MultiPlan Corporation

Good morning and welcome to the Multiplan Corporation's second quarter 2024 earnings call. My name is Harry and I'll be your operator today. At this time, all participant lines are in a listen-only mode and there will be an opportunity for questions and answers after management's prepared remarks. If you would like to enter the queue for questions, you may do so by dialing star followed by one on your telephone keypad. I would now like to hand the conference over to Shawna Gacic, AVP of Investor Relations. Thank you. Please go ahead.

Thank you, Harry. Good morning and welcome to Multiplan's second quarter 2024 earnings call. Our speakers today are Travis Dalton, Chief Executive Officer, and Jim Head, Chief Financial Officer. Jerry Hogg, Chief Operating Officer, will be available for the Q&A session. The call is being webcast and can be accessed through the investor relations section of our website at 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 second quarter 2024 earnings press release issued earlier this morning. Before we begin, a couple 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 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, Travis Dalton. Travis?

Thank you, Shawna, and good morning to all of you on the call. Thank you for your time today. I recently completed my first 100 days in my first full quarter here at Multiplan. I know more now than I did coming in. I validated my view on several aspects of the company, continue to learn, and am convinced we will execute on our evolution and transformation over time. I would like to share my reflections on the business with you today. It goes without saying it's been an interesting time to join the company and I'm more committed than ever to our transformational journey. That journey must begin with an honest assessment and a brutal confrontation of the facts. I'm exceedingly proud of our commitment to clients and relentless pursuit of service excellence. That is a very good thing. However, the fact is that financial results matter and ours simply haven't been consistent predictable, or good enough. We must perform better. By now, many of you have had the opportunity to review our second quarter financial results and our updated full-year guidance. Those results fell short of the expectations set entering the year. Our revised outlook is more fully aligned with the current realities of our business in the short term. But underlying that, I am encouraged by some key indications of progress and even more so by significant opportunities for growth in the mid and long term. All of that said, I am as excited as I have been since joining this great company. We have a clear, compelling vision and strategy forming for the future. We have great clients and longstanding relationships, an operating plan to execute better as we move forward, a current product portfolio that delivers value, a clearly defined set of new product opportunities, untapped technology and data assets, and a team of incredibly talented and dedicated professionals. We have a strong business foundation, we generate cash flow, and we have ample time to make progress. Our transformation requires a deep commitment to change, a sense of urgency, and decisive actions. Showing meaningful progress may take a bit longer than we had hoped, but I'm confident we can and will execute. Simply put, we know what to do to make this a world-class data and technology company that operates with more rigorous process, increased discipline, and enhanced organic product capability that drives more value for more clients across more markets. Over time, this will lead to sustainable growth. In a moment, I will share some of the encouraging progress that we're making, and I very much look forward to an opportunity to share with you my comprehensive vision for our transformation and an integrated strategic, operational, and financial plan in detail in the coming quarters. As I mentioned on our last earnings call, we have established a core operating framework to ensure that we more consistently achieve our results over time. Before I speak to the progress we've made against that framework, I would like to address a few key issues right up front. First, the overhang of media scrutiny has been an ongoing challenge. We have addressed it head-on, engaged directly with stakeholders, updated our value proposition, and will continue to do so proactively. We have established a corporate and government affairs team, inclusive of world-class public relations and lobbying representation, and will continue to protect our reputation, defend our business against misinformation and false narratives, and educate healthcare stakeholders about the value that we provide. We will actively use our voice to support the aims of healthcare quality, price transparency, and cost control. Next, we continue to confront with openness and transparency the legal claims against us, which we believe are without merit in our attempt to misuse the law in a way that will ultimately increase prices for patients and employers. The data is very clear that Multiplan, which operates in a highly competitive environment, makes health care more affordable for consumers, offers services across the entire continuum, seeks to eliminate or reduce balance bills, and supports price transparency, and the No Surprises Act. We are confident that the facts clearly support the merits of our products and the important role our company plays in the healthcare ecosystem. Next, we have faced a series of one-time environmental challenges that have impacted our clients, our claims flow, and our results. These included the clearinghouse destruction, which continued to affect us through the first half of the second quarter. We will continue to navigate these challenges and support our clients as we do. Next, it's taken longer to generate commercial traction with our new product initiatives than anticipated. However, I am confident that demand is there, the pipeline is growing, and the operating plan I mentioned earlier will get us back on track. Finally, we believe the prices of our products and services are competitively positioned in the marketplace across the spectrum of our clients, large and small. With the exception of an attrition overhang related to one of our larger clients, We have been growing at a mid single digit rate across the remainder of our customer base. While we now expect this attrition to constrain growth until mid 2025, at that point, the way should finally be clear for us to show growth in our core business. We have remarkable clients. It is our imperative to relentlessly develop and deliver new value for them. We will continue doing that because we are proud to serve them because doing so will sustain our success. After the value we provide in the market, before I joined Multiplan, I served providers for 21 years. In light of that, I had to ask myself the question, is Multiplan good for healthcare? I am as confident as ever that the answer is yes, unequivocally. We have a clear point of view, validated by facts. We are explicitly articulating that to stakeholders across our corporate communication channels, including our investor website. We will continue to communicate proactively and aggressively in support of our mission to make healthcare more transparent, fair, and affordable for all. Getting back to how we intend to move forward. In support of our vision to transform into a data and technology forward organization with an aggressive growth mindset, we are actively engaged across the company in a five-year strategic and resource planning exercise. This process, which is being led by our chief operating officer, includes assessing our market potential, evaluating our current set of products, sharpening new product development, fortifying our sales and go-to-market strategies, and clearly articulating our plan with precision, both internally and externally. This will allow us to remain laser-focused on executing now, but also prepare for the next through product and business development. Our vision builds on a strong foundation that includes our analytics-based services, 1.4 million provider networks, payment integrity products, HST value-driven health plans, and data and decision science capabilities in price transparency, risk analytics, supplemental insurance, and other areas. Building a resource and capital allocation with precision, along with developing and adhering to a robust and welcome to annual operating plan, will help us realize our vision and maximize those results. Delivering on that vision will be all about execution. We will be focused on our operating principles, clarity of purpose, alignment of talent, and focus on KPIs and accountability. And we will be focusing on getting fit for growth with a process rigor worthy of a great public company. Let me take each of these in turn. Clarity. We've made significant progress updating our message set and value proposition. We've refreshed our external messaging, website, and educated many key stakeholders. We will continue to be vocal in the role we play across the healthcare ecosystem. Alignment. We have added significant talent in applying clear accountability with the authority to operate. We've added a senior vice president of corporate affairs, a vice president of government affairs, a chief data scientist, a national sales leader, additional new market sales talent, and we have an incoming CFO. Combined with our existing talent, we have a team that is committed to and capable of accelerating our transformation. Focus. We have rounded out our set of 41 KPIs and have a clear tracking mechanism with accountable owners to ensure we execute on our strategies. This will allow us to take prudent real-time decisions and monitor forward indicators of progress against our goals. As we advance clarity, alignment, and focus, becoming fit for growth will encompass two key areas. Process, rigor, discipline, and insights. We have established data-driven bookings forecasts, an annual operating plan, monthly operating cadence, and product lifecycle management approach. We have much work to do, but this will yield more predictable results for the business and enable us to make more and better products over time. Laser focus on where we put our time, energy, and money. The processes noted are all in support of clear allocation of resources. They will enable us to make sound and timely decisions around expense and capital outlays that deliver better quarterly performance and create long-term value. They will help us prioritize investments in those products and initiatives that are most important to growth and have the highest market potential over time. We're investing today in a few key areas. Enhanced capabilities for our core clients. As identified at the start of this year, we will continue to seek opportunities to better serve our clients. This is job number one. investing in our data architecture to provide flexibility and extensibility in our technology stack. We will be able to more quickly iterate on internal projects and also potentially serve a platform-based ecosystem over time. Price transparency products and analytics serve the entire healthcare ecosystem. Assets acquired through our BST acquisition give us a strategic advantage. We have integrated BST to get more focused and will be aggressive in pursuit of this market opportunity. Internal automation with AI, starting with our NSA processes and continuing with other backlog of projects. More leveraged value as we progress. This is only the beginning. Over time, all of this will allow us to increase our total addressable markets and diversify our customer base as we serve our national and regional payer clients more aggressively deliver value for TPAs, brokers, consultants, and plan sponsors, address opportunities in provider markets, and deliver a data platform and analytics vision that meaningfully expands the capabilities we offer in all of these markets. We will be persistent in driving better results. I am pleased with the energy and determination of the organization, which has already resulted in better progress to support growth demonstrated by several examples. We added four new logos in Q2 and had a key TPA win. Sales are up 8% year over year, and our pipeline has grown by double digits in the first half, even with headwinds associated with the exogenous events that I mentioned earlier. Our plant optics product suite has been recognized with another key award for data and analytics, and we continue to close sales with plant optics and Ben Insights, including two additional in the second quarter across multiple sales channels. We closed our first provider client with bed insights and predictive risk models. I will also be a keynote speaker at the Critical Access Hospital Conference hosted by the National Rural Health Association to highlight our transparency products and analytics. If we want to control costs in healthcare, enabling autonomy and access in rural America is a key component. We believe that we can help in many ways. We are focused and on track with our development roadmap for key products that serve our core client base, we held the first leadership interlock with our new product lifecycle management plan, with our teams identified 15 new product ideas and over 30 additional enhancements for consideration. We're moving quickly to evaluate those concepts against client needs and market potential to prioritize our efforts and maximize results. Likewise, we will continue to advance our partnership opportunities to extend market reach. As I mentioned, we added new senior talent in the quarter. That we are able to attract these world-class professionals and that they want to be part of our journey is a strong endorsement of the company and the opportunity we have to unlock meaningful value over time. We know we operate in a competitive environment, an ever-changing environment. Our strategy, systems, processes, and people have to be ready and able to succeed in that environment. That will require transformation. We will take it straight on and we have the determination to do so. In summary, as I noted at the outset, we realize our financial results have not met expectations. As a management team, we will confront that with brutal honesty. We know what work to do and I am confident over time, and we have some, that we can and will achieve sustainable results. We are working tirelessly to deliver a clear strategy for predictable and sustainable growth. As we move forward, I will communicate more detail around our strategic and capital allocation plan, one that is underpinned by the investment discipline, organizational alignment, and execution focus needed to achieve that plan, and is supported by investor disclosure that will allow you to hold us accountable. I look forward to demonstrating all of this to you and improving our say-do ratio. You are what your record says you are. Ours needs to get better, and we will be relentless. I would like to turn it over to Jim to cover the details of our results. As disclosed this morning, Jim has decided to lead Multiplan, but will be staying with us in a strategic advisory role through the end of the year. Jim has been uncompromising in pursuit of service excellence for our clients, embodies our core values, and is frankly just a straight shooter. The board of directors and I can't thank him enough. We will be welcoming Doug Garris as our CFO starting August 5th and Doug will work closely with Jim through the end of the year to ensure a smooth transition. I have worked with Doug previously and I'm confident he is the right person to help carry us forward with our operating plan and has the execution skills we need to drive sustainable growth. I'm excited to work closely with him on realizing our potential. Let me turn it over to Jim.