insights technology into our HST platform and upselling these services to our existing base and new customers. The Ben Insights technology, which came to us from our acquisition of BST, will add descriptive, predictive, and prescriptive analytics to enhance employer benefit intelligence and reporting for our HST customers. Next, we have been focused on fortifying our leadership in NSA-related claims processing. During the third quarter, we launched the first version of our rules-based claims processing initiative and the beta version of our insights portal. Both of these initiatives are aimed at enabling more sophisticated and better informed compliance with the NSA regulations. For 2024, we will continue to advance both of these, and we plan to build a service that helps payers comply with the state surprise bill regulations. Additionally, we believe payers will demand increased assistance from us with the administration of their qualifying payment amounts, or QPAs. Let me expand on this QPA topic. As many of you are aware, throughout 2023, courts have ruled largely in favor of providers on several lawsuits filed by the Texas Medical Association. And for payers, these rulings have increased the complexity of complying with the NSA regulations. This dynamic continued in the third quarter when the court ruled that QPA schedules must be calculated at the plan level. reversing CMA's July 2021 final rules, which allowed for calculations based on the payer's book of business and for as few as one QPA schedule to price all claims. The latest TMA ruling will require a huge increase in data creation, data storage, maintenance, and processing logic. Our customers are telling us this will be very difficult for them to do, and they are looking to us for assistance. We've already built into our NSA services a variety of approaches to creating QPA schedules, including at the plan level. So we are very well positioned to provide that assistance. As a result, depending on whether CMS appeals the latest TMA ruling and the outcome of any appeal, QPA administration enhancements could be one of the key NSA-related initiatives for us in 2024. Wrapping up our list of core service enhancements during the third quarter, we introduced functionality enhancements to our itemized bill review service or IBR. And we are already starting to get traction in the market with the addition of a couple of significant customers in the quarter. IBR is a payment integrity service that reviews high dollar inpatient facility claims during the adjudication process to identify billing errors and prevent overpayment. Our IBR enhancements include the ability to mine claim data by leveraging our prepayment integrity analytics to identify and prioritize the most promising cases to pursue. For 2024, we are shifting our attention to our network-based services with a plan to pilot a next-generation customized network model, which would bundle services from each of our service lines, including payments, and will be targeted initially to the direct to employer channel. Moving on to the initiatives that expand our service offerings, which are detailed in the fourth row of page nine. During the third quarter, we made solid progress marketing our new data and decision side services line, which as most of you know, includes the products acquired through BST. We've wasted no time introducing these new services to our payer customers. The reception has been strong and even though we acquired DST just a few months ago, we are rapidly building a sales pipeline to help drive our growth in 2024. As part of this effort, we launched the first two phases of PlanOptics, our software suite that ingests the newly required payer price transparency data and uses this data to deliver critical market insights to our customers. In July, we released PlantOptics Search. And in October, we launched the first version of our PlantOptics Intelligence solution, which goes beyond simply querying the data to helping payers with their network contracting and market expansion strategies. For 2024, we are working on a number of data and decision science services-lined initiatives. This includes expanding the features and functionality of PlantOptics Intelligence, and designing a price transparency data solution for the provider market. This will open up a new product opportunity in a channel that is very familiar to us. It also includes standing up our risk scoring models as a standalone service that can add value to every claim we process through our platform and which is critical to deepening our penetration of Medicare Advantage and in-network claims. Also during the third quarter, we began to build our sales pipeline for our new B2B healthcare payment service, which as we have previously discussed, is being offered through a partnership with Echo Health. I'm pleased to announce that we have already secured our first customer and will begin implementing that mandate shortly for 2024 We continue to focus on the rollout of this exciting new service to our customer base. So as you can see, we have been very busy, but I'm extremely pleased with the progress we have made on each of our four growth plan objectives. Our 2023 initiatives are on track. We are already setting some of our 2024 initiatives in motion, which are creating more ways to grow our revenues at Multiplan. We still have a lot of work ahead of us, but we are already making a ton of progress thanks to the dedication of our product team, our sales team, and the rest of our 2,700 multi-plan colleagues. As I have said several times, the strategy is in place. From here, it's all about execution, and we will continue to be relentless in our day-to-day execution. With that, I'd like to turn the call over to our CFO, Jim Head. Jim?