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Hello, and welcome to today's MultiPlan Corporation First Quarter 2023 Earnings Conference. My name is Bailey, and I'll be the moderator for today's call. All lines have been muted during the presentation portion of the call. There’s an opportunity for questions and answers at the end. [Operator Instructions]. I would now like to hand the conference over to Shawna Gasik, AVP of Investor Relations. Thank you. Please go ahead.

Thank you, Bailey. Good morning, and welcome to MultiPlan's first quarter 2023 Earnings Call. Joining me today is Dale White, Chief Executive Officer; and Jim Head, Chief Financial Officer. The call is being webcast and can be accessed through the Investor Relations section of our website at www.multiplan.com. During our call, we will refer to the supplemental slide deck that is available on the Investor Relations portion of our website, along with the first quarter 2023 earnings press release, issued earlier this morning. 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 description on our annual report on Form 10-K and other documents we filed with the SEC. We will also be referring to several non-GAAP measures, which we believe provide investors with a more complete understanding of MultiPlan's underlying operating results. An explanation of these non-GAAP measures and reconciliations to those most comparable GAAP measures 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?

Thank you, Shawna. Good morning, everyone, and welcome to the call. I am excited to share with you today the meaningful progress we are making on a variety of fronts. It's an understatement to say we've been busy this quarter. So let me give you an update on our business results and progress against our guidance, our most recent contract renewals and most importantly, our growth plan. First, we've delivered results toward the higher ends of our revenue and adjusted EBITDA guidance ranges for the quarter. We will review the details of the quarter in a moment, but I wanted to underscore that the first half is playing out as we expected, and we are reaffirming our 2023 guidance. Second, on our fourth quarter earnings call, we indicated we would renew another multiyear contract with a larger customer in the first half of this year. I'm pleased to announce that we have completed this renewal in Q1. We now have renewed multiyear contracts with three of our larger customers since the third quarter of last year. As a result, our visibility in our business has materially improved and we are increasingly confident that our revenues are stabilizing and poised for growth over the next several years. As we communicated last quarter, the cumulative impact of contract renewals with these larger customers, including this latest renewal is already incorporated in our 2023 guidance. Third, we are executing on our growth plan. We are on pace to launch several new products and enhancements within our core service lines this year. I am also pleased with the significant progress we have made forming our new Data & Decision Science service line, which will be instrumental in expanding our footprint beyond our out-of-network claims processing and deepening our penetration in larger and growing markets like in-network, commercial health and Medicare Advantage. In fact, we will soon be launching the first solution in this service line, which I will describe shortly. Finally, we continued to demonstrate our capital flexibility. For the second consecutive quarter, we allocated $100 million of our cash balance towards the reduction of our debt. In Q1, we repurchased $137.8 million of face value of our 5.75% senior unsecured notes in the open market. We also took advantage of our reinstated share buyback authorization to repurchase $5.7 million of our shares during the quarter. With $266 million of unrestricted cash at quarter end, we still have ample flexibility to pursue our capital priorities. Turning to our first quarter results, as shown on Page four of the supplemental deck. Revenues of $236.6 million and adjusted EBITDA of $156.3 million were both in the top half of our guidance range -- our guidance ranges for the quarter. Revenues and adjusted EBITDA each declined about $5 million sequentially. The external environmental showed further signs of normalization with volumes of both build charges and identified savings in our core commercial health plan segment showing modest sequential growth, helping us absorb some of the anticipated headwinds related to our contract renewals coupled with our larger customers. Our adjusted EBITDA margin was 66%, down slightly from 67% in the prior quarter but in line with our expectations. Let me provide a few business highlights from the quarter. We had one of the best quarters to date in our regional payer and TPA customer segments with strong performance across our service lines, including network-based services and the payment and revenue integrity services that we acquired through Discovery Health Partners. We also had very strong revenues in the quarter in our Blues customer segment, and we added another Blue Cross Blue Shield plan. Our penetration in this segment is now over 55% of the Blues Association's 34 companies with significant room to expand both within and outside this current base. We saw a continued growth in our HST business, signing up another 181 employer groups comprising over 42,000 lives and bringing our total membership to 1.2 million lives. We expect HST's second half outlook to be very strong with new customers and one of a number of new add-on products about to launch. I'd like to turn to the progress we are making on our growth plan as detailed on Page eight of our deck. As we announced last quarter, we are introducing four new organic products and enhancements in 2023, which we estimate will generate $50 million to $100 millions of incremental revenue over the next few years. The first of those, a balance bill protection service will launch as scheduled in June for customers of HST's value-driven health plan service. This new product manages a planned member's exposure to balance billing to the benefit of the member, the plan and the provider. It also removes a common barrier to adoption of reference-based pricing solutions for employers with less tolerance for the risk of balanced billing and the potential friction it creates between providers and members. Also on target to launch before year-end, our machine learning enhancements to both our NSA compliance services and our next generation of the out-of-network pricing services. Both will now enable greater flexibility in managing out-of-network medical costs. These enhancements capitalize on our unique access to extensive provider, pricing and claims data to optimally align our solutions with a payer-specific benefit plan and business objectives. In next quarter, we are adding a data mining component to our itemized bill review service, which leverages our expansive payment integrity analytics to help our customers find and address more billing errors in their complex high-dollar claims prior to payment. This brings us to our exciting new Data & Decision Science service line. This new service line will deliver decision analytics and software tools to allow our customers to manage the health risk of a population, benchmark important network contracts, assess their plan's financial performance and use data, machine learning and AI to achieve other important business imperatives. We've had numerous conversations with our existing customer base and know that this is an area where there is -- the need is high, and there are few available solutions. Our provider network, our connected technology platform and expansive claims flows position us uniquely to deliver enriched and actionable data to our customers through market-leading products. The first of these products in our Data & Decision Science service line, scheduled for launch in the third quarter of 2023, is a price transparency service that leverages the machine readable payer and provider pricing data now required by regulation to be made public. We are thrilled by how differentiated our solution will be in the market. Not only will we aggregate this vast contracted rate information, but more importantly, we will enrich it in ways that no other company can, by leveraging MultiPlan's extensive demographic and affiliated data on 1.3 million contracted providers, by leveraging our pricing technology that enables comparison to Medicare, median and other financial benchmarks and with our deep clinical billing expertise, which enables normalization across varying rate structures. With this data enrichment, we will drive value well beyond simply having access to publicly available somewhat messy dataset. Our road map includes sophisticated and strategic use cases that help our customers improve their competitive positions such as benchmarking plan performance, driving network contracting strategies and innovating network design. Our Data & Decision Science service line will open up significant opportunities and is a critical part of our plan to expand our footprint beyond our out-of-network claim processing and deepen our penetration in large and growing markets like in-network commercial and Medicare Advantage. As you can see, we have been hard at work. We have strong customer demand and significant opportunities to grow our business. We are executing on our concrete plan to capture these opportunities and the energy and enthusiasm inside the company is as high as I've ever seen it. But we get it. We have -- we understand we have to deliver results as we progress through this pivotal year. We are excited to discuss all of this and more at our Investor Day coming up on June 28. With that, let me turn it over to Jim.

Thanks, Dale, and good morning, everyone. Today, I'll do the usual walk-through of our Q1 financial results, provide some commentary on our Q2 outlook and discuss the state of our progress towards our fiscal '23 guidance. And I'll close with some commentary on our balance sheet and provide an update on our capital allocation plans. As shown on Page four of the supplemental deck, first quarter revenue was $236.6 million, declining 21% from Q1 '22 and declining 2% from the prior quarter, but landing in the top half of our range of guidance for the quarter. Turning to revenues by service line, as shown on Page five of the supplemental deck, network-based and payment and revenue integrity service lines showed strength sequentially. Network-based services declined about 17% from the prior year quarter and increased about 5% sequentially. Analytics-based services revenues declined about 22% from the prior year quarter and declined about 5% sequentially. And Payment and Revenue Integrity services revenues declined about 19% from the prior year quarter and increased about 3% sequentially. And as Dale said, we continue to execute well on the regional player, Blues and TPA customer channels, and we're seeing robust growth in the services acquired through HST and Discovery Health Partners. Our first quarter revenues were driven by a modest sequential uplift in core volumes which partially offset a contraction in our revenue as a percentage of savings. As detailed on Page six of the supplemental deck, medical charges processed increased 2% from Q4 '22 to $39.7 billion and potential medical cost savings increased 3% from Q4 '22 to $5.6 billion. In the core commercial health plans category, the sequential increases in medical charges processed and potential medical cost savings identified were also 2% and 3% sequentially. This growth in volumes helped absorb some of the anticipated headwinds related to our contract renewals with our larger customers, which was the main contributor to the 21 basis point decline in our revenue as a percentage of savings, as shown on Page seven of the supplemental deck. Turning to expenses. Fourth quarter adjusted EBITDA expenses were $80.3 million, up $7.7 million from the prior year quarter and up less than $1 million sequentially. Both the year-over-year and sequential comparisons were driven by structural cost increases and investments in the business, partially offset by actions we began taking in the fourth quarter of '22 to reduce costs in 2023. Adjusted EBITDA was $156.3 million in Q1 '23, down 31% from $225.4 million in the prior year quarter and down 3% from $161.5 million in Q4 '22. Our adjusted EBITDA margin was 66.0% in Q1 '23 versus 75.6% in Q1 '22 and 67.0% in the prior quarter. Moving on to our outlook. I'll start with Q2 and then discuss our progress towards our full year 2023 guidance. In Q2, we anticipate revenues of $220 million to $235 million and adjusted EBITDA of $140 million to $155 million. As we've been anticipating since the outset of the year, we expect Q2 revenues to be slightly below our Q1 results by a few percent. Due to typical Q2 seasonality and some residual run rate effect of contracts adjustments that were not fully present in our Q1 results. We are forecasting a steady underlying volume environment in Q2 relative to Q1 before consideration of seasonality. Our Q2 adjusted EBITDA guidance reflects the volume and rate dynamics just mentioned, and modestly higher expenses, around $2 million to $3 million, reflecting incremental investments we're making to support our platform and our growth plan as well as merit increases enacted in Q1. As shown on Page nine of the supplemental deck, we are reaffirming our full year 2023 guidance. Our first half performance is tracking closely to our expectations, and we are encouraged that the vital signs of our business are progressing as planned, as we work through the contracts adjustments and experience a more normalized volume environment. As we stated in our Q4 call, we expect the results for the second half of '23 to be higher than the first half. As volume normalizes, as we realized growth from our HST and Discovery services and as we reap early gains from the growth initiatives we plan to launch this year. Turning to balance sheet and capital management. As Dale mentioned, in the first quarter, we repurchased $137.8 million face value of our 5.75% senior unsecured notes using $100 million of cash from our balance sheet. Separately, we repurchased a modest amount of our shares in the open market, $5.7 million during the quarter ended March 31 and about $9 million cumulatively through yesterday, May 3. Operating cash flow was $64.2 million in the first quarter and leveraged free cash flow was $41.1 million. Both of these amounts included a $22 million cash payment for the settlement of the Delaware litigation. As a reminder, our cash flow tends to be higher in the first and third quarters, given the timing of our tax and interest payments. As shown on Page 12 of the supplemental deck, we ended the quarter with $266 million of unrestricted cash. Net of cash, our total and operating leverage ratios were 6.3 times and 4.5 times, respectively. Our capital allocation priorities remain unchanged. Our highest priority is investing into the business, both organically and through M&A to drive growth and long-term value. As we noted on our last earnings call, we have earmarked $20 million to $30 million for incremental investment in 2023 through the P&L and CapEx to support the core platform and fund our new growth initiatives that Dale mentioned. In terms of M&A, we continue to focus on small-to-midsized acquisitions, particularly on targets that could accelerate our new Data & Decision Science service line. Next is debt reduction. Consistent with our actions over the past couple of quarters, our goal is to reduce our debt over the next several years, and we expect this to be the largest portion of our capital allocation. Lastly, as share buybacks, which remain a smaller allocation of our capital. In our view, there is a disconnect between our security prices and the state of our business as we see it, particularly in light of the growth opportunities we are pursuing. But as Dale said, we also know that we need to deliver results as we work through this pivotal year and that you will measure us on our progress to improve the position of the company and grow the business. That brings me to the end of my comments. I'll turn it back over to Dale.

Jim, thanks. Let me close with one more comment. We are going to deliver a lot in 2023, but we are not stopping there. We have several additional product and service line expansion opportunities slated for launch in 2024 and are already advancing those initiatives this year. We look forward to expanding on all of this at our Investor Day on June 28. Please join us. Operator, will you kindly open up the call for Q&A, please.

[Operator Instructions] Our first question today comes from the line of Joshua Raskin from Nephron Research. Please go ahead, your line is now open.

Hi, thanks. Good morning, guys. Can you provide a little bit more color on NSA in terms of the update? I'm just curious how trends are emerging early in the year. I'm also curious, there's been sort of a lot of media attention on the long backlog on arbitration cases. I'm curious how that's impacting your business and how you're working with your clients on that?

Sure, Josh. That's a great question. I think as you know, in 2022, we reported that we repriced about 1.75 million claims through NSA. We processed about 150,000 requests from providers who asked for -- who asked to negotiate a settlement. And of those 150,000, we closed 124,000 of them, and it was only at 6% higher than what the QPA and the QPA is the median contracted rate of the providers was that it was just slightly higher than what the original payment was. And of that, when you get down the -- down to the arbitration component of it, is all of last year was 57,000 claims and we closed about 11,000 of them. Why so little is because, as you said, the arbitration process was in a state of flux. Going into Q1, we see the same kind of activity in terms of volumes. And we're -- they're on par with what we expected. So in Q1 of 2023, we repriced about 560,000 claims through the NSA process of that. So that's the lion's share of the claims. The claims comes in, they get repriced, they return to the payer, the payer adjudicates it and pays the claim. 557,000 claims. Of that, just a small percentage, about 92,000 of that came to us through negotiations where the provider asked to negotiate. Of that, we settled 74,000 of those claims. 74,000 of the 92,000 were settled through the negotiation process and only 28,000 or 5% of the total NSA volume went to arbitration. Inside of that, when the Fed resumed -- told the arbiters to resume processing cases, we saw about 7,100 claims settled.

So it is -- maybe a quick takeaway, Josh, on this. This is Jim here. The kind of the underlying top of the waves trend is playing out exactly -- and we've said it before, it's very -- it's a pretty steady business because it's non-discretionary. It's emerging in large part. What we are seeing is the tick up in the negotiations. And listen, CMS has been putting out the initiating parties and the non-initiating parties in terms of where it is. And it's -- it's -- we're seeing a lot of the usual suspects are the ones who are negotiating and initiating arbitrations. So it's not completely surprising to us. This makes it more complicated, and that's exactly why we exist.

Yes, yes. And then of those ones that you closed, the settled, the 74,000 this year, is that similar to that sort of the rate coming in, the total payment coming in 6% above the QPA again?

Yes, it's pretty consistent.

Yes. It's pretty consistent, Josh.

Okay. So no change on that. And then just a second question. Just, network-based revenues were up sequentially. I know it's not the biggest component, and I know the categories can blend together with some of the customers. But and that was sequentially. Is that just you had repriced two of the big three? Or I'm just curious what led to the sequential increase in network-based revenues?

Well, actually, the two bright spots inside the network were primary, which is not really kind of anything with our bigger customers, it's with the regional payers and the TPAs. So we had some strength there. We also had strength in our workers' comp business, which was pretty more on for the last several years. So that was really the two big components. It was kind of steadier. And as you know, there's always been a little bit of, call it, a competition between the analytics side of the business and the network side of the business this staved off a little bit of that sequentially.

Okay. All right. That's perfect. All right, thanks.

The next question today comes from the line of Steven Valiquette from Barclays. Please go ahead, your line is now open.

Thanks, good morning. I got on the call here a couple of minutes late. I apologize if you provided color on this. But just on the Slide seven, talking about the revenues as a percent of identified savings, that table is pretty helpful. For the PSAV, just curious, any color on how that might trend for the rest of the year? Are we -- the downtick in '23 versus '22 kind of makes sense given some of the contract renewals, et cetera. But is 1Q the trough? Or just directionally, how about that trend for the rest of the year? Thanks.

Yes. And so listen, I think this data has been helpful for you, the investor, and I think it allows us to bridge some things. So just to kind of give you a sense. In Q1, if you think about our PSAV business, which is the main driver, over 90% of our revenues, volume was up 4.2%. Rate -- I'm just -- I'm not talking about basis points, but our rate was down 6.4% and revenues were down 2.3%. So it's kind of holding together. So that's 6.4% is really kind of the impact of those contract renewals. Steve, we did say that there is a little bit left in that. So you could see a modest tick down in Q1 as we get the full -- sorry, Q2, as we get the full-flow effect of the contract adjustments. But I will just emphasize, this is all playing out as we anticipated, particularly because of -- it's as simple as the volume environment is normalizing and we kind of know what the rate is as it rolls through our book. So in Q2 of '23, I think you are going to see that stabilize. And we've actually gotten a little bit of benefit over -- in the quarter for mix which was not our friend at the back half of last year. So that is one of the reasons why our rate has come down 6.4% when the contract adjustments that we highlighted were a little bit higher closer to 8% for the year.

Look, I think it's important, yes, I think it's important. Our key -- our business has normalized. You can see that in the volumes. You can see that with the renewals of our three larger customer contracts. You can see that the adjustments are coming through as we expected. We feel really good about the first half and we expect to see growth in the second half. And that's why we're confirming guidance for 2023. We are super-excited about our growth plan. And we've identified a number of unmet customer needs that our products, the four products that we plan to launch on our platform can serve. And that's why we're so excited about the new products and the product pipeline that we're working on this year to launch next year. So we believe, we're in a great position to resume growth in the second half of the year and -- as we indicated, and we'll have a full year of growth in 2024.

Okay. I appreciate the color. Thanks.

[Operator Instructions] Our next question today comes from the line of Luismario Higuera from Citigroup. Please go ahead, your line is now open. Please do ensure, you are unmute totally.

Can you hear me? Sorry this is Luis, for Daniel Grosslight.

I can hear you.

Yes, thank you. Providers have been reporting normalized utilization across the board. I just wanted to ask, would you be able to walk us through when MultiPlan should benefit from these trends? Thank you.

Yes, I guess a couple of things. We're definitely seeing -- because there's two aspects. There's the leading indicators, hospitals, ASCs, et cetera, have shown some real strength in Q1. And then there's our own kind of out-of-network skew that is our own circumstances. I think it is fair to say that the volume environment has gotten better. We saw a little bit of ourselves, 3% up in our -- or excuse me, 4% in our PSAV volumes. So it's moving in the right direction. I think what you're hearing from us is we're just not going to get over our skis on calling a turn, okay? So we're not cautious because we're worried. We are just trying to make sure that, that translates into our book because we've got a lag of 8 to 12 weeks. And so, our second quarter viewpoint is that we're going to have kind of a stable, solid volume environment like we had in Q1. You may argue that there's upside as it rolls through our book, but we're not ready to call that yet. And so we're just -- we're not going to get ahead of ourselves on the rebound. And as you know, for 2023, we did not predict a massive upswing in volume for our '23 guidance.

Thank you. That’s helpful.