Claritev Corporation (CTEV) Earnings Call Transcript & Summary

Thank you, everyone, for joining us for our next presentation. Looking forward to a great presentation. We have Travis Dalton, Travis, President and CEO of MultiPlan, just joined the team a couple of months in. So we're excited to have him. Thank you for coming. Jim Head, Chief Financial -- President and Chief Financial Officer. Before I kick it off, Shawna, I think she's going to read a quick disclaimer. She's here. Sorry.

Good afternoon. So just a quick reminder. As we have up on the screen, our remarks and responses today may include forward-looking statements as outlined on the screen and actual results may differ materially from those forward-looking statements. A number of these -- a summary of all of the risks can be found in our SEC filings and our most recent 10-K. Any such forward-looking statements are based on our information as of today. With that, I'll just hand it back over to you.

Thank you. Thanks, Shawna. And again, thanks to the team for joining us in the conference even.

Travis, I figure a good place to start. A couple of months in, I know we've touched on this, we had conversations about this. But for the audience, maybe you could just touch on your observations a couple of months in, what -- obviously on your call, you laid out a new team, new members and team, new COO, new leaders on the sales side. So a handful of those things and kind of what your vision is for the company now. Like I said, you've laid out some initiatives, some guidelines. Maybe you could just walk us through those guidelines and what you've -- kind of what your observations are on the first couple of months here.

Okay. Well, first of all, thanks for having us. We appreciate it. Yes, it's been an interesting 2 months. I'm not going to lie about that. I -- my prior experience kind of just briefly what I was doing before. So I was at Cerner Corporation. I was part of a really good growth story over a multiyear -- over a 20-year period, working in health care for over 22 years. And then spent several years at Oracle running all of Oracle Health. So I was responsible for all the global assets in 32 countries, about $6 billion of top line, et cetera. So growth, public company stuff, health care, serving it in that way. I kind of looked at MultiPlan, I'm like, okay, hadn't -- interestingly, when I was called about the opportunity, I never heard of the company. So that was -- the first interesting observation was like, ehh. And then I started looking at their little demographics, their little optics on the organization. Let me at least take a look at this. some fundamental things need to be there for -- to be interested in something. Great clients, great team with core values and kind of a mission that matters. Dug a little deeper, like the products work really well. They deliver a lot of value. I'm hearing that from our clients when I talk to them. We've got market segments that I think we could capitalize on today that aren't fully served by us or we could be more competitive if we focus. So we're going to focus on certain market segments in a different way. And then we have some untapped assets, I think, on the data and decision science side that we can focus on. So when I map those 2 things together, I'm like, this is a pretty interesting opportunity to drive growth. And my assessment was that, on a personal level, I had something to bring that could be a value for the company. We'll see about that. I hope so. But that's kind of the way I looked at it. As I look at the business, it will be -- folks may get tired of hearing my -- how I talk about it, but I'm going to talk about it the same way over and over. And clarity alignment focus is how you run a business. So clarity of the purpose. So everyone on our team knows what we're here to do, which is to reduce costs and take costs out of health care. That's what we're here to do. Alignment of the organization. So we've added some talent. We brought in a COO and some additional sales talent. And we're aligning the organization with what I think was a strong management team, which Jim is here representing, along with a couple of new points of view. And then focus on operational metrics. So we've developed 5 key areas that we're going to focus on, which is focus on our core, grow in our adjacent markets, which is be very aggressive in selling into those areas. Operational excellence with data, innovation in our people. And if you do those 5 things well, and if you have both forward indicators, and current indicators in a moment, I think you can run a successful business. And so the basis for the company forward will really be around that. And then furthermore, and then I'll pause so maybe Jim can get a word in here today. But I think being fit for growth is really important. And when I say that, I mean, we're going to have -- we're going to run the business with data and information and good sales processes and product life cycle. So MultiPlan was not -- hadn't been a product company over its past. I come from product environments. And so to me, part of the job is, can we take market insights, can we assess those insights, size those markets and then make more stuff with more velocity that we can drive into a captive client base while we search for additional growth in new segments and otherwise as we go forward. So I think we're on a journey to a maturation journey in that way that will yield different results for us on a long-term basis as we serve our core clients, as we sell more aggressively. And then ultimately, I think we break into new market segments that I haven't been shy talking about, which is provider health and other parts of the continuum.

Yes. To that end, can you walk us through -- you had talked about that, I think it was 30 performance initiatives on the call. Can you kind of wrap the -- for us, what really is the core, which gets a central message in those initiatives and what your expectations are internally for your new platform?

Yes. As I mentioned, there's kind of 5. So we're -- as a strategic and operating plan, we're going to focus on the 5 pillars, which I just mentioned. Inside of that, you'd have a set of metrics in each one. And then throughout the whole organization, everyone would line up to that. So you get organizational momentum. Depending on the vertical, it's different metrics, but it's things like what does our sales pipeline look like and how do we assess that pipeline on a weighted average. Do we have sufficiency? Do we have volume? And do we have growth? SPG. So measuring that in a very specific way and astutely will allow us to apply our resources in a different way. What is our code quality? How much code are we generating and putting down? What are our air rates in that code? Efficiency metrics like that. So it's things that -- it's not just the output, which is your results on a 90-day cycle. It's actually the things that you're doing inside the business that give you belief that you're actually on a forward trajectory over time or are forward-looking indicators. And we have some other with our people. Are they getting trained? Are they progressing their careers? Those kind of things. So if it's a great place to work, we can attract talent. I think we can ultimately be more effective in the market as well. But all of those things, in addition to what you would call standard metrics that many of you track every day as it relates to our business.

And in terms of innovation in the existing kind of, we'll call it, I guess, the new product platform, the acquisition of BST last year, PlanOptix you talked about on the call, I think HSC is one. Can you kind of frame that opportunity and how would we think about that opportunity going forward?

Yes. I -- the way I've classified it, as I mentioned earlier, what we're thinking inside of the company is the fundamentals of running the business, which I just noted in getting the fitness for that, but then there are horizons for growth. So what are those horizons. We kind of characterize 3 horizons. So one is serving the core market today, which is our large accounts and our current customers with more product faster, okay? Make goods -- make more better stuff to put it plainly. That's important. Secondarily is using products we have today and horizontally moving them into other market segments, brokers, consultant, TPAs. Building off of our HST platform to sell more aggressively against our competition in those areas, but also into white space and opportunities that we have. So that is what I would say is Horizon 1. We can do that today. Horizon 2 would be do that better and faster with more focus as your organic growth capabilities develop, and then look at new market segments. Everyone knows, I came from a provider world. I think we could serve provider health systems. I think PlanOptix is an interesting tool. I think it has transparency capabilities. I think that our data and decision science business can bring analytics and risk models to help that are well beyond the market that we serve today. And I think that's a huge opportunity. We have a market research group together today that we're working with that's helping us develop use cases that we could sell over time. And that's a multiyear journey. And then ultimately, we start to really hit on all those elements, and we see if there's something there related to our data platform. We're working on some platform assets and otherwise as we go forward that if you look at -- you look 3 years out, 2 years out, I don't -- I hate to use this word, but I said in the last meeting, but people need to give a you know what about MultiPlan. And what makes you give a you know what about MultiPlan? Well, it's tech forward. We're using data in interesting ways. We serve the continuum in a more broad way than we do today. We're not just this best kept secret in health care that serves a specific niche in health care. We actually bring value across that continuum. I firmly believe that we could take that journey. And that's why I came was to try to take that ride, which -- and I got to get everyone in here and others to believe in that because they've only known us as one thing in the past. And we're more than one thing today, but we haven't told our story very well. And so we'll invest in core, HST, BST with data assets and new market entry. Those are the things you'll see us investing in.

Does -- I know you've been out to see your -- kind of your top 10 clients. I mean, what has been their feedback? What do they communicate to you about either core or opportunistically?

It's been -- I mean, I had to joke with the team, I've been going to see these folks and I'm like, how much have you teed these conversations up because they've been very positive on the value that we bring. I mean, I'm very much embolden by that. I mean, the discussions have always been, we love your team, we love your people. We love the way you guys operate and the integrity with which you do business. We love that. And the solutions you have today add value. Do more of that. So bring us more value. Bring us more capability. So it's been very positive. I think we're priced competitively in the market now. I think we're in a good place. I think our activity going forward, you'll see that as we look at contracts that are upcoming. But it's been generally very, very positive conversations, honestly.

And you talked -- you hit some metrics that you had discussed, I think on the -- I think it was the first quarter call, on 4 new logos. And I think you talked about sales opportunities and so forth, [ 70 ]-plus. Can you just elaborate on those kind of initial opportunities and what you've gained from that?

Yes. I think we'll -- again, those new logo opportunities were primarily in our HST business. What I didn't say was we also took 3 from competitors. So I'll call that plus 7. And that's something that hadn't happened for us in a long time. So what I -- as I look at that, it's -- we're not going to let someone have our lunch money going forward. We're going to compete much harder in those markets. So new logos. We're going to keep track of new sales. We're going to look at that year-over-year. And we're going to really aggressively look at what we think our white space is versus where our resources are allocated. And in my view, the data is suggesting that our resources aren't all fully allocated where our best opportunities exist. And I think that that's an opportunity for us, frankly, as it relates to capital allocation, but also the allocation of time, energy and money and people inside the business today. And they're all the ones I've talked about. NSA, we view as a positive for us, ultimately. HST, I mentioned. Payment Integrity. In-network capabilities. Those are all big opportunities for us if we can execute.

Specifically to NSA, where do you -- how do you frame that opportunity? There's so much noise out there, if you will, right now in NSA and be it the provider payer community. I mean, how do you -- where do you see that opportunity?

I see us as -- well, I see it in a couple of ways. One is, I don't see it going away. So I see volume continuing to potentially grow there. I think we're a small percentage of the total market today, like many others. So there's market share potential to take there. And we're focused on using AI and other automation inside of that solution to where I think we could get better at it. So fewer errors, higher throughput. As you work through that and you work through your backlog of cases, ultimately, your solution on a value basis gets better. And so with more market share to go, more automation to be done, I view that really as an opportunity for us to positively impact the business. And we're -- it's very close to what we do on the other side of the network. We very much support the aims of the administration, interestingly. You might not pick that up in some of our coverage. But we eliminate balance bills. We actually do that. That's what we've done for decades. So we're going to keep doing that, actually.

And in light of kind of capital structure where the equity trades and so forth and so on, and the message. I mean, how do you regain confidence? How do you get shareholder confidence back? How do you -- bond hold means it's transitioning over to Jim now but...

Everything gets out and then swirls of liability management are out there and things like that. There's no silver bullet on this, Larry. I think the -- I think a couple of things. Number one, we need to execute. We have been unequivocal on our need to continue to chip away at the debt stack and grow the business. That hasn't changed. So you're not seeing -- we're not going to change our strategy in lieu of things widening out. I recognize a lot of investors are not happy about it, but on the other hand, there's no panacea. We are going to stick to kind of our mission, our north star of trying to get to a regular way of refinance with the lowest cost of capital without damaging our ratings along the way, okay? That seems trite but it actually is kind of the way we're organizing ourselves. Now having said that, we've been opportunistic about managing our capital. We -- if you've seen, we've been buying bonds, we bought the holdco converts over the last couple of quarters. Last year, we went pretty deep with our cash balance to buy the unsecureds. Everything looks juicy right now. I wish we had more cash lying around, but that doesn't mean we have to change our strategy. So we do have to get our cost of capital back to where it was, and that's through proving it out. And it's also not -- and I'm kind of grinding through some of the perception issues that exist. So back to Travis' point. We do need to get some simpler and more consistent messaging around our value in the system, which is having looked at all the data and understanding it, we really do provide a valuable service that's widely accepted 98% of the time and does good things for consumers and employers, but also is valuable to the providers because they need to eliminate friction. And so that story has got to continue to come out. There's a lot of, obviously, swirl around court cases, things like that. We're starting to see a little bit more of a balanced set of data out there. The Rand report came out earlier this week talking about hospital prices, et cetera. Very consistent with the data that we've seen in our system. So it's going to take a little bit of time, but we're not going to change our strategy dramatically other than grinding it out a little bit more aggressively on the stakeholders that matter to us, including government.

And since you kind of douche on it, and recognizing that -- the scope of what you can say is maybe very, very limited, but you're -- in regards to some of the noise, as I think you had put it, in regards to lawsuit and the allegations of the Times article in the not-for-profit and then recently, I think it was Community Health or certainly publicly came out and filed suit. How do you prepare? How do you think about that, understanding that your limited in scope as to what you can say? But is there much you can say on that?

Yes, I think -- well, we were aware that there was going to be some copycats or pile on, on the antitrust stuff that was expected, if you will. Interesting, and I would just note that there's been an interesting development in that antitrust theory last week in Nevada, I think Las Vegas Court. They had a similar suit in a different market that was -- the motion to dismiss with prejudice went through. It was dismissed with prejudice. Cendyn was the case. C-E-N-D-Y-N. And it had a lot of parallels to our case. So in some ways, this is going to play out. We like the facts that we have. We've been around forever, and we think we've provide a lot of value to hundreds of thousands of plan sponsors and millions of consumers, though our services are bought and sold that way. So I think that's going to play out, and we like where we stand.

Okay. To that end, I know we had touched on it earlier lunch but the retirement general counsel. I mean, thoughts, maybe that's back over to Travis and...