Ladies and gentlemen, thank you for standing by, and welcome to the MultiPlan Corporation Third Quarter 2020 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions].

I would now like to hand the conference over to your speaker today, Shawna Gasik. Thank you. Please go ahead, madam. .

Good morning. Thank you for joining us today for MultiPlan's Third Quarter 2020 Earnings Call. Today, our speakers will be Mark Tabak, Chief Executive Officer; Dale White, President of Payer Markets; and David Redmond, Chief Financial Officer. Paul Galant, President of New Markets, will be available for the Q&A session..

During the call, we will refer to the slide deck you will see during the webcast or which is available on the Investor Relations portion of our website, along with the third quarter earnings press release issued earlier this morning..

Before we begin, I'd like to remind you that our remarks and responses to questions may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Actual results may differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with our business, which are discussed in the risk factors included in our registration statement on Form S-1 and other SEC filings.

Any such forward-looking statements represent management's estimates as of the date of this call. While we may elect to update such forward-looking statements at some point in the future, please note that we assume no obligation to do so. .

Certain financial measures we will discuss on this call are non-GAAP financial measures. We believe that providing these measures help investors gain a more helpful and complete understanding of our financial results and is consistent with how management views our financial results.

A reconciliation of these non-GAAP financial measures to the most comparable GAAP measure calculated and presented in accordance with GAAP, to the extent available without unreasonable effort, is available in the earnings press release and in the presentation slides included in the Investor Relations portion of our website at www.multiplan.us..

I would now like to turn the call over to our Chief Executive Officer, Mark Tabak. .

Thank you, Shawna. We'll start on Slide #3. Welcome, everyone, to MultiPlan's third quarter earnings call. My team and I are very excited about this important next chapter of growth for our industry-leading company following our recent debut on October 8.

I've been at the helm of MultiPlan for almost 3 decades and have never been more enthusiastic about our future. .

To start us off, I will give a few remarks and hand the presentation over to Dale to talk about our business and the progress on our 3-part growth strategy and to Dave to talk about financials..

Next, please. From a financial perspective, we delivered a strong third quarter, with revenues of $224 million and adjusted EBITDA of $166 million..

We performed significantly better than we initially projected at the start of the pandemic and also better than the updated projections that we gave you at our August 18 Analyst Day.

The year-over-year decline is due to COVID, which impacted us less in Q3 and than in Q2, but did cause a drop in realized customer savings that drives a big part of our economics. Dave will give you some more detail on that later..

Now based on where we sit today, we believe that we will deliver a strong fourth quarter, with revenues in the range of $238 million to $253 million and adjusted EBITDA in the range of $180 million to $194 million at the midpoint of that range, and this represents a revenue growth rate of 9.8% quarter-over-quarter and minus 0.4% year-over-year.

And adjusted EBITDA, the growth rate is 12.3% quarter-over-quarter and 0.3% year-over-year. .

Next, during the time since our August 18 Analyst Day, our team has continued to execute our Enhance, Extend and Expand 3-part growth strategy we call MultiPlan 3.0.

As you will see in Dale and Dave's presentations, our third quarter financial performance was not only driven by a lower-than-initially-projected Q3 COVID impact but also more importantly, from executing our growth initiatives. Growth initiatives include new customer contracts and new products that play a meaningful role in building our business.

We continued our customer extension to both highly penetrated and underpenetrated segments. We are in the process of adding new sales, more business development and product management talents. .

Let me share some concrete accomplishments that the team delivered since our Analyst Day. Our large and successful refinancing has enabled us to increase the duration of our debt, reduced leverage, increased our revolver, reduced our annual interest expense by approximately $70 million.

We are also pleased that Moody's upgraded our credit rating to B2. .

We made progress on several of our 16 strategic initiatives that support our Enhance, Extend and Expand growth strategy, delivering annual revenue impact of $15 million to $20 million. And I'm happy to announce that we completed the acquisition of HST earlier this week.

It gives us a new product capability in support of our Enhance strategy and deepens penetration in adjacent markets that we are targeting with our Extend strategy. Dale will go into details of the acquisition, which we believe helps to derisk our execution and accelerates our growth..

Equally important, this acquisition was executed at an attractive price that will be accretive to MultiPlan. We will continue to pursue these types of acquisitions with discipline and support of our growth strategy. .

Next. It's important that I set the record straight on some narratives from someone attempting to run a short campaign against MultiPlan. MultiPlan has been in business for more than 3 decades. We serve all of the major insurers in the U.S., we serve more than 16 million people and work with 1.2 million providers.

We are a real and extraordinary business that has made money for every investor that has ever invested in MultiPlan. The management that runs this business built it and helped build an industry. It is offensive to have anyone suggest anything else..

There are 4 assertions that we have heard that I have listed on this slide, all of which are completely false. In addition, I added a fifth topic, which I will cover as well. .

The first assertion made by the short seller is that UnitedHealthcare is planning to exit the relationship with MultiPlan and, in effect, in-source what we've been doing and what we've been using, and they plan to use a reference pricing tool with a consumer advocacy service called Naviguard. That is absolutely false.

Our business with UnitedHealthcare continues to grow every quarter. .

Second, the MultiPlan's -- second, that MultiPlan's relationship with large payers is deteriorating, leading to a reduction of our pricing by 50% over the last 4 years. This, again, is absolutely false. Our business is growing with our top customers. .

Third, that MultiPlan used financial engineering to prop up its earnings to show better financial performance in 2018. Again, this is absolutely false. Revenue reserves at MultiPlan are small, and changes to those reserves had completely immaterial impact on our 2018 revenues. .

Fourth, that Hellman & Friedman [ gutted ] the company and couldn't find a buyer until Churchill came along. This, again, is absolutely false.

MultiPlan was executing its stand-alone private market strategy, and the merger with Churchill was done to reduce leverage, use additional operating talent and pursue a more aggressive plan to grow both organically and through mergers and acquisitions. .

And finally, something that did not appear on the short seller manifesto but has been a point of concern for some investors is they fear that MultiPlan is vulnerable to potential federal legislation surrounding added network claims that can generate surprise bills.

As we've communicated in prior calls and meetings, we believe only a small portion of our business is at risk from these types of legislation, and we put together a much more analysis to hopefully help investors better understand how these types of laws, which are already present in 30 states, impact our business. .

Next, please. Let me drill down into United-Naviguard. There is so much wrong with what the short seller manifesto has said that I candidly don't know where to start. First, United is not leaving MultiPlan. This has been an extraordinary customer, partner and industry leader.

They have worked with us continuously since 1994 and are continuing to grow their business with us. Even in a tough year like 2020 with COVID, United has expanded the business that we do with -- that they do with us to include more programs and more initiatives, all of which leads to more savings opportunities. .

As -- they do this because we deliver extraordinary service, value and quality. We enable customers like United to reduce medical costs and to generate revenue by leveraging MultiPlan's solutions for both self-insured and fully insured employers.

By the way, we have a multiyear contract with United that has been renewed numerous times over the course of our 25-year plus relationship. .

Think about it, why would a payer leave us when we provide an independent cost management solution that saves them and their employer and customers billions of dollars in medical costs, not to mention administrative costs every year at a bargain cost to them.

The answer is they don't leave us, and instead, they give us more business and partner with us to find better and better ways of serving their end customers and members. .

Now let me address Naviguard. Let me be clear, Naviguard is a helpful service and in no way is a replacement for the sophisticated suite of products that MultiPlan provides.

Naviguard addresses a particular niche, which MultiPlan is a broad-based -- while MultiPlan is a broad-based and comprehensive cost management solution, with a 1.2 million provider network used by 700 payers that processed $106 billion in claims in 2019 and identified more than $19 billion in potential savings opportunities for our customers. .

Reference-based pricing services determine a reimbursement to be paid by the plan for out-of-network claims using a reference point such as Medicare. And then if the provider sends a balanced bill, that solution can offer online tools and perhaps consulting services to help the patient negotiate the balance bill directly with their doctor.

MultiPlan enthusiastically supports UnitedHealthcare and the work they are doing to help their customers and their plan members when a balance bill is received..

Our reference pricing services can do much to help the member. We do not agree with the assertion that these services protect members completely from balance billing.

The only way a member is fully protected from a balance bill is through a contract or other agreement that the provider -- with the provider who accept the plan's reimbursement as payment in full. .

We also don't agree with the assertion that United or any major payer is likely to shift all of its business to reference-based pricing services like Naviguard. The choice of an employer to adopt reference-based pricing depends on the employers' objectives for its health plans.

Employers seeking to minimize planned costs will favor reference-based pricing, while those seeking to protect employees will stay with a more traditional Vantiv plan design. In reality, interest in aggressive versus -- interest and aggressiveness versus generous health plan approaches will always ebb and flow as the economy does. .

As you can see on this slide, we have attempted to show the comparison between what reference-based pricing services do and what and MultiPlan does. They are apples and oranges. MultiPlan supports a wide variety of benefit plan design, including reference-based pricing.

Reference-based pricing services offer only one approach and, furthermore, large insurers serving a variety of self-insured customers will always need to offer a choice and benefit plan design. Their customer base is not a one-size-fits-all..

I should also make it clear that Churchill, like any sophisticated investor, perform significant diligence about MultiPlan and its customers, including UnitedHealthcare, and we're satisfied that those relationships are rock-solid and represent a foundation for MultiPlan's continued future growth. .

On a final note, our relationship with United is as strong as it's ever been, and in fact, it's expanding, not shrinking.

We have a number of exciting initiatives that are either deployed this year or implementing involving several of our key services, spanning several United lines of business and also benefiting a number of the UnitedHealthcare family companies..

Next, please. The second topic to address is our relationship with our top customers and the completely false assertion that they are unhappy with us and are going to leave us in droves..

Our relationship with our customers across our market segments are as strong as ever. Our customers' commitments to partner with MultiPlan has never been more robust. And our pricing has remained steady, with the normal give-and-take between volume and pricing.

As we talked about during our -- on our Analyst Day, MultiPlan is an important value-added partner to all of its payer customers. We play an essential role as a fully independent third-party, addressing claims and identifying savings.

Independence is a cornerstone of our business model, along with our deep IT and process integrations into the prepayment workflows of our payer customers..

These 2 elements allow us to quickly process claims, reduce costs and help protect members from potential balance billing. .

As we said in the past, and the data supports it, our largest customers continue to perform in line with our overall business, which is growing.

While 2020 has seen a drop in health care utilization resulting from the COVID-19 pandemic, we continued to see strong relative performance among our top payers even in the last 2 quarters as they use a variety of MultiPlan solutions to contain costs and protect their members.

The growth for our top 10 customers, as shown, would have been even stronger if not for the idiosyncratic headwinds we felt in 2019, an issue we've covered numerous times before that was unique to a specific customer group. .

As we have said all along, our take rate with customers remained steady. You will note, there has been some confusion with the way we've been disclosing savings and revenues, which I can sympathize with. So I've asked Dave to tackle this later in the presentation.

In short, while the prices we charge our customers are mostly volume-related and/or high single-digit to double-digit percentages of savings, they realized our revenue divided by the savings we identified does not equal our take rate.

Our payer customers are the final decision-makers of how much of the identified savings that we provide them they actually use..

As you can imagine, we prefer to avoid disclosing specific pricing levels for competitive reasons, but the prices we charge and the conversion rates of savings into revenue have not seen anything like the types of headwinds floated out there by these short sellers.

We have had a productive year expanding contracts, signing on new logos, rolling out new programs that will lead to greater revenues for MultiPlan, and more savings and value for payers and consumers. .

Let me now turn to the third topic to clear up speculation that MultiPlan used aggressive accounting policies to mask performance in 2018. Revenue reserve leases had a $1.1 million impact on revenues in 2018.

In fact, we had less benefit in 2018 than in 2017, so our year-over-year reported revenue growth in 2018 was lower as a result of these accounting policies. .

Revenue reserves are small in the context of our total revenue, not the 10% to 30% type of figures described in the short seller's manifesto. Each year, MultiPlan appeals and other -- MultiPlan reviews appeals and other changes to the savings we generate to do our best to conservatively reflect our revenues. .

What is more frustrating about this claim is that in 2020, revenue reserves have actually been a headwind to reported revenue growth. Year-to-date, we have seen a $14.5 million headwind associated with revenue reserves as reserves have slightly grown since December..

I'm proud of our finance and accounting team, led by longtime CFO, Dave Redmond, and we will continue to appropriately and conservatively recognize revenues at MultiPlan..

The last short seller claim I'd like to address relates to the Churchill merger and MultiPlan's prior private equity ownership. Our company was by no means underinvested in and was not at any point for sale by Hellman & Friedman and our other investors.

MultiPlan was investing in our capabilities and seeing strong growth in our newest products like Data iSight and Payment Integrity. .

To reiterate, our company was not for sale. Churchill unilaterally approached us in the spring with a powerful thesis around unlocking and accelerating growth. That thesis, along with a robust pipeline of opportunities, led to the merger, deleveraging and public listing of our equity.

MultiPlan successfully partnering with private equity firms -- as MultiPlan has successfully partnered with private equity firms for 2 decades as we grew the business through both organic product development and M&A. But the public listing was the right step for our company.

MultiPlan's robust margins and free cash flow are a result of our scale and long-term commitment to technology and automation, not the result of our capital structure or ownership. .

Next slide, please. Let me now discuss proposed federal surprise billing legislation. This is not a new story, but it bears further scrutiny. Surprise billing laws are designed to protect consumers from unexpected medical bills..

These laws state that for certain types of providers, primarily emergency rooms, anesthesiologists, radiologists, pathologists, consumers cannot be billed for an out-of-network charge when they unknowingly arrive at an out-of-network ER facility or have an elective procedure at an in-network facility, which employs an out-of-network physician.

Why? Because in most cases, the consumer was not afforded the opportunity to choose an in-network provider. .

So for example, if you go to an in-network ER to have your fracture leg set, the surprise billing law would say that you cannot be hit with a surprise bill for the out-of-network anesthesiologist who assisted with the procedure.

All of these laws aim to eliminate unexpected health care bills to consumers, which we, of course, support as it is consistent with our core mission to make health care more affordable, efficient and fair. .

MultiPlan has long communicated, as we did again on Analyst Day, that the exposure of a potential federal surprise billing law to be about $90 million to $100 million of revenue.

I want to give you 2 points of analysis that suggests the impact could be less than this, one which shows impact from state laws of only 0.9% to 2.7% of identified potential savings on surprise bill-related claims that we don't know the exact mechanism that a potential federal law may employ or when, if ever, it may go into effect or how exactly its impact will resemble the state laws'..

The first point is what drives this estimated impact in the first place. As you see on Page 7 of the presentation, about 79% of the $17 billion that MultiPlan identified as potential savings or its commercial payer customers in 2019 came from claims that are unrelated to surprise bills.

These identified potential savings are in no way impacted by current state and proposed federal surprise billing laws. So we were talking about the remaining 21% or $3.6 billion of the total identified potential savings that came from claims addressed by surprise billing laws..

Now out of the 21% of related identified savings, approximately 11% was generated through our provider network and negotiation services, both of which by contract with the providers, eliminate surprise bills and are likely not a headwind to our business.

The remaining 10% or $1.7 billion of identified potential savings come from claims that could be at risk from surprise bills and surprise billing laws. .

And this is where our history with state surprise billing laws helps to inform our expected impact from a federal surprise billing law. As I will show you in the next 2 pages, our experience in the states show that very few customers upsending us surprise bill-related claims as a result of state surprise billing laws being enacted.

And those that did drove only about 2.2% or $374 million out of our $17 billion in identified potential savings. .

Next slide, please. There's a lot of detail on this page, and Dale White will take you through the process in his section. For now, let me focus us on what happens if a federal surprise bill is passed using the hybrid approach, which is one we believe is most likely to occur.

With the hybrid approach, the biggest risk to MultiPlan is on claims under $750. Here, MultiPlan may be asked to provide the reference price and to process the claim or the payer may choose not to send the claims to us for processing, and we would then not make any revenue on those claims. .

It's important to note that claims at or below $750 make up only 7.1% of the potential savings that MultiPlan identifies from surprise bill-related claims, and only 1.5% of the potential identified savings when adding nonsurprise bill-related claims.

This is another data point supporting the statement I just made that analysis suggests the impact to MultiPlan on a federal surprise billing law to be less than expected. So as you can see, only in a few select cases that is in a hybrid approach for claims under $750 as the claim run the potential risk of not being sent by the payer to MultiPlan.

Again, this is why we believe that the potential passing of a federal surprise building law will have a fairly limited impact on MultiPlan business..

Next slide, please. Lastly, let me share with you our analysis of what we have seen in the 30 states that have already enacted surprise billing laws..

There are a few different approaches states take to mandate what should happen if that anesthesiologist that I just mentioned isn't in the health plan's provider network or in MultiPlan's provider network and wasn't successfully negotiated.

I've already explained the dispute resolution and hybrid approaches, which are deployed in 7 states and 9 states, respectively. Another 5 states use a payment standard or reference pricing to set prices for these services with no prescribed option for dispute resolution.

And 9 states prohibit surprise billing, but leave it to the payers and providers to figure it out amongst themselves, which often results in a dispute resolution..

There are now 2 major federal proposals making their way through the lawmaking process. Both are very similar to the dispute resolution and hybrid mechanisms used at the state level. The main difference between the state laws and the federal is that the federal law affect ERISA-regulated plans.

ERISA is the federal law that regulates self insured employers. This is an important distinction because claim charges for self-insured payers account for approximately 78% of all claim charges that MultiPlan processes. We operate in all these states, both before and after enactment of these laws.

And as you can see on the chart on Page 9, the 30 states represent a sizable 87% share of our potential savings identified for both self-insured and fully insured commercial customers..

We analyze the 18 states with laws enacted after 2015, looking at fully insured potential savings identified on surprise bill-related claims in the year prior and the year following enactment..

Let me focus on the states with surprise billing laws that are similar to the 2 major federal proposals. First, the 7 states that employ dispute resolution account for approximately 21% of our total potential savings for customers.

In response to the law, MultiPlan customers opted to no longer send surprise bill-related claims and accounted for only 0.9% percent, only 0.9% of the pre-enacted potential identified savings from surprise bill claims in those states. .

Comparing pre-enactment to post-enactment fully insured potential identified savings from surprise bills, we saw an overall decline of 13.3%. It's critical to note that virtually all of the decline had nothing to do with the surprise billing law enactments.

Instead, it was almost entirely due to a payer customer, one of ours having lost a major employer as a customer in one of those states. A small remainder of the decline likely came from the impact of COVID in the last 2 quarters..

Second, the 9 states that employ a hybrid mechanism account for approximately 51% of the total identified savings from surprise bills.

We lost approximately 3% of our surprise billing-ready claims as a direct result of the law, but the total amount of fully insured potential identified savings from surprise bills grew by over 33%, all toward the laws in surprise bill-related claims following the enactment of state surprise billing laws came as a result of a small number of customers who made the decision to no longer send surprise billing claims to MultiPlan for processing.

That loss amounted to only 2.2%, 2.2% of our total potential identified savings on surprise bill-related claims in the year preceding the enactment of state surprise billing laws..

Notably, in the 2 categories where proposed federal legislation might land, dispute resolution and the hybrid approach, the percentage drop was less than 1%, 0.9% and 2.7%, respectively. This 1% to 3% range is certainly in the ballpark of what we noted on the prior slides. .

In full disclosure, this is not a perfect analysis. We don't always know, at the claim level, whether it is for fully insured or self-insured business or where the plan was underwritten nor do we know whether the facility or services were rendered was in- or out-of-network, which is important for non-ER services.

But we've made reasonable assumptions, and the analysis shows that we grew identified potential savings for surprise bill-related claims by 28% from the 12-month period before and the 12-month period after these 18 states enacted their surprise billing laws, even accounting for the known loss of 2.2% of that business as a direct result of the laws. .

Look, MultiPlan has been in business for nearly 40 years. We have worked with many of our customers and especially the large payers for much of that time. We evolve as the market evolves. We didn't stand still as the states pass these surprise billing laws. We created new approaches to help our customers operationalize and comply with these laws.

These actions account for much of the 28% growth in identified potential savings in these states with surprise billing laws. And of course, we continue to add new customers, improve the performance of our services and add new services, such as Payment Integrity. .

I'll close on this topic with one final point. MultiPlan is in the business of reducing medical spend, and we do this through a variety of technologies and data-driven methodologies that administer claim repricing and settlement. That is at the core of what any federal surprise billing law would require.

We are well ahead of the game and being prepared to help payers operationalize their federal bill, which we believe is not likely to be enacted and operationalize until 2023, if a bill is passed in the near term..

Let me -- next slide, please. Let me now hand things over to Dale for a business update. Dale will start off by telling you a bit about our business. He'll hit on 3 facts. First, we are a data analyst company in the large and growing $3.8 trillion U.S. health care system. Second, our customers are commercial health care payers.

Dale will talk about our core and also about the adjacent customer base we will address in the future. And third, we provide a mission-critical service. We identified potential savings of more than $19 billion in all of our customers and over $106 billion of medical claims in 2019.

In short, and without a question, without us, health care would be far less affordable..

So let me now turn things over to Dale to address this in a bit more detail.

Dale?.

Good morning. Thank you, Mark. Good morning, everyone. .

Next slide, please. We'll start on Slide 13. For those of you who don't -- who haven't met me, I'm Dale White, President of the Payer Markets. Since MultiPlan is new to the public markets, I would like to explain a bit about what MultiPlan does and how it does it, and then explain how we are making our strategic vision a reality.

As you know, we've laid out our growth strategy during Analyst Day and discussed how the 3 part Enhance, Extend and Expand strategy will drive our growth in the coming quarters and years. .

Next slide, please. As Mark said, we are a data analytics company in health care. I know that some of you focus on technology and others focus on health care, so I will borrow Mark's tagline and tell you that MultiPlan's core mission is to make health care more affordable. The U.S.

health care system is a $3.8 trillion market, growing at around 5% per year. Over $1.2 trillion of this is estimated to be overcharging, unnecessary services, errors, potential fraud, waste and abuse or administrative friction cost. .

Our job at MultiPlan is to reduce the end cost to our customers by identifying and advising them on how to reduce the cost of settling medical claims.

We do this by leveraging our large network of 1.2 million providers wherein we have contracted rates as well as through our market-leading data and analytics that help set fair rates, where we don't already have contracted rates in place. .

We also combat waste and abuse using our proprietary Payment Integrity technology, and through our highly automated processes, we reduce administrative costs for the system as a whole. .

Next slide, please. Our customers are, for the most part, commercial health care payers. I mentioned the $3.8 trillion health care market that includes Medicare, Medicaid and commercial health coverage.

Today, we focus primarily on the $1.3 trillion commercial market, and within that segment, primarily in the commercial out-of-network space, which is about 10% of that or about $130 billion of medical spend. We are the largest player in the commercial out-of-network space and work with payers offering both fully insured and self-insured business.

We serve health care payers that account for at least 80% of all commercial covered lives in the U.S..

And there is substantial room for growth within our current commercial customers to address their in-network spend and through selling new and existing services in adjacent markets..

We highlight 2 adjacencies on Page 14 of the presentation. First, for government, about 72% of government plan-covered lives are administered by commercial payers with whom we have an existing commercial relationship. So we enter into those sales discussions as a known and trusted partner.

And second, we have a lot of room to grow, both in adjacent commercial segments like TPAs and regional health plans as well as property and casualty payers. In fact, the acquisition we recently announced will accelerate our penetration within the TPA and regional plan segments. .

Next slide, please. It is really important to understand how we work with our customers. Let's walk through a simple example. Let's imagine Jane -- let's imagine Jack and his mother, Jane, who live in New York, have driven to North Carolina for Jack to play in a tennis tournament.

Jack developed severe elbow pain, so Jane schedules an appointment with a pediatric orthopedics, Dr. Smith, who is an out-of-network provider. Jane will have to pay a copayment, $50 in this example, and the doctor bills $1,000 to Jane's health insurer. .

Without MultiPlan, Jane's health insurer, the payer, might try to negotiate a reduction of the bill, but more likely will apply the plan's usual and customary benefit rate of, say, $800. Jane owes her portion of the plan's coinsurance, which is 40% in our example, another $320 plus her copay.

So Jane is out-of-pocket up to $520 because there was no network contract, and Dr. Smith has the right to bill her the difference between his $1,000 charge and the $800 paid by the payer and Jane. Both the payer and Dr. Smith had to pay administrative staff in order to negotiate and collect.

So in this example, the $1,000 doctor bill actually cost the 3 parties a total of $1,200. .

Next slide, please. Now let's see how things are different with MultiPlan. In this case, when Jane's insurance company received the bill from Dr. Smith, the bill is electronically sent to MultiPlan. Maybe Dr. Smith is 1 of over 1.2 million providers we contract with, and we apply our contracted rate..

If not, we can use our proprietary data and algorithms to identify and either negotiate or advise the payer to pay an amount supported by our claims data and algorithms..

Let's say we reduced the claim to $600 under a network contract. We send this new price to our customer, Jane's health insurer. The insurance company pays $360 of this to the doctor and Jane pays $240 in coinsurance and copayment. We've just saved the insurer and Jane money, and the provider and payer both incurred lower administrative expenses.

So in this example, the $1,000 doctor bill actually cost the 3 parties a total of $700. We charge the health care payer a percentage of realized savings depending on their contract with us and how the claim was reduced. This is how we make money on the majority of our business. We get a small amount of the savings realized by our customers.

Our incentives are completely aligned with theirs. In this case, we save the payer, consumer and provider $500 in medical and administrative costs, for which the payer paid $40 to MultiPlan. .

Next slide, please. In total, our services identified potential savings of about $19 billion for our customers in 2019, up from $10 billion in 2014. You saw this before on Analyst Day.

Out of the $100 billion-plus in claim charges processed through MultiPlan, roughly $45 billion presented a savings opportunity, and we identified potential savings equal to approximately 40% of these claims charges. .

Next slide, please. Let me switch gears now and talk about MultiPlan 3.0 strategic growth plan. Next slide. Looking at the health care value chain today, we delivered value in 2 critically important areas for our payer consumers. MultiPlan is the leader in pricing and payment integrity, primarily for out-of-network claims.

We intend to continue to drive initiatives to improve in these 2 areas.

Having said that, we executed the merger with Churchill because we believe that there is a substantial need and room for us to grow to better serve our existing and new payer customers as well as to provide solutions to providers and consumers who are the critically important constituents in the health care system. .

To that end, we have a clear vision of growth going forward in additional services for all payers plus solutions for consumers and providers, moving both to the left and to the right of the value chain. The foundation for this growth is our data, our algorithms, our platform and our provider network.

We already connect to 1.2 million providers and the majority of health care payers. We do not need to build de novo operational infrastructure or intellectual property to execute the majority of our 3-part growth strategy. .

Next slide, please. Our 3-part growth strategy is designed to increase our targeted addressable market by approximately fivefold in the coming years.

First, we are enhancing our existing solutions with advanced algorithms as well as adding product capabilities, such as additional reference-based pricing services, that will better serve our customers in the $6 billion to $8 billion existing TAM. .

Next, we are extending our offerings into adjacent payer segments that we either don't address or that are underpenetrated.

This includes commercial in-network claims; government and other adjacent segments like TPAs, regional health plans, dental and property and casualty adding another $4 billion to $5 billion to our TAM; and as we further expand into additional services for payer customers as well as adding services for providers and consumers across the value chain to target an additional $24 billion to $37 billion in TAM.

.

Next slide, please. Here, you can see the projected revenues and adjusted EBITDA attributed to the 3 growth strategies, which we presented on Analyst Day. Our acquisition of HST announced on Tuesday contributes to both the Enhance and Extend strategies and will add an estimated $18 million to $20 million in revenues in 2021.

We will continue to aggressively execute on our growth strategy. .

Next slide, please. We also shared with you on Analyst Day the 15 priority initiatives that are driving the Enhance, Extend and Expand strategies. Paul Galant, our President of New Markets, is focused on the Expand strategy, and together, we have identified the initial KPIs that will help us to measure progress moving forward..

I won't go into the detail on these now, but you can see here, they measure things like success in integrating machine learning into our operations, which is one of the cornerstones of the Enhance strategy; growth in both new customers from adjacent markets and penetration of commercial in-network claims, which are at the heart of the Extend strategy; and progress in deploying corporate development and M&A, which touches on all of our strategies.

In future calls, you'll hear from both Paul and me as we report results against these key indicators. .

Next slide, please. And speaking of acquisitions, on Tuesday, we announced the first closed deal, and we have a number of very interesting opportunities in the pipeline.

We are disciplined in our approach to acquisitions, looking at both tuck-ins like this one that are highly accretive and can be deployed quickly, as with MARS and NCN, which were subscale in revenue and had no EBITDA when we bought them. They now make up approximately 70% of MultiPlan's business and drive 75%-plus margins.

And we expect similar growth with HST. .

We are also looking at medium, large and even transformative acquisitions, especially in the Extend and Expand segments of our growth strategy.

I'm very pleased about this new addition to MultiPlan for a number of reasons, not the least of which is its projected growth, particularly considering -- when considering the relationships and scale that MultiPlan can use to support and further accelerate that growth. .

HST is a reference-based pricing service, but it's not a traditional reference-based pricing company. It takes what has historically been an adversarial strategy limited in its use to the small end of the commercial health market and has repositioned it into a collaborative approach that we know has a significant appeal to health plans.

HST delivers new services that can be deployed in the TPA market to deepen our penetration there, starting with the 44% of its TPA customers that don't work with MultiPlan today..

Today, the outlook for HST in 2021 is $18 million to $20 million of revenue and $8 million to $10 million in adjusted EBITDA. Because the 2021 outlook does not build in additional upside from MultiPlan distribution or cross-selling, we are extra excited about the business. HST joins MultiPlan with 2020 revenues projected at about $14 million.

For us, it's a classic tuck-in acquisition poised to generate dramatic growth with the distribution and scale that MultiPlan has proven, can take the right product well beyond the space it occupies as a stand-alone business. .

Next slide, please. I'll now stop and pause and turn it over to Dave, who will talk about the financials.

Dave?.

Thank you, Dale. First, as Mark said earlier, we delivered a strong quarter. Our revenue grew to $223.5 million in Q3, up 8% versus last quarter and down only 9% versus Q3 2019. The year-over-year decline is due to COVID, which impacted us less in Q3 than in Q2, but did cause a drop in realized customer savings that drive a big part of our economics.

Customers sent us over 1 million COVID-related claims, including many COVID tests at relatively low dollar amounts, and many of our payer customers chose not to have those tests negotiated down or negotiated and adjudicated at an amount higher than they might normally have adjudicated. That is the bulk of why revenues were down year-over-year. .

Our identified potential savings on the COVID-related tests were approximately 80%, but the realized fee based on payers adjudication were approximately 20% below our normal levels.

Now it is important to say that our performance Q-over-Q and year-over-year that was better than we forecasted on Analyst Day was not only driven by lower COVID impact, it was also driven by signing new customers and other initiatives associated with our 3-part strategy..

Next slide. We have all been affected by COVID as well as the follow-on effects over the last several months. Here are 3 examples of how we've responded to this new environment. Even as claims went down dramatically in Q2, we have made continuous investments in further automating that small sliver of our claims process that is not 100% automated..

As previously mentioned, we are also investing in machine learning and similar algorithms, which strengthen the system, and we are ready when more charges come. We are deploying agile teams to capture the opportunities and address new markets.

We are growing our offerings and sales force for government business as we expect some shift in membership to these lines of business in future quarters. We believe in through-cycle investing, and we continue to build new capabilities for the opportunities ahead. .

For example, we are fine-tuning our algorithms to identify cost savings opportunities for telehealth claims that we see increasing significantly. We look at a lot of ways to understand the impact of COVID. We are worried that payers would lose customers, and they have, as businesses close.

In contrast, we lost few accounts, all small, and our growth initiatives more than compensated for any lost revenue. .

Next slide. On this slide, we compare Q3 2020 budgeted revenues, Q3 2019 actual revenues and Q3 2020 actual revenues. On Analyst Day, we thought the COVID impact would be $70 million to $80 million in Q3 2020, and more than 90% of that normally falls through to adjusted EBITDA..

This would have resulted in approximately $184 million to $194 million of revenue in Q3, and even lower if you assume the $70 million to $80 million was against last year's volume. Instead, the impact was only about half when we look at the bridge to Q2, ending up about $22 million below last year's Q3 revenues. .

I would like to emphasize that we may not provide this level of detail every quarter, but we recognize that times, especially with COVID, are unusual, and we believe you deserve to look at this data. But in the future, we may not necessarily provide these bridges in every call. .

Next slide. Here, you see the absolute growth in each of our services. As you can see, the growth from Q2 was not concentrated in any one service line. Rather, all service lines grew, including network and Payment Integrity. This speaks to the robustness of the growth that we saw in Q3. .

Next slide, please. Our Q3 2020 adjusted EBITDA reached $165.5 million, up 10.5% from Q2, and our cash flow was $151.1 million, 14% better than Q2. We are proud of this healthy performance given the challenging year of COVID that 2020 has been. In the appendix, you will see how this reconciles to our GAAP net loss.

The biggest item in the net loss of $262 million -- the biggest item in the net loss is $262 million of stock-based compensation, which is the increase in fair value of the B stock units from the 2016 to 2020 stock-based compensation plan based on the business combination with Churchill. This is not going to be that large next quarter.

It will be about $106 million next quarter as these were charges related to the merger. There will be no stock-based compensation charges related to this Class B plan after Q4 2020. .

Next slide. We processed a record $27.8 billion in charges in Q3, up 21% from last quarter. Identified potential savings for our customers increased, and we are delivering more value for our customers.

For claims who -- with identified potential savings, we continue to recommend potential savings of 40% to 45% of charges to our customers, on average, as mentioned in the Analyst Day.

The important thing to point out is that even though identified potential savings were flat year-over-year, we believe that customers chose not to recognize as much of the savings that were identified versus normal rates because they did not want to negotiate down the cost of COVID test and perhaps certain COVID-related procedures. .

Next slide, please. While it is common for people to calculate revenues as a percentage of identified savings, we want to reiterate that this metric can be misleading for 2 fundamental reasons.

First, there are timing differences between these 2 numbers as claims take time to adjudicate after we send the identified potential savings on claims to our customers, and we get paid on realized savings after claims have been adjudicated, not on identified potential savings.

When claims grow rapidly, these differences can result in bigger variances. On this schedule, we adjust for that..

Second, we need to adjust for some corrections and settlements as we sort some items out with our payers and providers where they provide us corrections. That's just normal course of business for us.

Once we adjust for this, you can see that the pro forma revenues divided by the potential savings went up this quarter, not down, as you would think at first glance. .

In addition, as mentioned above -- earlier, the customer decides how much of the identified savings to take. It could even be 0 in some cases if they believe it is in the best interest in a given provider relationship or regulatory environment.

As noted on the slide, revenues as a percentage of savings for COVID-related claims are 15% to 20% lower than normal experience. Throughout the crisis, we have seen the medical expense ratio of our customers decline, and we believe that payers are often not taking as much as their potential identified savings as we indicate to them. .

Another example is that we have seen very large influx of claims associated with COVID. They are lower-dollar claims that many payers have elected not to challenge their cost. Our payer contracts, as Mark and Dale have mentioned, are normally 3 to 4 years, and nothing has changed in those contracts in Q3. .

Next slide. As we look into Q4 2020, we are guiding to $238 million to $253 million of revenue with $180 million to $194 million of adjusted EBITDA. The adjusted EBITDA estimate includes the cost we expect to have as we hire for growth and incorporate all the estimated costs of being a public company here that were not in our original budget.

For example, we needed to increase our D&O insurance, our audit fees go up. We have to be SOX compliant by December 31, 2021. Board fees and related expenses will increase, and we will hire additional staff in key public company-related staffing areas. .

As mentioned by Mark, our current interest expense will decrease significantly due to the refinancing. We should see a $12 million reduction in Q4 interest expense compared to Q3.

While there is, of course, uncertainty here, especially around the impact of a second COVID wave in the United States, we feel confident that these revenues and adjusted EBITDA guidance provided here will be achieved. .

Next slide, please. Here is how we think about forecasting in general, and in 2021, in particular. I thought I would lay this out in our first call together to walk you through our thinking. First, we look at actual performance and momentum the best we can to get a normalized starting point.

We then look at expectations of some health care trends, like health care cost inflation, maybe new procedures, therapies, et cetera. This would be a normalized baseline for 2021. We don't expect to see much there in '21, again, but I just wanted to lay it out in our framework. .

This year, obviously, we overlaid COVID impacts and that we -- and we believe we will have to consider COVID-related assumptions in our 2021 budget. Lastly, we are adding the net impact of our new initiatives, both organic and inorganic. .

Next slide, please. For 2021 outlook, we wanted to give you an update of how we were thinking about it. Obviously, there's a lot of uncertainty here, so I wouldn't really call it guidance. But on Analyst Day, we forecasted $1,085 billion to $1,125 billion in revenues and $845 million to $870 million (sic) [ $875 million ] in adjusted EBITDA for 2021.

We have not adjusted this forecast and are currently in the process of developing our 2021 budget. We expect to complete the 2021 budget in the next 60 days. .

We will provide 2021 guidance when we are comfortable with that budget. We believe that we will have approximately $77 million in CapEx, 24% to 28% tax rate and $240 million to $250 million in interest expense in 2021. .

I would like to briefly mention our capital allocation framework. We strongly believe that organic growth is the most value-accretive. So to the extent that, that needs capital, we fund it. .

Second in line is value-accretive M&A. We are obviously thoughtful about this and don't do M&A just for M&A's sake. It has to be the right company at the right price to get over our return threshold. We have a goal target to maintain, about 4.0x to 4.9x net operating leverage, and intend to deploy the cash needed to maintain that ratio.

Our net leverage may vary over time..

Lastly, at some point, we may return excess cash to shareholders in the form of stock buybacks. .

I will now turn it back over to Mark. .

Thanks, Dale, and thanks, Dave. As you know, MultiPlan has always had great leadership. We've enhanced that leadership team as we've gone public, and including Paul Galant, our new President of New Markets.

I also want to tell you that we're actively building an Investor Relations function, with dedicated executives to be responsive to investors and lenders going forward. This will give you a much more accessibility to and contact with us as we go forward. We are also planning a non-deal roadshow shortly.

I look forward to speaking with all of you again soon. .

With that, let's now open up the session to questions. .

[Operator Instructions] Your first question comes from Josh Raskin from Nephron Research. .

Here with Eric Percher as well. We've got a couple of questions. I guess the first one would be, overall revenues were down 9%, 9.1% year-over-year.

Just simply, was United as a customer better or worse than the overall change?.

Dave?.

I think it was actually slightly better. Let me double check that, Josh, while you ask your second question. .

Got you. All right. Second question, just you've talked about a couple of small customer losses, et cetera.

Are any of those customers going to competitor offerings? And if you're losing them, what exactly are they doing?.

Dale, you want to speak to the competition and -- with customers?.

Sure. Josh, I mean, the customers, it really is a function of their cost management strategy. And as -- and I think as we said, it ebb and flows as the economy does. And in reality, their interest can be -- it can be aggressive or it can be in -- aggressive or generous to help them benefit approaches, and that ebbs and flows always with the economy. .

So if we do lose a small number of customers, they may be changing their strategy. They may be using another type of service. They may be reorienting their strategies to include Payment Integrity. There's lots of reasons why the small customers move around.

And we're excited about the addition of HST and the opportunity to work with them and the addition of the reference-based pricing program that it brings. .

All right, which brings me to the next question. HST versus Naviguard, can you compare and contrast? I understand they're both in the reference pricing world, but it sounds like you believe HST is a little bit different. .

Dale, why don't you speak to the unique nature of the -- the collegial approach to the marketplace for HST, and then we can do the comparison to what the Naviguard offering really is about, which is largely focused on patient advocacy, if you will, to supplement that?.

Yes. I can -- I'll take the first part of that question. HST's approach, I mean, I think as I said in my remarks, Josh, there are a number of reference-based pricing companies that had been around for a while. And many of them were adversarial in nature. And what excited us about HST was twofold. One was their collaborative approach with providers.

They take a very collaborative, very engaged approach with the provider community in the way they implement their strategies.

And secondly is the work they do on the front end, the front end with the member, and to assist the member, not only on the front end as the members seeking care, but they also have a patient advocacy center that they can utilize to engage with the member if any issues come up as the members navigating their way through the delivery system. .

So from those 2 points, their collaborative approach is not adversarial, it fits nicely with our provider network strategy. And their engagement on the front end with the member and with the provider is what excited us about the HST model. Mark... .

But just a follow-up. On the basic mechanics -- I just want to make sure I get the basic mechanics, right? So the basic mechanics are they're using a reference price to reprice claims, correct? And I'm assuming it's typically off of some sort of percentage of Medicare.

Is that -- are those sort of the similarities of like the approaches of those 2 companies?.

Yes. .

Yes. Both have a reference-based pricing, oftentimes using Medicare as the reference point..

And then they both have -- both Naviguard and HST have a consumer advocacy program that they try to mitigate the exposure -- the higher exposure that those members would have for out-of-pocket costs for both in-network, which will be the coinsurance and deductibles, and also the out-of-network charges as well.

At the same time, address issues relative to abrasion -- a potential abrasion with providers and a potential abrasion with the subscribers. .

Your next question comes from Daniel Grosslight with Citi. .

One of the contentions of that short report is that basically your contracts are not enforceable.

So can you go into more detail on what a typical contract entails? And what's preventing someone like a United from using something like Naviguard, while still being in contract with you, simply shifting claims to Naviguard?.

Look, we -- our contracts with the large payers are multiyear. United has been under multiyear contracts with us since 1994, Cigna, since 1992, Aetna, since 1994, as an example. The contracts, multiyear, they're automatically renewable. And when we sit down to review the contract, typically changes the scope of services we provide them.

It's not an adversarial contract renewal process..

They sit down with our team, they look at how we make -- and help together, we can enhance the value by generating more savings through the solutions that we have identifying egregious billing or clinical aberrations through our Payment Integrity product. .

What the basis of these contracts is the continued value that we provide to those payers for both their insured book of business, where they're taking the medical risk, and then for their self-insured business, where they provide an array of administrative services, one of which are the MultiPlan out-of-network solutions. .

Got it.

And can you just speak to the exclusivity that's built into those contracts? And is there kind of anything preventing a large payer from shifting claims to another similar service?.

I think in almost every case, the out-of-network business, MultiPlan is in that first position and receives almost all of the out-of-network claims. So we get first look at all the out-of-network claims. Patient goes to the provider, provider sends that claim to the payer, the payer sees that, that provider is in their network.

If they're not in the customers' proprietary network, they electronically send that to MultiPlan. We get first look on that. And as Dale, Dave and I all mentioned, last year, we received $106 billion in charges from those payer customers. .

We also tailor our solution set of networks, negotiation at iSight to meet the goals and objectives of that payer to maximize savings. Obviously, the more savings we can generate for the payer, the more revenue we can generate for MultiPlan. And we have a high persistency rate and generate significant savings.

As we referenced, there were [ $19 billion ], and over $100 billion in charges received last year. .

Got it. Okay. And then just going to your example of Jane and Jack here. If Dr. Smith is not contracted with MultiPlan, so you're using your iSight with Dr. Smith. What's stopping him from going to Jane and balance billing for that $400 that you see? Is there anything that prevents balance billing when iSight [ paid Dr.

Smith ]?.

Dale, I think it'd be useful -- why don't we take a step -- in the spirit of education here, why don't we least take a moment and explain to the group how Data iSight works. And the experience we've had using it since 2011, we have a very low appeal rate because it's not a black box.

It's analytically driven, and there's a methodology that when we walk that through the provider, we have an appeal rate that is middle single digits.

Why don't we talk about the mechanics of how Data iSight actually works?.

Sure. As Mark said pretty well, Data iSight is a methodology that establishes a grade of reimbursement for the provider. It does that either using a cost-based-driven methodology, meaning it uses the Medicare cost reports and other publicly available data to establish a reasonable -- using the cost as opposed to charge to establish a methodology.

And it compares like facilities and like claims, meaning it takes into account severity of illness or injury. And it takes in -- it's adjust for wages, so it takes into account the difference in geography and a -- rise at a rate of reimbursement for the facility. .

And it's designed -- and as Mark said, it's very transparent with the provider. There's a portal, which the provider can access to better understand how the claim was reimbursed. And as Mark said, our appeal rate is very low.

And -- but we have a team of individuals that if the provider raises their hands or has any questions about how the claim was reimbursed, the methodology behind the claim and -- either a physician or a facility, then we have a team of advocates that engage with that provider to educate the provider, help the provider understand the methodology, help provider understand the reimbursement, and enter into discussions with the provider if they have any questions around the rate of reimbursement.

And as Mark said, our appeal rate with the providers have been, for the most part, very low. .

Yes. Supplemental to that, when you look at our network, the 1.2 million providers under contract, then you look at our analytical negotiation services, all of those claims by contract, by agreement, there is no balance billing, and the member is held harmless from any surprise billing..

And we've seen, over time, that out-of-network providers often, after some experience with MultiPlan, either for the negotiation, analytical services or Data iSight, will become a network provider for all the benefits the provider gets from being a network member within MultiPlan. But the network continues to grow year-over-year.

It's now 1.2 million providers in a national [ system ]. .

Yes. That makes sense.

I guess, do you have any data around what percent of members are kind of stuck with the surprise bill of those claims that -- where you don't have a contract network, just purely relying on iSight?.

Historically, the appeal rate has been in the 4% to 5% range going back to 2011. And the overall majority of those cases, the -- there's a -- the negotiation results in a settlement and the member is protected and the provider gets a timely, accurate payment. .

Okay. Got it. And then just one last one, and I'll hop back here in the queue. On the surprise billing, I thought that breakdown of your revenue was extremely helpful here.

I guess as we look at the around the 11.4% of the bills that are either settled using your network or through your negotiated process, what's the risk here that a surprise bill, federal legislation, really just obviate some of the need for your complementary network? So the -- your plans will just -- say, we'll just rely on that benchmark or whatever it will be, and we won't rely as much on MultiPlan for -- as entry network.

.

Well, look, I'm not prescient enough to know what will come out of Washington, DC. I think as we said in the presentation, I think we have these 2 models.

But I look at the years of experience we've had operating in those 30 states, and based on that, it's had a material impact on our business, and that our network business, our complementary network business, our negotiation services has continued to flourish and grow.

So I make the conclusion that it will be a similar experience at a federal level with the self-insured [ list of ] plans. .

Your next question comes from Rishi Parekh from Barclays. .

I wanted to clarify one item. On the -- on UNH's YouTube video on Naviguard, they talk about the price-enabling strategies and savings on bill charges. It seems as if they have some type of analytical platform. Now I get it, it may not be that robust, and I agree with you that your platform is a lot broader.

And I also agree that you're not going to lose 100% of the UNH business.

But given their platform and assuming that they're active, and considering UNH's public comments that they're indexing out-of-network claims in Medicare, do you expect to see certain types of UNH claims, such as ED claims or lab claims shifting over to Naviguard? And even if it does, will you still have a role on these claims?.

Dale, you're -- why don't you comment on the way -- I think -- why don't you comment on the way that MultiPlan is used by United across all their book of business? Because in Naviguard -- Naviguard, quite honestly, is another product offering that United brings to the marketplace.

And one of the -- embedded or included in Naviguard offering is our Payment Integrity product, because we have a robust, very effective, prospective Payment Integrity product, which I believe is the gold standard and best-in-class. .

We view Naviguard as a reference-based pricing product that United will bring to a certain segment of their marketplace. But United uses all our solutions to enhance their offering, lower their medical costs, lower their administrative costs and improve their go-to-market strategies.

Dale, can you supplement that?.

No, I think you're right, Mark. I mean it is clearly one -- it is one of the several programs that UnitedHealthcare offers.

And it really gets down to the choice of the employer to adopt a reference-based pricing program, depends on a number of strategies and their objectives and their health plan and we -- and how they want to go about minimizing plan costs.

And as Mark said, United uses as an array of services from MultiPlan, depending on that configuration, their needs and their clients' needs. .

United has -- Look, United is a market leader. It has a very diverse customer base. And that calls for offering a variety of health plan options to the employers, and the employers often offer multiple benefit plans. And I see Naviguard as one of the plans that UnitedHealthcare will offer their health insured ASO customers.

And just like we've been doing since the early '90s, we provide value-added services, and that they will take us along because we can improve the performance of that product..

It's very analogous to when [ United Ready ] is a product to go on the ACA exchange market, the exchange business, that's another product offering to that segment of the population, low-access MultiPlan services as well to produce better medical cost management in terms of egregious and excessive billing, and at the same time, identify collaborations that are inherent in some of the care that's being delivered today.

.

And with that, can you just maybe provide us an idea or quantify the number of lives that have actually migrated over to reference-based pricing and what your expectations are for '21 versus '20?.

I don't believe we have that data at hand to respond to that. Reference-based pricing... .

But I do think it -- excuse me, I do think bears repeating. And the guys have said this a bunch of times here, our business has grown with United, okay? Our business will continue to grow with United quarter after quarter. And so how many lives have migrated to Naviguard? It's a reasonable question. It's certainly not impacting our business. .

And then... .

I think the follow-up on Josh's earlier question, the United growth from Q2 to Q3 is greater than the 8% growth of the entire company from Q2 to Q3. So United continues to grow and be a bigger part of our business. .

Great. If could just ask one more. In the past, you've talked about with -- that you have this, I guess, you call a revenue-sharing agreement with your payers or your customers, and that UNH makes money on your services other than the cost saves, and that creates some stickiness with these customers.

I was hoping that -- if you could just quantify what this amount is with UNH or in total with all of your payers that -- so we could better understand that stickiness.

I mean is it $50 million? Is it $100 million? Is it $200 million, $300 million?.

I can't tell you the -- I can't tell you the -- I can't answer that question. I truly don't know. .

Your next question comes from Andrew Kugler with Goldman Sachs. .

So first, just to remind -- first, historically, claims repricing has been outsourced to third-party vendors such as yourself.

Can you maybe just talk more broadly about the market and why this is the case and hasn't previously been insourced?.

Are there any sort of regulations or any kind of ERISA legislation that prevents this? And does it sort of matter if the repricing amount is based on a negotiation or a nonstandard reference price like cost plus, which is what you guys do, compared to maybe a more standard reference price, such as a multiple in Medicare, like Naviguard seems to do, a percent of both charge, like it has historically been the out-of-network repricing amount in the past? And do you see the market shifting anytime soon to insourcing versus outsourcing?.

Okay. So the -- our customers view us as a partner. They outsource the repricing of out-of-network claims because we have a market data advantage, an incomparable database across 700-plus payer customers. We're highly automated, we're highly efficient, and we can reprice those out-of-network claims in a very timely and accurate manner..

It makes it much more cost-effective for them to use us than to internalize those services. We have impressive size and scale. We have a differentiated data advantage. We have incredible speed and accuracy and persistency in those claims.

And for nearly 30, 40 years is payers have recognized that value, and that's why they continue to do business with us and our business has continued to grow year-over-year. .

Let me just add something, Mark, if I may. When we were doing diligence on the company, the thing that we were most impressed by is the fact that they're drawing their data from claims of 700 payers. It's not a single payer database. It is claims from 700 payers.

It is very, very different than what any single payer can do on their own, which is why they all come to MultiPlan, because we provide that independent third-party gold standard. .

There are many, many products that are in the market today, and they have been forever, whether it's reference-based pricing or consumer advocacy. I think what might be getting lost a little bit in the translation is that we're talking about apples and oranges here. Solutions like -- you guys keep mentioning Naviguard.

Solutions like Naviguard, they're consumer-facing. You can go on their website and see it's a nice product, but it's a consumer-facing product that helps consumers to negotiate doctor bills. And it's done on a one-by-one basis. .

It's fundamentally different than what we do. We're an enterprise solution. We process 360,000 claims a day, 7 days a week, 365 days a year. So we support and we are very much in favor of products like Naviguard because they help consumers.

And one of our strategies in Expand, you may know, is for us to start to provide services to providers and consumers, in addition to payers. So this is all quite consistent.

But the motion that this is taking business away from us or that this is going to be in direct competition with us or that United is stopping its flow of claims with us, is just factually inaccurate. .

We would now like to turn the conference back over to Mr. Mark Tabak. .

Thank you very much. I'd like to leave you with a couple of thoughts, if I may. MultiPlan, for decades, has enjoyed a market-leading position with impressive scale and a market-differentiated date advantage. Mission-critical nature of our product really has created a competitive moat around our company that drives high recurring revenues.

And the attractive financial we have gives us strong cash conversion and best-in-class margins. As I said before, we will be doing a non-deal roadshow in the coming weeks, and we look forward to speaking with you all again. Thank you for your support. .

Ladies and gentlemen, this concludes today's conference call. Thank you so much for participating. You may now disconnect..