Claritev Corporation (CTEV) Earnings Call Transcript & Summary

Good morning, and welcome to the MultiPlan Corporation Annual Meeting of Stockholders. I would now like to introduce the first presenter, Mark Tabak.

Welcome to the First Annual Meeting of the stockholders of MultiPlan. We appreciate you joining us today. I'm Mark Tabak, CEO and Chairperson of the Board. Because of the ongoing COVID-19 concerns and to ensure the health and well-being all attending, we are our meeting in a virtual format this year. I would like to introduce the other directors of MultiPlan joining us today. Allen Thorpe, our independent Lead Director and Chair of the Nominating and Corporate Governance Committee; Anthony Kaluka, Chair of the Audit Committee; Hunter Philbrick, Chair of the Compensation Committee; Glenn R. August, Richard Clarke, Paul Emery, Martin Harris, Julie Klapstein, Michael Klein and Bill Veghte. Also with us today is Jamal Douglas from PricewaterhouseCoopers, our independent auditors. Mr. Douglas is available to respond to appropriate questions during the general question-and-answer period today. Jeffrey Doctoroff, Corporate Secretary of the company, is present as well and will act as the secretary of today's meeting. A few housekeeping [indiscernible] before we begin the meeting, today's meeting will be recorded and available on our Investor Relations website at www.multiplan.com. That's www.multiplan.com. The rules of this meeting can be found at the bottom of the virtual meeting page. Stockholders who have logged in with their 16 digit control number may submit questions at any time during this meeting through the question box on the screen. During the annual meeting, questions from stockholders should pertain to the proposals being considered at that particular time. Stockholders wishing to ask other questions will be give you an opportunity to do so following the adjournment of the business portion of today's meeting. The 2021 annual meeting of the stockholders is now called to order. Lou Larsen has been appointed to act as inspector of election for the meeting. He has executed the Oath of inspector of election and has presented such oath to the Secretary. An affidavit of distribution executed by a representative Broadridge has been delivered to the company, stating that she caused a notice of availability of proxy material to mail beginning on April 16, 2021. A list of the stockholders of record of the company as of the close of business on March 29, 2021, has been on file at the principal office of the company for at least 10 days. During this meeting, stockholders that have logged in with their 16 digit control number may view the list by clicking on the stockholder list link on the bottom of your screen. Since notice of this annual meeting has been properly sent, and I have been informing a quorum is present, I declare this meeting duly convened. We will now proceed with the business of the meeting. It is now 11:03 eastern on May 27, 2021, and the polls for the 4 proposals are now open. All MultiPlan stockholders entitled to vote at this meeting have the ability to do so online. Any stockholder who has not yet voted or wish to change their votes may do so by logging in with their 16 digit control number and clicking on the Vote Here button at the bottom of the right corner of your screen. Let me remind you that if you have already sent in your proxy, and you not wish to change your vote, you do not need to vote again. As the votes are being completed, let me review the 4 items of business for consideration at this meeting. First, to elect 4 Class I nominees named in the proxy statement to our Board of Directors to serve until the Annual Meeting of Stockholders in 2024 or until their respective successors are duly elected and qualified. In accordance with the company's Bylaws, paul Emery, Martin Harris, Mark Tabak and Bill Veghte have been nominated to serve as Class I directors of the company. No other nominations were received prior to the deadline established in the company's bylaws therefore, no additional nominations may be made at this meeting. I declare the nominations to be closed. Second, stockholders have been asked to vote to ratify PricewaterhouseCoopers as the independent registered public accounting firm for fiscal year 2021. Third, stockholders have been asked to provide an advisory vote to approve the compensation of our named executive Officers, or say-on-pay vote. And the final resolution is the advisory vote on the frequency of holding future advisory votes to approve the compensation of the named executive officers or say-on-frequency vote. No other matters have been brought before the meeting in accordance with the company's bylaws. Are there any questions regarding the proposals before the meeting.

There are no questions at this time, Mr. Tabak. I turn the meeting back over to you.

The polls are about to close. So if you have not yet voted, please do so. Since everyone has had the opportunity to vote, it is now 11:05 Eastern, and the polls are closed. The inspector of election has delivered his preliminary report, and I'm pleased to share with you that each of the 4 nominees of Class I directors have been elected, the proposal to ratify PwC as the independent registered public accounting firm and the say-on-pay proposal has been approved in 1 year with the preferred frequency for the say-on-frequency proposal. We will file the final report of the inspector of election with the records of this meeting. We expect to report the results of the meeting on our Form 8-K to be filed with the SEC within 4 business days of this meeting. As this concludes the business of the meeting, we will officially adjourn the meeting. I'd like to thank the stockholders for their support. I want to spend a few minutes talking with you about what drives MultiPlan's success and why we're enthusiastic about the company's future. Many of you already know MultiPlan. We are a value-added provider of data analytics and technology-enabled end-to-end cost management and payment integrity solutions to the U.S. health care industry. For more than 40 years, MultiPlan has worked to deliver affordability, efficiency and fairness in the U.S. health care system for payers, providers and consumers. We pursue this by executing our -- to get our mission to understand the unique needs of our payer customers to develop innovative solutions that meet those needs and to partner with our customers to manage the cost of care. Our services and business processes are aligned with these goals. We provide a mission-critical surface and are recognized as a truly independent source of trusted information to the U.S. health care industry. We are the leader in add of network cost management for our customers. This is accomplished with a single product. That product is affordability in health care, supported by 3 service offerings. First, our network-based services offer contracts with health care providers who agreed to discounted rates to help plan members in exchange for increased access to patients. Using our network of over 1.2 million health care providers we supplement payers' proprietary networks to extend the service breadth and geographic reach of the coverage for the planned members they serve. Second, our analytics-based services leverage our extensive proprietary data and analytics and our independent position within the value chain to help our payer customers identify and negotiate and apply appropriate prices for health care services provided at our network. Third and finally, our payment and revenue integrity services helped reduce waste and abuse by identifying improper charges before and after claims are paid and by identifying and restoring underpaid premium dollars. We have a very strong competitive position in the markets we serve. In the first instance, this is underpinned by our unique operating assets. I've already mentioned our large network of more than 1.2 million providers and our proprietary data algorithms acquired by serving hundreds of payers over the past 40 years. In addition, we have excellent technology that supports efficient, high throughput claims processing and a large team of claim negotiation and review experts, both of which are at the heart of the operational scale that allow us to process over $100 billion of charges in 2020 and identify cumulative savings of approximately $80 billion for our customers over the last 5 years. These assets are combined with our relentless focus on operational excellence and a set of dynamic capabilities that allows us to configure and reconfigure our assets to repeatedly create enduring value for our customers, their members and ourselves. A member of these strengths is our leading position with our payer customers. We have 700-plus payer customers, including large commercial insurers, Blue Cross and Blue Shield plans, third party administrators, regional health plans and employee groups. Many of these have been customers for decades and view us as a strategic partner. We are operationally embedded in their workflows and IT processes, and most of them use a configuration of our 3 service lines. We engage strategically to evolve services that improve their competitive standing in their markets. And importantly, we are aligned with their interest. For the vast majority of our business, we generate revenue when they use the savings we identify, and our cross-sell opportunities are all about saving more for them and their employer plans by increasing the level and scope of services we provide to them. As a result, we have very high customer retention and enjoy long-term customer relationships. The so-called stickiness of these relationships translates to our durable financial model. We have persistent recurring revenues, high adjusted EBITDA margins, an attractive conversion of adjusted EBITDA to free cash flow. Our financial strength supports strategic investments we have made to grow our business and drive further value for our customers, establish a virtual cycle. I'd like to walk through some of these initiatives in a moment. First, let me say a brief word about the year behind us. As everyone is well aware, COVID-19 pandemic threw the world into a territory that was uncharted in the modern [indiscernible]. It has been a difficult time for every person, every family and every company. And I'm very proud of how our company navigated such a challenging environment. We began 2020 with an excellent momentum, delivering strong first quarter 2020 results. As the COVID pandemic unfolded, we responded quickly by enabling our teams to work remotely, ensuring the health and safety of our employees while continuing to provide uninterrupted service to the customers we serve. Like many companies, we absorbed a large revenue hit in the second quarter of 2020 and, since then, we have made considerable progress. We exited the year on a very strong run rate, with Q4 2020 revenues and EBITDA up about 4% versus prior fourth year. That momentum continued into the first quarter of 2021 results we reported earlier this month. Despite accelerated pressure related to the COVID-19 pandemic, our business continued to perform, delivering revenue growth over the prior year's first quarter, which had no COVID impact and a modest decline in adjusted EBITDA accounted for mostly by the absorption of incremental costs associated with being a public company. We continue to generate an adjusted EBITDA margin of above 70%. We delivered our highest operating cash flow quarter [indiscernible], and we converted over 90% of our adjusted EBITDA to free cash flow. We couldn't be more excited about what is in store for MultiPlan. We are hard at work executing against our 3-part growth strategy to enhance the services we provide our existing customers, to extend our reach into adjacent market segments like in network claims and Medicare Advantage and to expand our value proposition to serve other stakeholders in the health care industry, namely providers and consumers. We have made tangible progress in several fronts -- three pronged growth strategy with a number of key initiatives already beginning to bear fruit. On the enhanced front, we've deployed over 25 service enhancements to increase identified savings or service level agreements. We have another 20 in the concept phase. We also have 6 machine learning initiatives underway and another 10 that we are concepting. These initiatives span across MultiPlan's solution categories and deliver both increased savings and operational efficiencies. As we noted earlier this month, one of the models already deployed last year has already generated $1.5 million in net new customer value through February. When we extend front, we are moving quickly into fast-growing market segments where we have historically been underpenetrated. At the center of the strategy component are our most recent acquisitions of HST, which closed in the fourth quarter of last year, Discovery Health Partners, which closed in the first quarter of this year. HST strengthened their analytics-based services by adding the next-generation of reference-based pricing and accelerating our push to serve third-party administrators and health plans in the small to midsized market segment through brokers and consultants. With HST, we've closed 116 new employer groups with over 13,000 covered lives, adding value-driven health plan services that we expect to generate over $2 million in new revenue annually. Discovery added new services to our payment integrity category and introduced a new category called revenue integrity. Discovery comes with significant new relationships that expand our services and customer footprint and segment plan has historically underserved, including government like Medicare Advantage in Medicaid and in-network claims. With Discovery, we have -- we were awarded a coordination of benefit plan and subrogation contract with a large Blue Cross and Blue Shield plan with expected annual revenues of $3.5 million. We also have a pipeline of payment and revenue integrity services deals in later stages. In summary, I am extremely proud of how our company persevered through this pandemic. I'm optimistic that the worst is behind us. And I couldn't be more encouraged about the trajectory of the company. I'd like to once again thank our stockholders for their support. With that, I'd like to invite you to ask any questions that you may have regarding the company and its business. Operator?

[Operator Instructions] There are no questions at this time. Mr. Tabak, I turn the call back over to you.

Thank you. On behalf of the Board of Directors, I would like to thank all the stockholders for their continued interest and support and for attending this landmark meeting today. Thank you very much.

Thank you. The Annual General Meeting for MultiPlan Corporation has now come to an end. Thank you for attending. You may now disconnect and leave the virtual meeting.