MultiPlan Q3 2023 Earnings Call Transcript

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Provided by Quartr
November 7, 2023

There are 7 speakers on the call.

Operator

Welcome to the MultiPlan Corporation Third Quarter 2023 Earnings Conference Call. My name is Harry, and I'll be your operator today. I'd now like to turn the conference over to Shawna Gacyk, EVP of Investor Relations. Thank you. Please go ahead.

Speaker 1

Thank you, Harry. Good morning, and welcome to Multi Fin's Q3 2023 earnings call. Joining me today is Dale White, Chief Executive Officer and Jim Head, Chief Financial Officer. The call is being webcast ask questions, please press star. Thank you.

Speaker 1

Thank you. Thank you. Thank you. Our next question comes from the line of a question, please press star. The supplemental slide deck that is available on the Investor Relations portion of our website, along with the Q3 2023 earnings press release issued earlier this morning.

Speaker 1

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 ask a question on our annual report on Form 10 ks and other documents we file with the SEC.

Speaker 1

We will also be referring to several non GAAP measures, Which we believe provide investors with a more complete understanding of MultiPlan's underlying 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?

Speaker 2

Thank you, Shauna. Good morning, everyone, and welcome to the call. Well, what a difference a year makes. This time last year, I had the unfortunate job of ask a question, please. I'm just In the 4th quarters since then, we wasted no time pivoting the company.

Speaker 2

We stabilized our revenue base and reset financial expectations, ask a question, please. Formalized a new strategy to transform our business and initiated a growth plan to execute on that transformation. Ask a question. 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 3rd quarter results that were in line with our guidance ask And that met our expectation to resume growth in the back half of twenty twenty three.

Speaker 2

And during the quarter, ask questions. We achieved several milestones in our growth plan with a number of new product initiatives rolling out on or ahead of schedule. Ask With our business now stable, our visibility increasing and our pipeline of new business growing, ask questions, please. We are even more confident that we are well positioned to deliver accelerated growth in 2024 and beyond. Starting with our Q3 results, as shown on Page 4 of the supplemental deck, revenues were ask $242,800,000 And while that was 3.1% lower than the prior year quarter,

Speaker 3

ask questions.

Speaker 2

It was up about $5,000,000 or 2% sequentially. Revenues came in at the midpoint of our Q3 guidance range, Driven by increases in our identified potential savings. Adjusted EBITDA was $152,300,000 ask questions, please go ahead. Down about 12% from the prior year, but in line with the Q2 of 2023. Adjusted EBITDA was Also in line with our Q3 guidance, albeit closer to the lower end of the range, reflecting the impact of accelerated investments this quarter ask questions, please go ahead.

Speaker 2

In integrating Benefits Science Technologies or BST and launching our new data and decision science services line. Ask a question. Our adjusted EBITDA margin was 62.7%, down from 64.2% the prior quarter, ask questions, please. Again, reflecting costs exceeding revenues for BST. Adjusted EBITDA margin declined from 68.7% the prior year

Speaker 3

ask questions, please go ahead. Due to the impact of our contract resets as

Speaker 2

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 Q3, we delivered several new products to the market ask questions, please press

Speaker 3

star on or ahead of schedule.

Speaker 2

In fact, we have now delivered on initiatives spanning across each of our 4 growth plan objectives, We also have a deep pipeline of new products ask questions, please. And the road map for our 2024 product initiatives is already coming into focus, which will help us drive our growth ask

Speaker 3

questions, please

Speaker 2

go ahead. Thank you. As we noted at our Investor Day, this successive layering of new products into our revenue base ask questions, please. Our next question comes from the line of John. Hi, good morning, everyone.

Speaker 2

I'm going to turn the call over to Mr. Chairman. Hi, good morning, everyone. Ask questions about 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 9. In the Q3, we launched our smart scoring solution called ProCricer ask questions.

Speaker 2

ProCrysor leverages the combination of machine learning technology ask questions, please. 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 ask product during the Q3 and onboarded a larger customer on October 1, which we expect to translate to approximately $6,000,000 ask a question about the annualized revenue. And that is just the beginning. For 2024, we are planning additional release ask a question about the potential to increase its functionality and flexibility, including giving customers the option to attach our balance bill protection service. Ask.

Speaker 2

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, ask questions, please press star and we expect that number to double by January 1, 2024. These lives alone translate to over $5,000,000 of incremental annualized balance bill protection revenue for our HST business. Ask questions, please. For 2024, we're continuing to build out the HSD platform with our Employer Solution in a Box strategy By adding pharmacy and care navigation services and also by integrating aspects of our BenInsights technology into our HST ask a question and upselling these services to our existing base and new customers.

Speaker 2

The BenInsights technology, which ask You came to us from our acquisition of BST, we'll add descriptive, predictive and prescriptive analytics to enhance employer benefit intelligence and reporting for our HST customers. Next, ask questions. We have been focused on fortifying our leadership in NSA related claims processing. During the Q3, ask questions, please. We launched the first version of our rules based claims processing initiative and the beta version of our Insights portal.

Speaker 2

Both of these initiatives are aimed at enabling more sophisticated and better informed compliance with the NSA regulations. Ask questions. For 2024, we will continue to advance both of these, and we plan to build a service that helps payers ask questions, please press star and press star and press star and press star and press star and press star and press star

Speaker 3

and press star and press star and press star and press star and press star and press star and press star and press star and press star and press star and press star and press star and press star and press star.

Speaker 2

We will now begin the call With the administration of their qualifying payment amounts or QPAs. Let me expand on this QPA topic. Ask a question. 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.

Speaker 2

This dynamic ask questions, please press star. Continued in the Q3 when the court ruled that QPA schedules must be calculated at the planned level, reversing CMA's And for as few as one QPA scheduled to price all claims. The latest TMA ruling ask questions, please press star. We'll require a huge increase in data creation, data storage, maintenance and processing logic. Ask questions.

Speaker 2

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

Speaker 3

ask questions, please go

Speaker 2

ahead. Wrapping up our list of core service enhancements during the Q3, We introduced functionality enhancements to our itemized bill review service or IVR, and we are already starting to get traction in the market with ask the addition of a couple of significant customers in the quarter. IBR is a payment integrity service that reviews high dollar inpatient facility ask questions during the adjudication process to identify billing errors and prevent overpayments. Our IVR enhancements include the ability to assign claim data by leveraging our prepayment integrity analytics to identify and prioritize the most promising cases to pursue. Ask.

Speaker 2

For 2024, we are shifting our attention to our network based services with a plan to ask a question, please. 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 4th row of Page 9. Ask a question. During the Q3, we made solid progress marketing our new data and decision side services line, which as most of you know, includes We've wasted no time introducing these new services to our payer customers.

Speaker 2

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. Ask. As part of this effort, we launched the first two phases of PlanOptix, our software suite that ingest the newly required payer price transparency data and uses this data to deliver critical market insights to our customers. In July, ask a question, please. We released PlantOptix Search.

Speaker 2

And in October, we launched the first version of our PlantOptix Intelligent Solution, ask questions, which goes beyond simply clearing the data to helping payers with their network contracting and market expansion strategies. Ask a question, please. For 2024, we are working on a number of data and decision science services lined initiatives. This includes ask, expanding the features and functionality of PlantOptics Intelligence and designing a price transparency data solution for the provider market. Ask a question, please.

Speaker 2

This would open up a new product opportunity in a channel that is very familiar to us. Ask questions. It also includes standing up our risk scoring models as a stand alone service that can add value to every claim we process through our platform ask questions, please. And which is critical to deepening our penetration of Medicare Advantage and in network claims. Ask a question.

Speaker 2

Also during the Q3, we began to build our sales pipeline for our new B2B Healthcare Payment Service, which as we have previously discussed, ask questions, please press star. Thank you. I'm pleased to announce that we have already secured our first customer And we'll begin implementing that mandate shortly. For 2024, we continue to focus on the rollout of this exciting new service ask our customer base. So as you can see, we have been very busy, but I'm extremely pleased with the progress ask questions we have made on each of our 4 growth plan objectives.

Speaker 2

Our 2023 initiatives are on track. Ask questions. 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 MultiPlan colleagues. As I have said several times, the strategy is in place.

Speaker 2

Ask questions, please. 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?

Speaker 4

Thank you, Dale, and good morning, everyone. Before I begin, I just want to echo Dale's view that we're really pleased with our solid execution in the quarter and how we're progressing through the year as planned. I'm I'm going to start with a review of the quarterly financial results. I'll follow that by commenting on our Q4 outlook and I'll finish up by providing an update on our balance sheet and capital allocation. As shown on Page 4 of the supplemental deck, 3rd quarter revenues were $242,800,000 declining 3% from Q3 2022

Speaker 3

ask a question, please. As year over year volume growth helped us

Speaker 4

absorb a meaningful portion of the annual headwind of approximately 8% related to contract renewals with our larger customers. Ask a question. Importantly, revenues increased 2% from the prior quarter as we delivered on our expectation to resume growth in the second half. Ask a question. Excluding a $3,600,000 contribution to revenues from BST, 3rd quarter revenues were $239,200,000 down 4.5% from prior year quarter ask questions, please go ahead.

Speaker 4

And up about 1.4 percent or $3,000,000 sequentially despite one less business day in Q3. Turning to revenues by service line, as shown on Page 5 of the supplemental deck, network based revenues to ask. Network based services revenues declined about 4% from the prior year quarter and were down less than 1% sequentially. Ask. Analytics based services revenues declined about 3% from the prior year quarter, but were relatively strong sequentially, ask questions, please.

Speaker 4

Increasing about 5% from the prior quarter, inclusive of $1,500,000 of incremental BST revenues. Ask Payment and Revenue Integrity Services revenues were flat from the prior year and declined 6% sequentially or about 1,800,000 The sequential decline was driven primarily by lower clinical negotiation volumes, which were partially substituted by additional activity in our analytics business. We also had lower revenues in our revenue integrity services, which can exhibit lumpy quarter to quarter performance. Our 3rd quarter revenues reflect a sequential shift in potential identified medical cost savings despite a flattish quarter for utilization, ask questions, which plateaued in Q3 after a strong first half. As detailed on Page 6 of the supplemental deck, ask questions.

Speaker 3

At the top of the

Speaker 4

funnel, medical charges processed declined by 1% from Q2 2023 to 42,500,000,000 ask Given our claims lag, this looked more or less consistent with the mixed healthcare utilization trends in the Q2 that were reported by some of the publicly traded payers and hospital operators. Identified potential savings increased 2% from Q2 23 to 5,800,000,000 ask questions. In the core commercial health plans category, medical charges processed declined 1% sequentially to $18,500,000,000 ask a question about the financial results. But identified potential savings increased 2% sequentially to $5,500,000,000 our highest quarter for commercial health plan savings since Q1 'twenty two, ask questions, please. Reflecting our core savings performance and strength from HST.

Speaker 4

As shown on Page 8 of the supplemental deck, ask questions. Identify potential savings in our PSAVE revenue model increased 1% sequentially to 4,200,000,000 ask questions. Also as shown on Page 8, revenues as a percentage of identified savings or revenue yield was very stable this quarter, to decline just one basis point for our overall business, which includes both PSAVE and PEPM. Order to the point, ask questions. The revenue yield for our core percentage of savings revenue model, which is approximately 90% of our revenues, was effectively flat, declining just one basis point.

Speaker 4

Ask questions. As we have previously indicated, the impact of the contract renewals was fully reflected in the quarterly run rate in the Q2 and we expect our revenue yield to look stable for the foreseeable future ask questions, with modest changes up or down driven by products and customer mix, and this is precisely what we saw in the 3rd quarter. Turning to expenses. 3rd quarter adjusted EBITDA expenses were $90,500,000 up $12,200,000 from the prior year quarter ask questions, please go ahead. And up $5,200,000 sequentially.

Speaker 4

For the sequential comparison, about 60% of the increase in expenses was driven by cost increases in our core business, Which reflects the combination of investments in headcount to support our new products and services and cost to support our NSA IDR activities. Ask The other 40% of the expense growth reflects the expenses contributed by BST in Q3 2023, which was the 1st full quarter post acquisition. Ask The attribution of expense increases was similar to what we saw in Q2, reflecting delivered upfront investments we're making to enact our growth plan in our ask questions about our business and absorbing the BST cost structure and some upfront costs related to the BST integration, much of which will not recur. We expect our expense trajectory to normalize in the Q4 with expenses down slightly sequentially. As we finish the year and complete our expense budgeting for 2024, we are actively assessing our cost structure to preempt inflationary pressures ask questions, please press star and mitigate growth in core expenses to free up room for investment in our initiatives.

Speaker 4

Adjusted EBITDA was $152,300,000 in Q3 2023 ask questions, we'll be conducting a question on the call for questions. Versus $172,200,000 in the prior year quarter and $152,700,000 in Q2. Our Q3 adjusted EBITDA landed towards the lower end of our guidance for the Q3 driven by the affirmation investments in the core business and in BST. Ask questions. As a result, our Q3 adjusted EBITDA margin, including DST, was 62.7%, down 150 basis ask questions versus 64.2 percent in Q2, 2023.

Speaker 4

Excluding the impact of BST, ask questions. The margin in our core business was above our consolidated margin for Q3 and consistent with the 2nd quarter overall margin. Turning to Q4 2023 and full year 2023 guidance. We expect revenues of $240,000,000 to $250,000,000 in the 4th quarter. Ask questions.

Speaker 4

We are narrowing the range of our full year 2023 revenue guidance to $960,000,000 to $970,000,000 which implies no change at the midpoint from our prior 2023 guidance range of $950,000,000 to $980,000,000 For adjusted EBITDA, we are projecting $155,000,000 to $165,000,000 in the 4th quarter, ask questions, please press star 1, which includes less of a drag from BST. We expect adjusted EBITDA expenses in Q4 to be lower than in Q3 ask some additional expenses in our core business related to hiring for new products and additional NSA expenses should be more than offset by cost controls ask a question and a drop off of some one time costs related to BST. For the full year 2023, we are now expecting adjusted EBITDA in the range of $615,000,000 to 6.25 ask questions, please. Which at the midpoint implies a very modest reduction relative to our full year 2023 guidance range of $6.15 to 6.35 And reflects the impact of those additional investments that we have mentioned. Combination of our revenue adjusted EBITDA assumptions implies an improvement in the ask EBITDA margin in Q4 closer to our annual expectations than in Q3.

Speaker 4

We remain on track to achieve an adjusted EBITDA margin of ask 64% to 65% for full year 2023 consistent with our guidance. Moreover, we remain confident that as BST scales, ask questions, please. We should feel upward lift on our adjusted EBITDA margin, while still making additional investments to drive growth. Ask questions. Moving on to balance sheet and capital management.

Speaker 4

In the 3rd quarter, operating cash flow was $78,400,000 while our leverage free cash flow was 49,200,000 ask questions. As a reminder, the 1st and third quarters are typically our higher quarters for cash flow given the timing of our interest and tax payments. As shown on page 14 of the supplemental deck, We ended the quarter with $101,000,000 of unrestricted cash, up from about $90,000,000 in the prior quarter, with the increase reflecting our quarterly free cash flow offset by 30 $5,000,000 of cash used to repurchase $46,000,000 of face value of our 5.75 percent senior unsecured notes. Ask. Net of cash, our total and operating leverage ratios were 7.3 and 5.2 respectively.

Speaker 4

We continue to be active and disciplined in allocating our capital. Over the last four quarters, we have deployed over $400,000,000 of capital, ask a question, please. Including $248,000,000 on debt repurchases and retirement, dollars 140,000,000 on M and A and $13,000,000 on share repurchases. Ask questions. Our highest long term priority remains investing in the business, both organically and through M and A to drive growth and long term value.

Speaker 4

Ask That priority is followed closely by debt reduction. Of note, we have reduced the face value of our debt by $333,000,000 over the last four quarters. Ask questions. As we've mentioned previously

Speaker 3

and as shown on Page

Speaker 4

12, following the acquisition of BST, in the near term, we are likely to deemphasize M and A, that's near term. As a result, you should expect us to continue making a series of small, but critical organic investments to support our platform, ask questions, please go ahead. Including our new core products and our new data and decision science services line. In near term, you should expect the bulk of our incremental capital generation to be ask allocated towards debt retirement. We will continue to assess share repurchases, but as we've consistently said, that will likely be limited to a small allocation of our capital.

Speaker 4

Ask. Stepping back to the bigger picture. Our transformation is on track ask And we're very pleased with how our organization has responded to the call to be nimble and action oriented. We've deliberately accelerated some investments this year to put us in a position to deliver growth in 2024 and we expect to grow in 2024. Ask Admittedly, it's a bit of put a bit of near term pressure on our margins, but rest assured we have not lost our historical discipline around costs.

Speaker 4

Ask questions. Even now as we head into our 2024 budgeting exercise, we are prudently thinking through our cost base, making adjustments as we always do ask questions, please. And looking for ways to maintain our industry leading adjusted EBITDA margins, while creating additional capacity to fund our investments in growth. Ask. It's a delicate balance, but achieving this balance is paramount to how our leadership team manages this business.

Speaker 4

And it's absolutely part of our execution roadmap. So that wraps up my comments. I'll turn it back over to Dale.

Speaker 2

Thanks, Jim. Before we open the call for questions, It bears repeating that we've been on quite a journey over the past 12 months. The headwinds have dissipated and the tailwinds are picking up. We've stabilized revenue and pivoted to a refresh strategy and the execution of our growth plan is in full swing. We remain confident that the initiatives we are working on will amplify our growth in the coming years and that we are marching down a path of transformation.

Speaker 2

Ask a question. As a result, I see great things on the horizon for our company. And as we've said at our Investor Day, within 5 years, ask MultiPlan will be a stronger, more diversified, faster growing and better capitalized company. And as Jim just mentioned, ask questions, please. Operator, would you kindly open the call for Q and A?

Operator

Certainly, thank you. And when preparing to ask your question, please ensure your phone is unmuted locally. Our first question today is from the line of Daniel Rosyth of Citigroup. Daniel, your line is open. Please proceed.

Operator

Daniel Grossett, Citigroup. Your line is now open.

Speaker 5

Hey guys, thanks for taking the question. I want to go back to some of the comments ask that you made on utilization this quarter and the lag, as you mentioned, Jim, there's this ask There's always a flag. So the sequential decline in volumes, I think you were implying was due to kind of what ask providers and payers had said in 2Q. As we look towards 4Q and 2024, it seems like the payers and providers ask I'm curious, how that is, transferring to how you're thinking about ask for 4Q and 2024 and if you can provide any additional detail around the composition of that utilization.

Speaker 4

Ask. Yes. So maybe to talk a little bit about the arc of this year ask And what it pretends for 2024. But we saw a nice uptick ask In the first half of the year, in our savings, we saw it raised about 5% in the 1st two quarters Compared to Q4 of last year. So we saw that and it was actually pretty consistent with what we saw in ask the provider universe, the hospitals, etcetera.

Speaker 4

And it's the best way to describe it is it's plateauing. Ask I don't know whether that's consolidating to get to a higher level. We've always been a little cautious about calling the uptick. But obviously, we look at the leading indicators and it seems to be ask Ticking upwards, so that obviously doesn't feel bad for our business, but we're just not ready to call another upswing in volume. Ask But what it is not is going backwards.

Speaker 4

It's not coming down. It's not falling. But I think it's consolidating at a new level and grinding upwards. Ask. So that bodes well for our business, but we're not hanging our hat on that to for growth next year.

Speaker 4

I think we're kind of ask Planning for a flat to maybe slightly up volume environment, but very low. That's just not part of our planning process. Ask. As it pertains to the mix of our business, we've got a pretty big mix on the physician side and then we've got a pretty big portion of our mix ask On the facility side, so what you see out of the hospitals etcetera is actually consistent with us, ask We're seeing some upswing in volume, surgeries, etcetera. So that is rhyming very closely to what ask some of the hospitals have described.

Speaker 4

On the physician side, it's relatively flat. And so just given our mix, ask It does it's a little bit slower than what the hospitals see across the board. So ask To summarize, feels good consolidating in a new plateau doesn't feel like We've got risk on the downside. It's a little bit more about how do we whether we call the upside here.

Speaker 5

Ask Got it. Thanks. And as we think about 2024 and looking at your longer term guidance that you provided during Investor Day of 4% to 5%. You just mentioned Jim that you expect utilization to be flattish to maybe slightly up. Is there any change in how you're thinking about that 4% to 5% growth rate for 2024 or anything that would ask prevent you from hitting that in 2024.

Speaker 5

And then as we think about EBITDA margin too, ask Is 4Q the right margin run rate that we should think about for full year 2024? Or are there some additional investments questions that you need to make that might lead to some additional margin degradation.

Speaker 4

Okay. So let's break it into 2 parts. Ask So is utilization a big part of our growth algorithm? And the answer is it never has been. Medical inflation, ask Membership growth, productivity improvements, if you go back to our Investor Day, those are bigger pieces of the overall puzzle.

Speaker 4

Ask So it's not inconsistent with our our statements are not inconsistent with our long term model, Daniel, in terms of how we think about things. Ask I look at utilization uptick as all upside. If it really ticks upwards then that's super helpful for us. But ask Medical inflation, productivity improvements are bigger pieces of the overall puzzle. On the expense side, I think You can equate Q3 to be the nadir of our margins.

Speaker 4

And as we march into 2024 and going forward, ask I can't say that we've got we're expecting any major uplifts in margins because we're continuing to make investments here. Ask But obviously in February, we'll come out with guidance and give you a sharper point of view. But we've been clear that we're aiming for mid-60s type of margins in the business, that is deliberate. And it's also an ask indicator that we see growth opportunities and we're willing to invest in them.

Speaker 5

Got it. Thanks for the color.

Speaker 3

Ask

Operator

questions. Okay. And it appears we have no further questions in the queue today. Us to this, we'll conclude the MultiClient Corporation oh, my apologies. We do have we have just had a question virtually from the line of Madison Aaron of JPMorgan.

Speaker 6

With regards to the QPA, Seth, you had noted earlier that you're working with your payers to provide them assistance. Is there anything that ask if you could quantify around what that opportunity looks like going into next year since it's going to be incremental to what you're doing. And then as we think about margins going into the first half, I know you're making a number of investments to prepare for 2024, especially with BST. How should we think about the progression of margins? Ask, do you expect it to be under some pressure in the first half due to these investments and then to ramp up more in the second half of next year?

Speaker 6

Thank you.

Speaker 3

Ask.

Speaker 2

I can answer the first part of the question. It's still too early to size the opportunity going forward in ask 24, the federal court in Texas just released the opinions on the 2 NSA related cases in August, what was called then as TMA ask 3 in TMA 4. And it was in TMA 3 where the court found primarily for the challengers ask And addressed issues around how the QPA is calculated like prohibiting ghost rates, requiring the QPA to be calculated by specialty ask And prohibiting the payers from calculating QPAs across multiple plan sponsors. So it addressed a number of open issues. Ask.

Speaker 2

We believe the administration is set to appeal the decision and update its guidance documents to accommodate these changes. In fact, The administration just on October 30 related released a proposed rule to the IDR process ask Under the NSA and it largely focused on the efficiency and communication between the disputing parties ask And try to decrease the volume of disputes that are being submitted for the IDR process. The administration has requested comments from the industry for those proposed rules, those comments I think have to be submitted by the beginning of January ask And then we'll wait for the publication of a final rule. So it's still early in the process to declare what impact that will have ask in 2024, but we've already in the work we've done to date and the work we're doing now, we're positioning the company to respond to the ask Growing complexity that we recognize continues to come with NSA.

Speaker 4

And Rishi, why don't I just address the margin ask a question. As we go into 2024, I think there's a couple ask tailwinds, which will help lift margins and then there's the investments we're making in the business. And my first statement would be, we're trying to maintain this balancing act, Which is maintaining our margins and putting ourselves in a position to go capture these new growth opportunities. So I don't view that as ask the J curve in 2024, I think it's more of just kind of maintaining. And some of the things that are positive, we're going to get some lift ask as some of those one timers start dissipating and BST starts contributing a little bit more on the top line, ask We're going obviously as volumes increase that's beneficial to us.

Speaker 4

We've got we do have in our mix ask Some of the mix in our growth is going to slow our margin expansion down and then we've got investments in the business. So ask Think about a balancing act for 2024, in advance of providing any guidance, I think that's the best message we can give you. But ask. Q3 was certainly the nadir.

Speaker 5

Great. Thank you.

Operator

Ask questions, please. Thank you. And we have no further questions in the queue at this time. So this will conclude the MultiPlan Corporation Q3 2023 earnings conference call. Thank you all for joining.

Operator

You may now disconnect your lines.

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Key Takeaways

  • Sequential growth resumed: Q3 revenues were $242.8 million (–3.1% YoY, +2% QoQ) and adjusted EBITDA was $152.3 million in line with guidance, with a 62.7% margin pressured by BST integration and accelerated investments.
  • Growth plan execution on track: Multiple new products rolled out ahead of schedule—including ProCryer smart scoring, balance-bill protection, NSA compliance tools and PlanOptix data services—and a robust 2024 roadmap is in place.
  • Emerging QPA opportunity: Recent Texas court rulings have increased NSA complexity, driving payers to seek MultiPlan’s assistance in building plan-level QPA schedules and creating a new service revenue stream.
  • Strong capital discipline: The company reduced debt by $333 million in the past year, exited Q3 with $101 million in cash, and plans to prioritize organic investments and further debt reduction while keeping share repurchases modest.
  • Confident 2024 outlook: With a stabilized core business, expanding product pipeline and increasing visibility, MultiPlan expects to accelerate revenue growth and sustain mid-60% adjusted EBITDA margins next year.
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Earnings Conference Call
MultiPlan Q3 2023
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