CTEV - NYSE

Hello and welcome to the MultiPlan Corporation Third Quarter 2024 Earnings Call. My name is Harry and I will be your operator today. All lines are currently in a listen-only mode and there will be an opportunity for Q&A after management's prepared remarks. [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, Harry. Good morning and welcome to MultiPlan's third quarter 2024 earnings call. Joining me today is Travis Dalton, Chief Executive Officer and Doug Garis, Chief Financial Officer. Gary House, Chief Operating Officer, will be available for the Q&A session. The call is being webcast and can be accessed through the Investor Relations section of our website at 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 third quarter 2024 earnings press release issued earlier this morning. Before we begin, a couple of reminders. Our remarks and responses to questions 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 these 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 file through 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 underlining operational goals. An explanation of these non-GAAP measures and reconciliation to their 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, Travis Dalton. Travis?

Thank you, Shawna, and good morning to all of you on the call. Thank you for your time on this important Election Day in the U.S. Voting is one of the most cherished rights we enjoy as Americans, so I hope everyone gets out to the polls to cast their votes today before they close. Good luck. Today, I'd like to report out on the state of MultiPlan through the third quarter of this year and provide a brief update on our multi-year transformation journey to becoming a world-class data insight and technology company. The latter incorporates changes we are seeing in the healthcare industry and a unique position that MultiPlan has built over decades to help our clients drive value through networks, increase transparency, and reduce costs by using our products. As you can see from our earnings release this morning, our third quarter results were within our guidance range for both revenues and adjusted EBITDA. During the quarter, we executed on some key wins with four new client logos and 165 closed opportunities while reaching $6.4 billion in identified potential savings, a record quarterly achievement for MultiPlan. We continue to make progress with our core product set, data products, new markets such as Provider, and deepen client engagement with our payment and revenue integrity products. Finally, we continue to manage with discipline to ensure proper allocation of capital and management of operating expenses against our outlook. Of paramount importance to us is continuing to add value to our long-time relationships, driving new market penetration, and using technology to automate. A couple examples include, first, we forged a stronger relationship with Sanford Health Plan, a valued client since 2017. For Sanford, we are implementing itemized bill review pre-screen, which will increase the claims volume we analyze. Sanford is also the first partner to sign up for our IBR end-to-end automation initiative for 2025, a service improvement project that will systematically identify cases and accelerate results to our clients. Second, we solidified a strategic alliance partnership with the National Rural Health Association. For NRHA, we identified four pilot sites to initiate our product, where they focus on reduced costs, greater access to care, and greater price transparency. This important relationship is progressing quickly and we see a great opportunity to extend multi-plan horizontally into this market. We are committed to access and care viability in rural America. Third, as a technology company, we continue to drive internal automation using advanced tools and technology. We have been investing in our NSA products and reducing friction and lag time to drive faster performance and keeping backlogs low. This benefits our clients but also creates operating leverage and cost benefits for us to invest capital in other growth areas. Additionally, we have refocused the data and decision science group under a general manager structure to ensure maximum value. We are very excited to see the positive momentum from some initial wins as we develop a targeted approach for our go-to-market plan for these high-value products. BenInsights, which drives transparency and affordability in healthcare by using analytics and insights to optimize employer benefit plans, has a broad, addressable market covering employers, providers, and consultants, and we are seeing positive market response to this product. To demonstrate the fundamental value of BenInsights, we apply the analytic tool set to our own company with material and positive results, both reducing costs and improving benefit design for our employees. Hard ROI-based capabilities aren't always easy to discern in healthcare. This is one example of where we can bring that kind of immediate benefit to our clients. We expect to be sharing more notable sales from this product suite on our next call. Finally, our ongoing focus on cost efficiency is generating bottom-line savings that Doug will detail in his update, but we need to and will do more. The core elements of today's MultiPlan that I laid out on our last call still ring true and enable our transformational path. We have great clients, core products that bring real client and enterprise value, good cash flow, and strong talent. Our stable business base and new product capabilities also provide a solid financial foundation upon which we are seeking to holistically extend our capital structure and which will further position MultiPlan to drive profitable growth going forward. We continue to make progress across all aspects of the business as we build towards our long-term vision for the company. We firmly believe that our healthcare expertise, our agility as an organization to embrace more rigorous and disciplined processes, our strong foundation built on decades of data and technology assets, and most importantly, our integrity as a market leader will sustain MultiPlan’s strategic advantage over time and bring tremendous value across the healthcare continuum. For our longtime clients, I say thank you. Also, rest assured we will continue to enhance and innovate our existing product set. Our transformation is meant to increase discipline and apply a more rigorous process around organic product development to not only address our client's current challenges and opportunities, but also the ones to come. This, along with lateral product expansion, strategic product bundles, and value-focused pricing plans will provide a natural expansion of our total addressable market potential. After the progress of the transformation itself, we continue to organize around the operating principles of clarity of purpose, alignment of resources, and focus on accountability. I believe more and more that healthcare is at an inflection point with affordability as a key lever that only technology can address. The last decade was focused on digitization of data and interoperability. The future will be focused not just on data, but on actionable insights that increase transparency, reduce cost, and improve quality. The challenges are many. Healthcare consumers are demanding more than ever around data at their fingertips, transparency and less opaque pricing, higher quality, better tools, and automation. The operators in healthcare are facing increased regulation, medical cost inflation, employer plan cost increases, skilled labor shortages, provider risk, M&A consolidation, and a divergence of payment rates between rural and urban providers. These are but a few examples. Against that landscape, the technology partners that can bring real insights and answers to one or more of these challenges will emerge the winners. We believe we have uniquely positioned ourselves over time. That's where our clarity of purpose lies. We uphold our unique position to combine data and technology with actionable insights to positively impact transparency, cost, and quality. In order to realize our clarity of purpose, we have created a devoted team and set of fully aligned resources. The biggest resource we have is our talent. We are focused on our cultural change management to instill a mindset of urgency, focused on sustainable growth with reinforced emphasis on the rigor and discipline in our processes. Each of our associates knows our mantra when it comes to serving clients. They are at the center of everything we do. We listen, we serve, and we problem solve. And selling is problem solving. Thus, we all sell, and that's how we will deliver value-driven growth. I continue to be impressed by the level of talent we have inside the company, but also those that we have been able to attract. I think they all see the potential here. At this point, our senior management team has been solidified with the recent addition of Doug Garris as our CFO, Tiffani Misencik joining as our Chief Growth Officer, and longtime leader Sean Crandell with new responsibilities as the GM of our Data and Decision Sciences. I am very confident in our team, the diverse set of skills and experiences it represents, and our ability to lead MultiPlan forward. We also stand ready with robust legal, corporate, and government affairs teams aligned to protect, defend, and educate. Along with the promotion of our general counsel, we have added leaders to all of these teams to work alongside our marketing, communications, and lobbying teams to protect and vigorously defend our company and be an effective thought leader on regulatory and policy matters. We want to have a voice and contribute. I will touch on these endeavors later on. Along with upgrading our human resources, we are also embarking on a transformation of our technology infrastructure to not only embrace the recent leaps such as AI, but more importantly, to make our data and analytics capabilities more scalable and expandable to meet the product and solution needs of the market in the future. This will position us well in the decade of actionable insights. Doug will share some of these upgrades in his comments. I have said many times that you are what your record says you are. I am confident that we are taking the right steps to improve. Our focus is on how our results over the next couple of years will stack up against the transformation model that we have built. This model is made up of KPIs that signal our progress towards sustainable growth. These KPIs will focus on driving value in the core, aggressively competing to win in existing and new markets, operational excellence, talent acquisition, and innovation across our products and technology. As I mentioned in our last call, we launched a comprehensive evaluation of the company and financial potential forward. Out of that effort, we have created a fundamental business framework for our transformational journey called Vision 2030, which is a strategic, financial, and operational execution roadmap meant to drive our strategic KPIs. This will allow us to align the resources, capital, and goals of the company. It is the foundation for clarity, alignment, and focus and MultiPlan going forward. This process is being led by Jerry Hogge, our Chief Operating Officer, and includes preserving and expanding the three core businesses, networks, analytics, and payment and revenue integrity. Achieving the full revenue and value potential of the existing white space and market potential enabled through products from our HST acquisition and diversifying the business by accelerating new revenue growth and product innovation across the data and decision sciences portfolio, like BenInsights and risk models. Clearly defining our products and the financial plan associated with each will allow us to organize our go-to-market teams and add needed sales talent with proper incentives to spur our growth forward. As I prepare to turn the call over to Doug, let me provide a quick update on our corporate and government affairs. The Verity decision in August was certainly an encouraging development and our ongoing vigorous defense of similar legal claims against us. We believe these legal claims against us are without merit. We will continue to focus on our service and product delivery. We operate in a highly competitive environment, drive costs out of healthcare, reduce balance bills, and support the regulatory goals around transparency. In addition, we will continue to engage openly and collaboratively with lawmakers on Capitol Hill to educate them on our services and the positive impact we make on the healthcare system by reducing costs and increasing transparency, no matter the outcome of the election. You'll hear more about this as we continue to make progress. MultiPlan was built on sustainable core values of character and integrity, great client relationships, and decades of service. This forms our foundation, but make no mistake, we will be rapidly impacting change for the future. The evolution of our leadership team, modernized platform, and how we go to market as a data insights and technology leader in healthcare expands and transforms our brand vision. There will be more news to come soon on this new brand emergence. I wanted to reiterate that our third quarter was what we expected, albeit on the lower end. We expect fourth quarter to run similarly and hence have provided updated guidance ranges to reflect this expectation. We are working to refine our processes with rigor and discipline as we enact the Vision 2030 plan in our new fiscal year. While the business stabilization is expected to occur through the first half of 2025, we now have more visibility into its eventual outcome and impact on financial results. We will be presenting our updated 2025 outlook on our year-end earnings call scheduled for late February. With that, let me turn it over to Doug.

Thank you, Travis, and good morning, everyone. I'm delighted to be a part of the MultiPlan family and look forward to meeting and working closely with the investor community now that I've had the chance to fully onboard. Before reviewing third quarter results, I'm going to start off by sharing a few observations today, which ironically is my three-month anniversary. First, I've had the privilege to work with some of the largest, preeminent, and globally recognized firms, and the MultiPlan team here is not only comparable but exemplary. We have a good balance of talent, passion, industry knowledge, deep technology, and operational expertise, and importantly, grit. Everyone here shows up engaged and willing to do the work required to enrich our culture and serve our clients. This is demonstrated by our recent inclusion as a great place to work for the third consecutive year and an elite net promoter score that we've earned from our clients. Second, our core business is strong and durable. Outside of the decline of one specific client and a non-repeating positive impact on COVID-related volumes, our core business has consistently grown since we went public. Our products within analytics, network services, payment revenue integrity, continue to yield significant value for our clients as evidenced by the continued strength of the identified potential savings we deliver. We are an indispensable partner for our 700-plus clients, and the value we uncover lowers the overall cost to deliver healthcare to patients. Third, I'm going to share some of the progress we are making against our strategy. We have completed an assessment of our cost structure, and our initial findings suggest we can deliver efficiencies in the order of magnitude to roughly 10% to 20% of our cost base over the next several years as part of our Vision 2030 plan. The areas of focus to address and improve our cost position will be as follows. We plan to modernize our data and technology platform. We are embarking on a multi-pronged approach to modernize our data foundry, to build cloud-native products, and to deploy a modern cloud-based ERP system, which is expected to go live in the first half of 2025. Next, we have streamlined our business structure. We recently instituted a general manager model with direct P&L accountability, and we added a Chief Growth Officer and organized our go-to-market segments to fuel growth across our sales channel. We also plan to reduce our physical facility footprint by roughly 60 % to create centers of excellence in flagship locations focused on operations, products, technology, data science, and client success. We have also implemented robust efficiency programs that have already begun to yield tangible results. Travis briefly mentioned a great example that I can share on our benefits plan. As part of our annual planning process, we ran our own product then insights from our data and decision science business against our benefits plan design. And we captured nearly $4 million of hard savings, both reducing our benefit spend by 15% annually. And we were able to lower our per-employee cost of benefits while improving the quality of the benefits plan design for our associates. As a CFO and a frequent buyer of enterprise technology solutions, delivering real cash savings without reducing quality is frankly incredible. We have many additional areas of opportunity that I plan to share more formally when appropriate, but rest assured we have a team that is laser-focused on scoring points in this arena. Finally, building upon our strong foundation and the new leadership team we've assembled, MultiPlan now has the ingredients required to launch our multi-year strategy. This is why we are opportunistically and actively talking with our lenders to extend our capital structure now to give us ample runway for realizing our Vision 2030 plan. Now, moving on to third quarter results. As shown on Page 4 of the supplemental deck, Q3 revenues of approximately $230.5 million were down 5.1% from Q3 of 2023 and down 1.3% from prior quarter. Our revenues came in at the low end of the guidance range for the quarter with strong claims volumes offset by a decline of one client. Excluding the impact of this client, revenue was up 1.4% from prior year. Turning to third quarter revenue by services line as shown by Page 5 of the supplemental deck, network-based revenues declined 18.8% from the prior year quarter and were up 0.9% sequentially. Analytics-based revenue declined 0.4% from the prior year quarter and were down 1.4% sequentially. Our payment and integrity revenues decreased 3.4% from prior year quarter and were down 4.4% sequentially. During the third quarter, we continued to experience solid growth of our identified potential savings. As shown on Page 7 of the supplemental deck, total third quarter bill charges decreased 1% sequentially to $44.7 billion and identified potential savings increased 3% sequentially to $6.4 billion. In our core commercial health plan segment, bill charges increased 3% sequentially and 11% versus the prior year quarter and identified potential savings increased 3% sequentially and 10% versus the prior year quarter to $6 billion. Both were new quarterly records for multi-plan. As shown in Page 8 in our core percentage of savings revenue model, identified potential savings increased approximately 0.8% sequentially and 5.5% year-over-year to $4.5 billion. With respect to the utilization environment, bill charges from both facilities and physicians were up sequentially and year-over-year with particular strength in hospital inpatient and hospital outpatient on the facility side and in surgery on the physician side. On balance, data from a few publicly traded hospitals suggest the utilization environment remains healthy, which is slightly positive for forward volumes given our typical claims lag. The sequential increase in our volumes was more than offset in our revenues by a decline in revenue as a percent of identified savings or revenue yield. As shown on Page 8 of the supplemental deck, our revenue yield declined about 15 basis points sequentially for the overall business, which includes both PSAV and PEPM revenue models. In our core percentage of savings revenue model, which is approximately 90% of our revenue, our yield fell about 8 basis points in the quarter, which had a resulting impact of about $2 million on revenue. This was made up of approximately $1.7 million of volume-driven increase offset by approximately 3.7 of price and mixed shifts for the quarter. Notably, none of the decline in our PSEV revenue yield was attributed to any contract changes with our clients. Turning over to expenses, third quarter adjusted expenses were $88.9 million, decreasing $1.7 million from prior year quarter and increasing $2 million sequentially. The decrease versus prior year was primarily due to increases in capitalized software development and was partially offset by increases in professional fees and personnel expenses related to year-over-year increases in compensation. For the sequential comparison, the $2 million increase in adjusted EBITDA expenses was primarily due to increases in access and bill review fees and legal fees and a decrease in capitalized software development costs, which was primarily timing-related. Adjusted EBITDA was $141.6 million in the quarter, down 7% from $152.3 in the prior year quarter and down 3.4% from $146.7 million in Q2 of ‘24. Our Q3 adjusted EBITDA was slightly above the low end of our guidance range and margin came in at 61.5%, down 130 basis points from the 62.8% in prior quarter and down from 62.7% the same time prior year. We enjoy great operating leverage with our business and most of the margin compression we've experienced in our costs is due to lower revenues, but I will say the team is doing a great job managing costs because our cost base is actually down year-over-year in the quarter. Moving on to our outlook, as shown on Page 9 of the supplemental deck, we're tightening our full-year revenue guide to between $930 million and $940 million versus our prior guide range of $935 million to $955 million. This is reflective of a more reasonable run rate of our core business. We're also narrowing our adjusted EBITDA guide range to between $580 million and $590 million in lockstep with the revenue decline. We are confident that prudent cost management and the recent launch of efficiencies program associated with our Vision 2030 plan will help us keep earning and margin power for the remainder of the year. As you are aware from the press release, we conducted an impairment test for the third quarter, which incorporates current market conditions, including share price, market discount rates, forecast revisions, and other various factors. Based on this test, the estimated share value of our goodwill was less than carrying value, and accordingly, we took a $5.8 million adjustment to indefinite lived assets, and we recorded a non-cash impairment charge of approximately $361.6 million to our GAAP earnings results. This brings the year-to-date total impairment charges of roughly $1.4 million to our GAAP earnings. Turning on to the balance sheet and capital allocation. Our net cash provided by operating activities was $72.8 million for the third quarter of 2024, while the free cash flow generated was $41.1 million. As a reminder, our cash flow generation tends to be higher in the first and third quarter of any year due to the timing of our debt, interest, and tax savings. As shown on Page 12 of the supplemental deck, we ended the quarter with $86.6 million of unrestricted cash, and we did not buy any securities this quarter. Net of cash, our total and operating debt leverage ratios were 7.6 and 5.5 times respectively. Our long-term capital priorities remain the same. Our highest priority and immediate focus remains on investing in the business to drive organic growth and the assets we have in service. You should expect us to continue making critical investments to support our platform, including our core products and our HST and data and decision science businesses. With the remaining cash flows, we will primarily focus on debt paydown and leverage reduction. Finally, as we previously announced, we're currently working with our lenders and their advisors to extend our capital structure. Our focus is simple, to opportunistically extend our maturities to provide ample time for the new leadership team to execute against our strategy and realize the transformation we discussed this morning. As a reminder, our first funded debt maturity is not until 2027 in October. We are having productive discussions, but while we are in active talks, we cannot discuss any details about the debt extension. And I ask that you kindly refrain from inquiring about this topic during our Q&A section. And with that, that brings me to the end of my prepared comments, and I'll turn it back over to Travis to finish us out.

Thanks, Doug. Appreciate it. As I said throughout, the company's path is clear and becoming clearer. We're taking the actions to transform MultiPlan with a thoughtful focus on cost, with a capital structure to fit our growth aspirations, with a new brand emergence to add an external identity to our internal progression, and with a clear 2025 corporate strategy to go out and win in the market. I look forward to sharing our progress with you in the coming months and quarters. Operator, would you kindly open the call for questions for Doug, Jerry, and myself? Thanks.

Yes, of course. [Operator Instructions] And our first question today will be from the line of Joshua Raskin with Nephron Research. Please go ahead. Your line is open.

Hi, thanks. Good morning. I guess a couple on my end, maybe just the first one sort of to start with the last three months or so guidance sort of moving towards the lower end. What would be incremental changes, I guess, relative to what you were seeing three months ago? It certainly doesn't seem like the volume environment.

Are you speaking, hi, Josh, and good morning and pleased to meet you. Are you speaking specifically to our revenue?

Revenue in that, I know EBITDA kind of just flows with revenue. So, yeah, if you could talk a little about revenue. Why towards the lower end of the guidance?

Yeah, so I think, as we mentioned, our volume for the quarter is actually positive and our identified potential savings is certainly an encouraging sign. I think coming in and certainly having a chance to assess the business. We fell within our guide range, but we narrowed and heightened our guide range. I think primarily we're pretty well in order with the current run-rate of the business. And I will say we recently enacted some robust efficiency programs. So, we feel pretty good about our ability to keep and maintain EBITDA margin and traction. I would say over the last three months, nothing has fundamentally changed about the dynamics of the business. I think we're tightening our range for the year to coalesce with the run rate we're seeing in our business.

Okay, that's helpful. And then last quarter, you talked specifically about a 3% headwind to revenues from a specific customer. So, I guess, is that still the case or is that customer running off faster this year than expected? And then any other client headwinds that we should know about for next year and maybe what percentage of your 2025 revenues are actually contracted at this point?

Yeah, so we'll maybe answer the last question first. We're not going to give more substantive forward-looking guidance until our February update. But our one-time, our one strategic customer decision that we talked about in the last quarter most certainly impacted the business in this quarter. And I think we said it was roughly 3% or roughly $15 million a quarter of impact. And in the prepared remarks, if you strip out the roughly 3% that we expect as a headwind, our revenues were actually up year over year. So, that certainly is the case that for the first half of 2025, our discussion around the last quarter still remains true. We don't see an uptick or a downtick of the strategic client decision, but it certainly affects itself and our financials in Q3.

Okay. So, no new client headwinds, nothing to call out at this time? And obviously, we'll get the full details in February.

Correct. Correct. We've had no material customer contract or rate changes over the last three months.

And I'll just add a little context. I mean, I've been out with a client. This is Travis, hey Josh. And we have our client advisory meeting this week. We have well over 100 clients that we'll be with individually. I think in talking to them, we expect affordability, cost containment, and other programs that we're actively involved with and drive real value to be more important to them than ever over time. So, we're confident and the wind will be at our back, we think, over time. And I also think we're at the right price to value ratio with those clients and we're well positioned to continue to do business with them going forward. And so, we're confident in our client environment and the value that we bring as we progress.

All right. Perfect. Thanks.

Our next question today will be from the line of Daniel Grosslight with Citigroup. Please go ahead. Your line is open.

Thanks for taking the question. And congrats, Doug, on your first full quarter at MultiPlan. We've now had 10 quarters in a row of take rate degradation. Is this kind of the new normal where we'll see this continued mix shift which will lead to this take rate degradation and it's really up to the savings rate to do the heavy lifting? Or is 2024 the neither of take rates in ‘25 and beyond? We should start to see a little bit of take rate expansion.

Hey, Daniel. Good morning and good to meet you. So, I'll take the first stab at it. In the prepared remarks, we highlighted that if you look at our business, certainly over the last 12 quarters or so, if you exclude the one-client impact and one-time tailwind that we had from COVID-associated volumes. Our core business, I think, would look a little bit different and, in fact, has grown pretty consistently. I think what you're seeing in the degradation of yield certainly is the impact of one client, and I think where you've seen us tighten our guidance range certainly for the full year and the implied Q4 is. I can't tell you for certain that we're at a nadir, but it feels like nothing has changed with our client or contract base and the run rate of our business feels very reasonable at this time, excluding any new go-to-market or sales activities that we're planning for 2025.

Got it. Okay. And some companies have commented on IV shortages leading to delays in elective procedures, mostly in the fourth quarter because it was due to Hurricane Helene. So, I'm curious if you're starting to see some of those delays in your business. You mentioned that utilization is strong, but curious if some of those IV shortages are bleeding into your business and maybe what that portends for the first quarter of 2025 for you guys, given that lag that you guys always have.

Yeah. So, let me maybe start that. So, with respect to the specifics, I don't think we've seen anything at this point that's disrupted the flow of our expected Q4. We're in the process of closing the month of October. But certainly I don't know if that would be substantive enough for us to come off our guide range. But that goes without saying that we definitely are watching some of the seasonality of the business play through. Q4 is typically a stronger quarter for us. And towards the end of the year, things like IV shortage or other disruptions due to natural weather events. We think that there's no reason to inject that additional seasonality in our business at this time. But we haven't seen major disruptions to our business and our claims flow presently.

Got it. And last one for me, I really appreciate the details on Vision 2030 and some of the operational changes that you guys are making. And I understand you're not guiding specifically to ‘25 now, but I wonder if you can just comment qualitatively on how you're thinking about ‘25 in terms of growth and your cost structure. And then from a longer term perspective, has there been any change in how you're thinking about the business versus the investor day? I guess it was now more than a year and a half ago where you kind of think that the core business can grow mid single-digits. And then with some of these other expansion opportunities, you can get back to the high single digits in terms of growth.

Yeah, this is Travis. So appreciate the question. Thanks for asking about our operating plan 2030. So a couple of things. Since I got here, we've been actively working on evaluation of business as I discussed, looking at, frankly, what are our core strengths and values and what are the things that maybe we should spend less time on. So the 2030 Vision is really about looking at what we do well and creating a path for some of our new products. So we'll continue to make investments in analytics, networks, fame, integrity. We're going to focus more sales resources on the HST product in the mid and down market as it relates to that capability. And then we're really going to actively look at expanding the business with the data and decision science investments and mapping clear go to market talent against that. So the whole point of this vision was to basically align the division, the operating mechanism, which I've talked about at great length inside the company in a clear plan to allocate capital and put sales resources against it. We think that that will yield sustainable growth for us over time as we get as we go forward. So that was the -- that's been the kind of premise behind the 2030. And we're looking forward to discussing that in much greater detail with you guys. We continue to maintain our growth potential and prospects over time off of that planning process.

Yeah. And then this is Doug, I might add on the cost side, if you take a look at it, right, just at a macro level, it seems that health care inflation -- health care spend is a natural sale at our back. And I think we would have said that in the ‘23 Investor Day. I think where our new leadership team is really focused is bringing a much, I would say, bringing an order of magnitude inspection in the business. And that's where certainly I've partnered with Jerry, our Chief Operating Officer and our executive leadership team to put in a very thoughtful program. And in my prepared remarks, I mentioned, we think we can address between 10% to 20% of our cost base. And if you kind of parlay that and relate that to our capital allocation priorities, that gives us much greater flexibility against our clarity, alignment and focus paradigm to invest in the things that will matter and drive the needle. And on that line, we talked about our data and tech modernization, right? We are making significant progress there and we'll be excited to share more details next year. And then we're just going to run the business better, faster and smarter. Having general managers and business segmentation with P&L accountability is a new muscle and something that we've actively put in place in the last 90 days to drive better accountability and fidelity to the management of our business. And then finally, as we think about operational efficiencies, it's not really a strategy, it's just a way to do business. And I think with the leadership team that we've assembled, we have some really good, robust efficiency programs that will help us capture value and ultimately invest back in the core business, which is still our primary capital allocation objective.

Our next question today will be from the line of Jessica Tassan with Piper Sandler. Please go ahead. Your line is now open.

Hi, guys. Thanks for taking the question. I was hoping you could remind us of just any major directional kind of differences in revenue yield by payer type or let us know if that's a customer mix issue that you were referring to. And then just secondarily on the large customer, I was hoping you could just remind us the circumstances that led to the attrition that you're seeing year to date and just kind of why we should consider that anomaly as opposed to an ongoing risk. Thanks.

I'm going to take the last one first.

Yeah. So, hi. Thanks for the questions, Travis. Yeah, I think that we covered it pretty thoroughly last time as a reminder to -- we view that as a strategic decision by a single client that's embarking on, frankly taking a lot of capabilities in that. And so we were very clear last time that we thought that was one client, not all of our clients. We continue to believe that in discussions with them. But we also continue to believe that the value we bring is very beneficial to our clients over time and that we're clearly on strategy with them. So in no way, shape or form, do we are we seeing that as anything other than kind of a single client issue, both in terms of our new sales progression, which we're pleased with. We'll be able to quantify more clearly when we go into ’25. But also in our existing client accounts and selling new products and innovation into our new clients. And so that's kind of what I would say about that. And to the extent that some of that happens more quickly, it does impact our quarter a little bit more than we may have thought, but we've been clear about our forecast on that. I'll also just say one other thing for the last question. One of the most important things on this entire topic is that we are able to drive organic product growth. And so we've been working really hard since I got here making sure that we have product lifecycle capabilities and that we can continuously and quickly drive new innovation like the IBR example I gave for Stanford. That's regardless of the landscape or strategy, when you bring value to clients and it's priced to value and they see it, they buy from you. And so my view is our strategy is to make great stuff and make it at the right price point and to sell it aggressively. And I think our strategy is a winning one over time, but we have to demonstrate that value for clients to continue to buy from us. And that's what we intend to do.

Great. And then maybe Jessica, hi, this is Doug. So maybe on the mix question, I would say we haven't done a particularly great job of explaining price volume and mix. And accordingly, I've actually refreshed the finance and accounting leadership team to bring in F&A leadership, commercial finance leadership and a new pricing leader. So I think you can expect in the future for us to have much better color around our disclosures and around our variance explanations on things like price volume and mix. But the mix and rate impact that we've seen that the degradation is primarily due to negative mix and again, is being accentuated by one large customer impact. And if you kind of strip that out, the mix and rate impact versus the volume impact is actually is far more muted than it appears in our calculations for yield and the yield decline that we've seen consistently now for the last several quarters.

Okay, I will do that. Thank you. And then my final question is just, can you all give us an update on the status of recently resolved and then pending litigation? Thanks.

Yeah, this is Travis. Happy to. Appreciate the question. It's a good opportunity for me to get our messages out there. So I'm going to take that. We have a lot -- what we've been saying across not just the litigation, but the media and otherwise is that long history of provider and payer service. What we do benefits employers and employees. I think that there's a lot of data on the high cost of certain areas of particularly out of network and we reduce costs, balance bills, and we increase transparency. So we're very supportive of the NSA transparency and a lot of the administrative and regulatory environment out there. We're not an insurer and we're in a highly competitive environment. So all that said -- we're vigorously defending ourselves. There's been the Verity case that I mentioned, but there's also been cases with similar fact patterns in other vertical industries that we think are -- we think are right and positive for us. We're going to play out the process. We've got the best legal defense that we think we could possibly have. They've been with us a long time and they're phenomenal. And we're in a highly regulated environment. So we're not surprised by this. It's part of doing business in healthcare. The cases, the direct and class action have been centralized into the Northern District of Illinois. And so we're actively working on that and we intend to file our motion to dismiss likely in the mid-January timeframe. And that's where we're at.

Thank you.

Our next question will be from the line of Madison Aron with JPMorgan. Please go ahead. Your line is open.

Hi, thanks for taking my question. I apologize for jumping around calls, but as you adjust for that one-time impact or as you clarified or classified as one-time to revenue yields, what's your comfort level in terms of the visibility around where the take rate is today? Do you think it's stabilizing? Do you think at least until the next round of contract negotiations, or do you think that there's still some headwinds to this take rate net of these one-time issues?

Yeah, I think we would reiterate, right. It's hard to say that I think to Daniel's point that there is a nadir of the yield, but I would say the run rate of our business right now against our current contract base and customer set is reasonable on existing business. So plus or minus a couple of basis points perhaps. But I think we need to keep in mind that yield is a very good directional metric. But when you look at it things do happen from quarter to quarter, both the positive and the negative one-time customer impact, et cetera. But relative to a stabilization, I think it's fair to say that our yield, especially given the one client issue now is played through the first couple of quarters and will play through the first half of the year. I think it's fair to say that our yield is stabilized.

Okay. And then on Vision 2030, just given some of the comments you made earlier about the new ERP system, the general manager model, how should we think about the investments behind Vision 2030? Is it going to be heavy in 2025, 2026? And we'll love to better understand the breakup between what we should see from an expense standpoint and CapEx standpoint, the mix.

Yeah. So, we will most certainly provide a very detailed walk, including a very substantive and robust detail on both revenue expenses and capital for 2025. But I think my prepared remarks and reiterating that we can drive focus in our business and fund the things that we need to do. And that's why we're pretty confident that we can address 10% to 20% of our cost base, focusing on technology and data modernization, including ERP, which that investment has been going on and will eventually yield savings for our business going forward. And then on the business segmentation and efficiencies front we mentioned in the prepared remarks that we ran our own product on ourselves and we delivered $4 million of savings. So, just with further inspection and partnership with our leadership team, we're driving very specific focus to optimize our cost structure and our capital structure to focus primarily on growing the business organically. And so, I think addressing our cost base and being very circumspect on what we invest our money in means that there's not going to be a material change to our cost division as we embark on our Vision 2030 mission and maintain, I think very strong margins going forward.

Yeah. And hey, this is Jerry Hogge. So, just to kind of dovetail on what Doug said, right. The investment that we stepped up from ‘23 to ‘24 and our data science team, our sales team, our marketing team, and so forth. We're looking at those as sufficient to enable the Vision 2030 growth plan, but we're looking to sharpen where we put the money and get a greater return on the operating investments as we continue to economize and drive efficiencies in the business.

Thank you. [Operator Instructions] And our next question will be from the line of Joshua Kramer with CreditSights. Please go ahead. Your line is open.

Hi there, guys. Thank you so much for taking my question and thank you for all the detail you've given on the call so far. My very brief question for you, and then I'll let someone else ask theirs, is about the antitrust lawsuit. Do you have any estimate or updates or run rate on what you're approximately spending on the antitrust lawsuit in professional fees, either each month, each quarter, or each year?

Yeah. Hi, Josh. Thanks for the question. This is Doug. So, we're not going to, I don't think we would share that specifically, but I would say that the current environment certainly has presented us with some one-time costs that hopefully, as these issues resolve will not repeat. But I don't think it would be appropriate to give an exact dollar value. I would say that as one-time costs come up, as a leadership team, we manage against the money we have to invest. But I wouldn't give you details and specifics on a dollar value because certainly, we've been able to manage any one-time costs within our core cost structure.

Yeah. I would just add to that, to Doug's point. Yeah. I'll just add one point to that, because I think it's important. I started March 1. We had a series of interesting events, right? So, we've been actively adding to our corporate affairs function. So, across, not just the legal team, but also across other corporate affairs areas around our communications team. How we message, making sure we're doing that robustly, our how we manage government affairs. And we've been able to do all of that inside the current wrapper of the company and our current projections and margin profile and otherwise forward. For the call, we think we can continue to do that over time. And if that changes, we certainly would let you know. But we're very confident that we can continue to manage those areas appropriately. And we've already stepped it up to a certain degree as we go forward as a public company. We need to do that. Thank you.