Claritev Corporation (CTEV) Earnings Call Transcript & Summary

All right. Good afternoon, everyone, and thanks for joining us for the MultiPlan fireside chat here at the Citi Healthcare Conference. My name is Daniel Grosslight. I'm the healthcare technology analyst here at Citi, and I'm pleased to welcome Dale White, the CEO of MultiPlan and Jim Head, the CFO of MultiPlan. Thanks both for joining us here.

Thank you.

I'm sure I don't have to tell you this or anyone in the room that it's been a little bit of a wild ride for MultiPlan since you guys went public via AD stacking. So I'd like to focus maybe our conversation, at least upfront on a few of the big controversies that I've talked to investors about quite frequently. The first one would be on just revenue visibility, particularly given some utilization challenges more recently. The second one would be competition and the potential for customer in-sourcing. And then the third one is just via the NSA and the potential impact on your business, which seems to be influx every day.

So let's kick it off with the revenue visibility question. As I mentioned, much of this revenue visibility headwind has come about because of a lack of utilization or at least an abnormal utilization pattern this year coming out of COVID and with a potential recession. So given the lag between your procedures, your savings that you generate, revenue recognition, how much revenue visibility do you have on a quarterly basis?

And maybe -- why don't I take this, then I'll go. Talking about competition, but it's interesting. We've got a platform that serves the out-of-network market. And we -- all of our distribution channels stretch out to 100,000 plan sponsors, which are basically companies like Citigroup and all their employees. And so on one hand, there's a fair amount of visibility into the ecosystem, right, which is because it doesn't shift year-on-year. Citigroup isn't changing its benefits wildly each year. They're tweaking it and -- my guess is they're probably using MultiPlan, I'm going to take a guess. But what underneath the surface is the consumer behavior. So whether Daniel, you choose to use in network, out of network, whether you're utilizing health care, et cetera. And so what we saw last year was a little bit more of a change in the consumer behavior versus the change in the ecosystem we're in. The ecosystem really didn't change. the services we're offering, the plan sponsors, et cetera, we're all intact. And it started changing midyear. So that was one of the sources of our lack of visibility. And I guess the unfortunate news is we -- you can see it coming through our second half. All of a sudden, our savings came down, and it's kind of -- in the claims that were coming into the top of the system. We disclosed that in our commercial health plan. It started coming down, but that's actually stabilized. So I would say lack of visibility last year, absolutely because the world kind of changed, inflation, post-pandemic, a lot of behavioral changes. But what we're -- I could say visibility into '23, we're taking a pretty silver point of view that we're not expecting any upswing. And so I think -- and the other part of visibility in 2023 is we gave you -- we said we gave you a 3-fer. We put all 3 adjustments, if you will, client renewal adjustments into 1 number for 2023. And that really does kind of encapsulate it. So -- 2 of the things that were the biggest question marks a year ago, customer renewals and what's going on with the consumer. We've kind of reset that and have a greater level of visibility this year. On a quarter-to-quarter, you typically have a pretty good sense on that. But you can always be surprised because the -- last year in the second half, there was just -- there was some volatility in just the utilization of the system.

Yes. And I guess that's just the nature of the business. If there is a significant behavior change that affects the macro environment, you just don't have that visibility. .

Well, we just went through, too, right? We went through a pandemic that caused consumer behavior to change because capacity went to 0. And then last year, you had record record-setting inflation, which impacted just generated a bunch of Pocketbook issues that caused members to defer care.

Yes. So if I look at the guidance that you introduced, it seems like a decade ago, but I think it was 2 days ago, [indiscernible] around a 12% decline in revenue year-over-year and around 500 basis points of margin compression. And I think you broke out all of the headwinds and tailwinds, quite helpfully in your investor deck, which was great to see. But if we -- can you just kind of hone in on some of the headwinds, namely the lower utilization that we spoke about, the nonrecurring contract that rolled off. It's around $120 million of headwind. And then you laid out kind of a contract renewal headwind of around $86 million or so. So let's start with the first headwind here on utilization. You noticed that -- you noted that December was your strongest month since May 2022. But your guidance assumes basically that you're at the run rate of Q4. So I guess, help square that for us? Is there just conservatism built in to that number because of the lack of visibility. And when do you think you can get confident that what you saw in December that the strength of utilization in December is going to carry forward for the rest of the year.

Yes. And maybe to kind of put it into contrast, you could track our -- the quarters through last year in the second half, really Q3 was [ 2 50 ]and Q4 was [ 2 41. ] It was kind of a new normal. And so inside that, you had a little bit of a trough in October. But I would not describe December as a reaching escape velocity into a new realm. And so we are being cautious. We do think it's stabilized a little bit. Part of what was running through the system, we lag a little bit. But our December, if you think about -- just take everything we record, our performance is essentially of data service claims that were 2 months prior-ish, 8 to 10 weeks. So our December really reflected what was going on in September, October. Our October, which is a low is reflecting what's going on in the middle of the summer. And we definitely saw deferred care. We also saw capacity constraints. So I think what's happening is the capacity is lifting a little bit. Some of the deferrals are coming. And in the fall, you started seeing the classic back-to-school. Sniffles, RSV, flu, et cetera. And we look to the leading indicator. So we're not devoid of that. And it's just not clear to us that there's a concomitant kind of explosion of demand coming in the hospital sector, for instance. There's been even some volatility on that. So we're being cautious and then focusing on what we can do best with the volume environment that exists.

I think there's many of us in the health care sector who would love nothing more than to predict utilization with digital precision, right? And we're just being cautious and saying, look at what happened yet December uptick, modest -- we've built in a modest recovery going forward in utilization, but we don't want to get out of our skis.

Yes. Okay. So let's turn to the other major headwind for '23, the contract renewals. So you had 2 last year that started on 1. You have another one, which will renew by June of this year. Can you put a finer point on where the headwind specifically is coming from? Are you seeing folks direct volume to other solutions? Or is it more of a pricing headwind?

It's more the latter. And we -- look, we said that we did 2 contracts, to your point, last year. Once since the earnings call and now this one that will do by the end of the -- by end of June-ish midsummer. And all of them are built into our guidance, right? So the impact is all built into our guidance. And it's not a change in scope. It's not a change in service. It's rates to your point.

Yes. Okay. And you had predicted before what some of the earlier impacts just with 1 data point might have been. Now what we've done is wrapped it all into one big one.

And I know you're not blessing my numbers. But if my estimate was right, that would mean that, that first renewal was the vast majority of this.

Your estimate -- we will not bless your number, but you at least size based on the guidance that we've given you that it was a significant number, how's that? And so what -- and what we've seen is this washing through into the view of 2023.

From our perspective, right, it removes a considerable overhead right? We've now addressed one of the biggest [indiscernible] and controversies is client concentration and looking at those 3 and the overhang. We now have great line of sight into those contracts over multiple years.

Yes. Yes. Although I think there are some bears that will never be satisfied by what you do, but it is a great signal that you are an important partner. And if you look at the 10-K that you just filed to, your -- the revenue as -- from your top customers has remained pretty stable. So I think that's a good...

And the way we should characterize it is, we -- these are our top distributors, right? I mean in the end, the ultimate buyer of the -- of our services is Citigroup or a Honeywell. I'm naming just large corporates who make a benefit decision and they want the MultiPlan offering as part of it, okay? So it's very hard to actually change that year-to-year, 100,000 plan sponsors. We dissipate off into the market and the choices are made at the plan sponsor level. So there's no light switch in there, because -- the HR lead or the benefits manager or a large organization is not bouncing around on their benefits choices year-to-year. They're tweaking it. They're enhancing and they're -- but generally speaking, the auto network is not something that comes up and is thrown out 1 year and brought back to next year.

Yes. Its interesting. We just had our panel with the Head of Citi's Benefits and our consultant partner. And yes, it was very in line with what you just said. But I think this year is a little bit odd because of the concerns around a recession. So I'm wondering, you've always said that relative to another product in the market that's reference based, MultiPlan is a little more generous for the employee because you're not balance build as much right. But in times weaker economic times, I'm wondering if the balance of power here moves back towards the employer, where they're -- now they're really looking closely at ways to save money and quit switching to a reference-base reprice or be a way that they save money in these more challenging times.

Dale, maybe just start with the big picture issue cost, right? It's all about cost, right? So I would say that -- I would say it's all about cost and players are always looking for ways in self-funded city and others during now are always looking for ways to save on the total cost of care. Reference-based pricing, not a new service. It's been around for a while as a form -- it's one way to do that by lowering the rate of reimbursement to providers. HST, our reference-based pricing arm has done very well and is in that same area and has done extraordinarily well and hit with -- in that middle market where the benefits and employers are struggling to provide a comprehensive set of benefits to their employees and reference base pricing helps manage the cost of care, so they can put more back into their benefit packages.

Yes. Let's go to the margin headwind for '23. I think you pointed out around 250 basis points of headwind -- incremental headwind. Are these headwinds more structural in nature? Or are you making significant onetime investments in '23, which won't recur?

I'll have to do the math on the bridge. So we exited Q4, that kind of is the run rate of the business. So we're a fixed-cost shop when you really get down to it. We don't -- if revenues are 10% higher or 10% lower, our cost base doesn't flex that much because it's basically people in a platform. But what you heard from us on that was we took our fourth quarter and when we did identify some cost savings, we got smart on some components of external spend. And we found about 4% savings in our cost base. Some of that was given back just on the rising cost of salaries and things like that, right, merits, et cetera. And a big component of our cost base is salaries, is people. But we are also making investments in the business, and I think that's the real story here. So we did have to make some investments in the infrastructure, NSA, in particular. These aren't big numbers, but marginally, we had to invest more money back into NSA to kind of deal with the exploding IDR volumes and support our clients. We're in the infrastructure. But importantly, we're investing in new products. And that's what Dale had highlighted is kind of 4 new products that we are launching throughout the course of this year towards the back end largely. And that to us is pretty interesting because between that and the capital expenditures, what you're hearing from us is we're finding really good opportunities to launch new products into our existing customers that are essentially an upsell and the investment required is not dramatic. And nothing's even over much $5 million maybe, but $1 million to $5 million in terms of size. Those types of investments that could yield multiples on revenue and the opportunity. That's really good news for us because we're finding places to invest.

Yes. Yes. So -- and I know you're not giving '24 guidance yet. But if I -- if we think that your costs are largely fixed, and you're going to drive growth through some of these new products as well as your core business. and there's not a lot of incremental investment that you need to make, $1 million to $5 million. As you return to growth in '24 and beyond, should we expect to see margins improve because you do have high incremental margins off of that?

Yes. I mean so if each $10 million that comes in could be an extra point, right? It's rough justice. So there's a natural bias for uplift in our margins, okay? And what's going to offset that is just making sure that we're continuing to invest in the business. I think maybe the right way to say it is -- we can show some modest uplift over time. We're not going to get back to 75% margins. We don't think that's -- what that says is we're devoid of investment opportunities. But we also don't think there's downward pressure in the sense that, that fixed cost base really is -- if we're finding more revenues, we should be fine. And anything we're kind of adding into the mix, most of the opportunities we're looking at are basically in that corporate level margin opportunity. So there's no mix shift in a dramatic way.

Got it. So should we think about this business as operating more in the mid- to high 60% margin?

That feels much more like the new [indiscernible] and probably healthier.

Yes. Yes. Let's talk about the model in general because there has been, I think, some more products in the market that charge on a PEPM basis versus a percent of savings where you generate a majority -- a vast majority of your revenue right now. Although if we look at your financials, PEPM has become more prevalent in terms of where you're generating your savings. So can you just talk a little bit about how the market is evolving, perhaps in terms of shifting from percent of savings to PEPM, if at all, and how you're responding to that?

Sure. So on our -- what we'll call our legacy platform, mainly our add of network cost savings, the model hasn't changed, right? The same way it's largely intact, the way we've been compensated as a percentage of the savings is largely intact. The reason why you see growth in the PEPM as HST. HST's model is a PEPM model. And so with its growth there, you've seen the growth as we played it out in the deck. As we go forward, now you look at the 4 initiatives that are in flight to be deployed this year. And they're all aimed at our core, right? So these are enhancements to the core which largely will have the same pricing model as our core. The service that we said we were announcing a new service line, data analytics, I expect that, that could be a different pricing model, right? That could be a different pricing model.

But as of now, no pushback from your clients on the pricing model as a percent of savings? Okay. Let's dig a little deeper into those 4 new products that you laid out. Can you just spell out for us kind of where you're investing most of your time now? And I guess, more importantly, the cadence of that?

Sure. Jim and I, look, we've been in place for a year and for 15 months in these seats. And we see with -- this company has an incredible platform, incredible client relationships, one of its strength is its payer relationships. And on this side, it has access to millions of claims. And those 2 assets are tough to beat. We just want to take advantage of, and we want to take advantage of them with more product. And so we've gone about identifying with our team and with our customers. I mean these 4 product launches -- it didn't come out of an end of the age room and now we're going to go out and try and sell them to our customers. This is our customer wish list. That's the benefit of having long and trusted relationships with your customers. We're sitting across the table collaborating on what their pain points are and what we can do to deliver more product to generate more value and more savings for them and their employer customers. And so we're focusing on bringing -- one is to bring AI and machine learning to the claim smart scoring to how you route the claim. How do you take a claim that it comes in our front door and routed to the solution that maximizes the savings opportunity for the payer, drive it to the right answer. So that's -- the lift is on our end, it's large IT lift, and we'll be ready to deploy by the end of this year. We're doing a lot of work in NSA. We took NSA what was -- I think you've identified it as a controversy, but we've made it not -- we didn't think it was a controversy. It's not a controversy. Most people don't today think it is. It's a real strength of the company for us. And we've now taken that and we're adding to it. So we're bringing analytics, reporting, client portals. We actually have a client working group together that where we're sitting around developing the product. So that's another area of focus, right? Continue to build more in those surprises area. Third, we're doing is the refreshing IVR, right? We're taking itemized bill review and building that. So those are one. And then the fourth one is we're bringing a product to the HST platform, which will address the the no surprise -- non-surprise bills. So not the emergency bills, but the other bills and address the balance billing issues associated with that, and it will be part of the HST platform. So those are the 4 products, all aimed at our core. And then the fifth is the data service and data analytics business that we're working on. Now in parallel, we're advancing more products. So we're advancing more products to be launched next year. So we're doing the advanced work needed too much this year. We have the 4. We want to do it right, and then we'll launch those in 2024.

Okay. Great. So clearly, a lot in the hopper right now, and so look at your growth rates going forward, longer-term growth rates. I think you've said before that mid-single digit is kind of where you should be at. How much of that growth to mid-single digit is going to be the core analytics, networks, AI solutions? And how much is going to be from some of these newer products that are in development?

So in some ways, if you want to think about how we think about the longer-term growth algorithm, look at our bridge and essentially get rid of the headwind part and maybe say in the longer term, there's a little headwind because it's always -- you always give back a little bit of the volume and the inflation and the productivity gains because they're big customers in the core. I'm sorry, at the national account level, right? But we have a pretty big revenue business outside of that in regional, the other Blues, HST, et cetera. So between that mix, we can get -- we think we can get to a mid-single-digit type of algorithm. The new products are on top of that. And I think that, that 1% to 2% could be -- maybe lift up a little bit as we start seeing some of those things terminate.

Got it. Got it. Okay. Let's turn to the second controversy that I have identified.

That was just the first one?

That was just number one. Competition. This has obviously been top of mind since you used back. And really, it's the threat of in-sourcing rather than competition from other similar companies that we get? Because I think that there's no one really that can do what you do at the scale that you do it, except for the plants themselves. We've already touched on this a little bit. But what's preventing your clients from in-sourcing to their internal solutions, especially as the plants get bigger and more vertically integrated in technology with side United by Change Healthcare. And I suppose, more importantly, than in-sourcing itself is the threat of in-sourcing to really take down pricing, which is what happened on these recent contract renewals.

Well, I'd say the best indicator of in-sourcing is we've been doing this for 42 years. And they've had ample -- clients have had ample opportunity along the way to in-source their services. And we come to your point, Daniel, we have size, scale. We have -- we're able to do it at a cost that's less than them. I mean look at no surprise, no surprise was a great opportunity for a client, for a competitor to come in or to in-source and that didn't happen, right?

That was the biggest RFP in the last 20 years.

And in our case, as we've announced, we have bought -- 2 clients made decisions, one to in-source. And that was, to Jim's point, it was the biggest RFP in years, and it didn't happen. Somebody could have taken our block off and it didn't happen. So it's all about providing value. It's all about providing innovation. It's all about driving that value at a reasonable price and performing. And it's those variables that create a lot of stickiness. I mean -- and I'll speak to a surprise bill, because that was an opportunity and we were there ready to be deployed on January 1 in less than 12 months.

Yes. And let me just give a couple fun facts. We've -- we're close to $500 million of investment in capitalized software in our platform. And a lot of that is actually configurations for our customers' IT environments. So one of the other parts about it is not just cost, but it's like, "Oh, gosh, I'm going to have to recreate the system to allow us to do this. The other part is we are a trusted, call it, clear -- we're not a clearing house. We're a trusted adjudicator of all this between the 2 parts of the system that are oftentimes clashing pretty hard and litigating. And that is between the providers and the payers. So -- our independence is actually really important. So between independence, the investments we've made, we've sharpened our prices. The in-sourcing equation gets tougher and tougher every bit we continue to invest and every time we sharpen our price. And the idea is I can do better, but I have to go tell 20,000 plan sponsors that I can do better than what they've been doing for 20 years. That's not easy. Your HR person is like that's an interesting proposition. I'm not willing to do that because I don't want Daniel squawking -- Daniel and 20,000 other people squawking at me because I made the wrong decision.

Yes. Makes sense. And I know you can't comment on this directly, but last year, we heard a lot about Naviguard and United. And -- we haven't really heard a lot about Naviguard recently. It seems to not be a huge factor in the market, at least not yet. And if I look at your 10-K, which you just filed, around 32% of your revenue is still coming from United by far your largest customer. But my question here is if an ASO client wanted to move to a product like Naviguard, how much notice would they need to give you, how much visibility would you have into some of that attrition at the self-insured level?

It varies from client to client. In terms of the visibility that we have. I think most of those, you said big clients. So most big clients renew...

1:1 .

1:1 , right? That's the biggest change. Clearly by -- typically, in some cases, we have visibility going in. And in other cases, we'll have visibility by March. Sort of -- because by then, we'll see the runout if somebody changes. And there's always change, right? There's the big, if they make a move, they're usually moving to one of the others. And so we may see it over here and then we see it over here with another carrier. If it goes to a completely another solution, we'll either know that in advance with some or we'll see it in our claims by March.

And we've seen boomerangs.

Yes.

Let me explain that. Meaning it goes one direction. Then a year later, it comes back. And so we -- the right way to describe it is we get a general sense from the, I'll call it, our big distributor partners, kind of membership up, down, sideways kind of thing, and you can track their ASO books through their filings, right? And generally speaking, it's kind of trending upwards of a couple of percent growth each year. Some are flat, some are up a little bit. But again, the reference-based pricing product is better suited for smaller customers, lower end of the market, maybe lower wage types. There's nothing majority about it. It's just that that's where the cost sensitivity seems to be most direct. Maybe not at the larger end of the market. Those are the big, big accounts that will switch over. But -- so we have a sense of that. But it's also -- there's a lot -- inside the competitive game between those platforms. We kind of see -- we see -- sometimes we see accounts going back and forth because they make switches from one platform to the other, but it's not a sea change. And one of the reasons why is each employer is not that big of an overall puzzle. It just isn't. We've got 60 million members ultimately through 100,000-plus employers. Our exposure at the plan sponsor level is quite small.

Got it. So sitting here today, what -- how much -- I guess, I'm trying to get to how much visibility you have on potential attrition versus what you'll have in March? Are you kind of like...

I think we probably -- yes, I think a fair amount of visibility is just not digital.

Yes. Got it. Okay. With the last 8 or so minutes we have here, let's talk about, we'll call it, a noncontroversy, controversy. Yes, NSA.

The weather?

I remember actually last year when you were at our conference, we were talking about this as we have been for the past 1.5 years. And you said -- at that time, it was -- the rules had just come out around the QPA. And it seemed like a very restrictive rules making process in favor of the payers where the QPA was effectively the fact of benchmark. And at that time, I think you said, well, there's some litigation around this, which might prevent that from happening and [ don't ] behold a few, I think, a week later, so that Texas lawsuit was settled in favor of the Texas physicians, which made the QPA less of a benchmark. And then this year, it's a little bit of a deja vu again because we have another lawsuit out of the Texas physician group. So where do we stand now on the utilization of the QPA as what was effectively a de facto benchmark in the IDR process? And how do you think -- do you have your crystal ball because it worked so well last year? Where do you think that goes eventually when some of the rules making is finalized?

I think it's -- all of that -- it's a great question. I mean from our perspective, in terms of the no surprise, last year was a learning year for everyone. We were priced -- as we said, we priced almost 1.75 million surprise bills on behalf of our customers. And the work we do, even despite the litigation in connection with the IDR, we've seen most of our work is done taking a surprise bill claim in identifying it as one, applying a client's QPA, returning it to the client, and they pay it. And then if the provider is unhappy with the reimbursement they are obligated to reach out and enter into a negotiation, we do that. That's where the lion's share of our work takes place, even under -- even with all the litigation that's taking place around it where the litigation has been focused is in the IDR process. And we -- as Jim said, we saw an explosion in the fourth quarter of IDR request, still a small fraction of our overall volume. And what the rulings did is it made the arbitration process more balanced between the payer and the provider. And so with the ambiguity, with the rules change by design, when we talked this time earlier last year, we kept -- we designed our IDR process to be nimble and flexible, regardless of which way the pendulum swung, and favor the provider or the payer, and that's paid off for us. So we're comfortable where we are in terms of the rulings. Are the rulings, it's a more balanced approach and the payers continue to rely on us and making [ nuisance ], handling and managing the IDR process on their behalf under the rules that are in place now.

Got it. So would -- I guess if a bulk of your work is done before the IDR process itself, with any major rules changes have an impact on...

Bulk of the revenue?

Yes, the bulk of the revenue really.

Not really.

I mean I think the earlier in the year, the idea -- if you could do the math, [ 50-plus thousand ] on 1.7, it's like 3%, right? Early in the year, it's even less. So it kind of has exploded. We think it's going to -- it will come down a little bit. There's a little bit of a -- let's throw some step up against the wall. And CMS responded by making it perhaps a little bit more costly to play the game, which is they raised the fees on both sides. And in the arbitration process, if you're on the hook for both, you just kind of made it more expensive to play the IDR game. We were seeing stuff that was -- claims that were coming in that were below the fees. So it was not necessarily at least from the provider side, I think there was a little bit more of a test and learn kind of approach versus an algorithmic decision going on in terms of whether it was a smart idea to put it into IDR.

And I think one of the latest litigations is aimed at that. It's challenging, the fee increase, right? So there was a $50 fee that went to $350. And now I think they're litigating the...

And $50 x 2 for the loser or 350 x 2 for loser. So 350 is -- you got to -- by definition, you have to be playing for more than $700. And the claims themselves are not 10,000 at a time. There are a couple of thousand.

Look, it's in line with what we expected, good. It's been steady. Despite the decrease in utilization, this has been steady. ER visits and emergency care has been steady. We've turned it from a controversy into a strength of the company. We're investing in it. We're collaborating with our payer customers on what they need more from us as the process settles in. So we're working around analytics and bringing machine learning to the IDR process, developing client portals, giving them dashboards. So they, on a real-time basis know exactly where their claim volume sits inside our platform. All that work is being done now and will be launched later this year.

Got it. Okay. So putting that all together at the beginning of last year, you dimensionalized the overall headwind utmost a 2% headwind. Is it now a tailwind? Are you now making...

Well, we're always making money off it. It was the revenue -- the revenue -- it was the revenue headwind, if you will. And that -- I mean, one in-house and the other one to a very small vendor, and that hasn't changed. So there was a little bit of a headwind. But at this point, we kind of think it's: a, it came in right on track otherwise, and it's very steady to put a little bit more resource against it but not -- I don't think -- it's not like it's changing the margin dramatically; and now we're kind of in a position where we feel like there's probably skewed towards opportunity. But this is very much a strength of our business. The harder it gets, the more complex, the more ambiguous it gets, the harder it is for somebody to do it themselves. -- because we're making all these investments. And the more analytics we can put around it, that's real value. And that's where I think the bar just keeps on rising.

Yes. Yes. in the last minute or so we have with you today. Let's talk about capital deployment priorities. And I think there's 2 major ones that folks are focused on. Everyone obviously realized that you're investing in the business. But in terms of debt paydown and M&A, 2 big categories for you. How are you balancing those 2 areas of deployment?

Last year, we talked about the construct, the priorities, investing in the business, M&A, debt repayment and then to a lesser extent, share. And that as we pivot into this year, it's exactly the same, but the cost of capital just went up over the last 12 months. And so you saw that we -- sitting on cash, had a little bit more cost to it, and so we started addressing the debt in Q4. We bought some back. But as you go forward, think about our stock of capital that we have on our balance sheet today, more than enough to operate. We don't have to operate with $300 million of cash. And then we're going to generate cash going forward. So our allowance is that pie that we have -- and it's -- a lot is going to be towards debt retirement. The M&A we identify doesn't speak for more than maybe 1/3 of our -- of the capital that we're going to have available over the next couple of years. And I think on the other end of the spectrum, we're kind of saying, listen, the authorization was important. We want to make sure that we have capital to allocate towards share repurchase, if necessary, but it's not the main event. We made that clear. It's not the main event. We need to chip away at our debt stack, and we'll do that over time. And we know -- we want to put ourselves in a position where we have a smooth refinancing in '27.

Okay. Well, we are out of time. [ Shawna ], do you need to read? Okay. Guys, don't worry. Don't see the Citi. Thanks, Dale and Jim for joining us. Good to be in person with you.

Yes, very much.

Thank you, everyone, for joining us this afternoon.

Great.

Thank you. Thank you.