Q3 2020 Multiplan Corp Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the multi plan Corporation third quarter Twentytwenty earnings Conference call. At this time all participants are in a listen only mode. After the speakers presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone please.
Be advised that todays conference is being recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today Shauna gastric. Thank you. Please go ahead Madam.
Good morning, Thank you for joining us today for multi planned third quarter 2020 Ernie.
<unk> call today, our speakers will be Mark payback, Chief Executive Officer, Dale White, President a pair markets and David Redmond, Chief Financial Officer Paul.
Oh go on President of new markets will be available for the Q and a session.
During the call we will refer to the slide deck, you will see during the webcast which is available.
Please 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 90, 95 actual results may differ materially.
Really 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. One and other SEC filings.
Any such forward looking statements represent managements 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 can 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.
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 visible in the earnings press release and in the presentation slides included in the Investor Relations portion of our website.
Right.
At Www Dot multi plant.
I would now like to turn the call over to our Chief Executive Officer, Mark payback.
Thank you Shawn I will start on slide number three.
Welcome everyone to multi plans third quarter earnings call My team and I are very exciting.
Think about this important next chapter of growth for our industry, leading companies on their recent debut on October Eightth.
I've been at the helm of multi plant for almost three decades and have never been more enthusiastic about our future.
The sort of all I will give you a few remarks and hand, the presentation over to bill to talk about it.
Thank goodness in the proper progress one or three part growth strategy.
Today to talk about financials.
Yes. Please.
From an internal perspective, we delivered a strong third quarter with revenues of 224 million and adjusted EBITDA of 166 million, we performed significantly better than we did.
Duly projected at the start of the pandemic and also better than the updated projections that we gave you at our August 18th Analyst day.
Year over year decline is due to cobot, which impacted us less in Q3 than in Q2, we did cause a drop in realized customer savings that drive a big part of our economics. They will give you.
There's more detail on that later.
No based on where we sit today, we believe that we will deliver a strong fourth quarter with revenues in the range of 238.
253 million and adjusted EBITDA in the range of 180 $194 million at the midpoint of that range. This represents your <unk>.
Revenue growth rate of 9.8% quarter over quarter.
And minus 0.4 tenths of a percent year over year.
Adjusted EBITDA the growth rate is 12.3% quarter over quarter and.
0.3 tenths of a percent year over year.
Yes.
Women time since our August.
The analyst day, our team has continued to execute our enhanced extend and expand three part growth strategy, we call multi plan 3.0.
As you will see in Dalian days presentations, our third quarter financial performance was not only driven by lower than initially projected Q3 could impact, but also more importantly from ex.
Executing our growth initiatives.
Its growth initiatives, including new customer contracts.
Products that play a meaningful role in building our business.
Continue our customer extension into both highly penetrated and Underpenetrated segments, we were in the process of adding new sales.
More business development and product management.
And talent.
Let me share some concrete accomplishments, but the team delivered since our analyst day.
Our largest successful refinancing has enabled us to increase the duration of our debt.
Reduce leverage increase.
Increased our revolver reduce our annual interest expense by approximately $70 million. We were also pleased.
That Moody's upgraded our credit rating.
Two.
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.
Please.
It gives us a new product capability in support of our enhanced strategy and deepens penetration in adjacent markets that we are targeting with our extend strategy there.
They will go into details of the acquisition, which we believe helps to de risk our execution and accelerates our growth equally.
Equally important this acquisition was.
Weak unit at an attractive price will be accretive to multi plan. We will continue to pursue these types of acquisitions with discipline in support of our growth strategy.
Next.
It is important.
Set the record straight on some narratives from someone attempting to run a short campaign against multi plan.
Multi plan has been in business for more than three decades, we serve all of the major insurers in the US we serve more than 60 million people and work with 1.2 million providers.
We were a real an extraordinary business made money for every investor that has ever invested in multi plan the management that runs.
After this business built it and help to help build an industry. It is offensive to have anyone suggest anything else.
There were four assertions that we have heard that I've listed on this slide all of which are completely false.
In addition, I ended up this topic, which I will cover as well.
Unversed assertion made by the short seller is that United Healthcare is planning to exit the relationship with multi plan 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 with a consumer advocacy service called NAV at card.
That is absolutely false.
Our business with United Healthcare continues to grow every quarter.
Second.
The multi plant and second that multi plans relationship with large payers is deteriorating leading to a reduction of our pricing by 50% over the last four years. This.
This again is absolutely false or businesses growing with our top cost.
Customers.
Third the multi plan to use financial engineering to prop up its earnings to show to show better financial performance in 2018.
Again this is absolutely false.
Revenue reserves at multi plant are small and changes to those reserves.
Completely immaterial impact on our two.
Sales in 18 revenues.
Fourth at.
At Helmand Friedman gutted the company and couldn't find a buyer until Churchill came along.
This again is absolutely false multi plan was executing its standalone price.
Private market strategy and their merger with Churchill was done to reduce leverage.
Excuse 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 as a few they multi plan as vulnerable to potential federal legislation rounding.
Adam network claims that 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 much more analysis to hopefully help investors better understand how these types of laws, which are already present in 30 states.
In fact, our business.
Next please.
Let me drill down into United navigate sorry.
There's so much wrong with what the short seller manifesto has said that I candidly don't know where it where to start.
United is not leaving multi plan.
This has been an extraordinary customer.
For partner and industry leader we.
We have work they have worked with us continuously since 1994 and are continuing to grow their business with us even.
Even in a tough year like 2000, 2020 with cobot 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 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 multi plan solutions for both self insured and fully insured employers.
And 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.
Sales of them in their employer customers billions of dollars in medical cost not dimension.
Straight up cost every year at a borrowing 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.
Serving their end customers and members.
Now, let me address Nabokov navigate card.
Let me be clear now.
Other guard is a helpful service and in no way is a replacement for the sophisticated suite of products that multi plan provides navios.
Navigate addresses a particular niche, which multi plant as a broad base, while multi plant as a broad based and comprehensive cost management solution with 1.2 million with a 1.2 million provider.
Network used by 700 payers that process to $106 billion in claims in 2019 and identified more than $19 billion in potential savings opportunities for our customers.
Referenced based pricing services determine a reimbursement to be paid by the plant we're at a network.
Where claims using a reference point such as Medicare.
And then if the provider sends a balance bill that solution can offer online tools and perhaps consulting services help the patient negotiate the balance bill directly with their doctor multi.
Multi plant enthusiastically support United Healthcare and the work they are doing to help there.
Summers and their plan members when a balance still is received.
Well I referenced 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.
For other agreement that the provider with a provider except the plans 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 navigating.
The choice of an employer to adopt referenced based pricing depend.
Hands on the employers objectives for its health plan.
Employers seek seeking to mid to minimize plan costs will.
We will favor referenced based pricing, while those seeking to protect employees will stay with a more traditional benefit plan design in reality interest in aggressive versus.
Interest in aggressive.
Of this 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 referenced based pricing services do and went multi plan does.
They are apples and oranges.
While deeply and supports a wide variety of benefit plan design.
Including referenced based pricing referenced 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 in benefit plan designs their customer base is not a one size fits all.
I should also make it clear that church.
So like any sophisticated investor perform significant diligence about multi plan and its customers, including United Healthcare and were satisfied that those relationships are rock solid and represent a foundation for multi plants continued future growth.
On a final note our relationship with United is a strong.
As it's ever been and in fact, it's expanding not shrinking.
We have a number of exciting initiatives that have either deployed this year or implementing involving several of our key services span.
Spanning several United lines of business and also benefiting a number of the United Healthcare 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 our customers commitments to partner with multi plan has never been.
Been more robust and our pricing has remained steady with the normal give and take between volume and price.
As we talked about during our on analyst day multi plan as an important value added partners 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 ICTI and process integrations into the prepayment workflows of our payer customers.
These two elements allow us to quickly process claims reduce costs and help protect members from potential balance billing.
As he said in the past 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 continue to see strong relative performance among our top payers even in.
Last two quarters as they use a variety of multi plan solutions to contain costs and protect their members that.
The growth for our top 10 customers as shown would have been even stronger if not for the idiosyncratic headwinds we felt in 2019 and issued 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 remain steady.
Well no there has been some confusion with the way we've been disclosing savings in revenues, which I can sympathize with I can sympathize with so I've asked Dave to tackle. This later in the presentation in short while the prices.
Terrific, we charge our customers are mostly volume related.
And our high single digit double digit percentages of savings they realize 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 they.
Says that we provide them they actually use.
As you can imagine we preferred to avoid disclosing specific pricing levels for competitive reasons.
But the price the prices, we charge and the conversion rates of savings into revenue I have not seen anything like the types of headwinds floated out there.
Probably the short sellers.
We have had a productive year extending contracts signing on new logos rolling out new programs that will lead to greater revenues from multi plan and more savings in value for payers and consumers.
Let me now turn to the third topic to clear up speculation that multi plan use.
Aggressive accounting policies to mask performance in 2018.
Revenue reserve releases.
And a 1.1 million dollar impact on revenues in 2018.
In fact, we had less benefit in 2018 than in 2017, so our year over year Rick.
Turning to revenue growth in 2018 was lower as a result of these accounting policies.
Okay reserves are small in the context of our total revenue not the 10% to 30% type of figures described in the short sellers manifesto.
Each year multi play an appeals.
And other multi plan reviews.
Repeals and other changes to the savings we generate to do our best to conservatively reflect our revenues with more frustrating about this claim is that in 2012 and 2020 revenue reserve 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 reserve has slightly grown since December I'm.
Im proud of our finance and accounting team.
Led by longtime CFO, Dave Redmond, and we will continue to appropriately and conservatively recognize revenues at multi plan.
The last short seller claim I'd like to address relates to that.
The purchase a merger and multi plans prior private equity ownership.
Our company was by no means under invested in and was not at any point for sale by Helmand Fremont and our other investors multi plan was investing in it and our capabilities and seeing strong growth in our in our newest products.
Data eyesight and payment integrity through.
Reiterate our company was not for sale church.
Churchill unilaterally approached us in the spring with a powerful thesis around unlocking and accelerating growth.
That that's thesis along with a robust pipeline of opportunities led to the merger de leveraging and public.
Listing of our equity multi plan successfully partnering with private equity firms such as multi plant has successfully partnered with private equity firms for to get decades. As we grew the business through both organic product development and M&A that the public listing was the right step for our company multi plans robust margins and free cash flow.
Like our result of our scale and long term commitment to technology and automation not the result of our capital structure or ownership next.
Next slide please.
Let me now discuss propose federal surprise billing legislation. This is not a new story.
But it bears further scrutiny.
Apprised billing laws are designed to protect consumers unexpected medical bills.
These laws say that for certain types of providers, primarily emergency rooms.
And as the geologists radiologists pathologists consumers cannot be billed for an added.
Had a network charge when they unknowingly arrived at an AD network IAR facility or have an elective procedure at an in network facility, which employs an added 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.
In in network year to have your fractured League said.
The surprise building law would say that you cannot be hit with a surprise bill for the AD network Anesthesiologists, who assisted with the procedure. All of these laws aim to eliminate unexpected healthcare bills to consumers, which we of course support as it is concern.
So Tim with our core mission to make health care more affordable efficient and fair.
Multi plan has long communicated as we did it again on analyst day.
That the exposure of a potential fed will surprise billing law to be about $90 million to $100 million of revenue.
I want to give you two points of analysis that six.
Suggest the impact could be less than this one which shows the impact from state laws of only 0.9% to 2.7% of identified potential savings on surprised though related claims 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 seven of the presentation about 79% of the 17 billion that multiplan identified as potential savings or its commercial payer customers in two.
In 19 and from claims that are unrelated to surprise bills.
These identified potential savings are in no way impacted by current state and propose federal surprise doing laws. So we were talking about the remaining 21% or $3.6 billion of the total identified potential sale.
I think that came from claims address by surprise billing laws.
Now out of the 21% it related identified savings approximately 11% was generated through our provider network negotiations services, both of which by contract with the providers eliminates surprise bills and are likely not not.
Headwind to our business.
The remaining 10% or $1.7 billion of identify potential savings 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.
The federal surprise billing law as I will show you in the next two pages our experience in the states show that very few customers stop sending us surprise Bill related claims as a result of state surprise Boeing laws being enacted and those that did drove only about 2.2%.
For 300 said.
$74 million at of Era, 17 billion and identified potential savings.
Next next slide please.
There is a lot of detail on this page and Darryl White will take you through the process in his section. We are now let me focus us on what happens if a federal surprise bill pay.
Past.
His past using the hybrid approach, which is one of the one we believe is most likely to occur.
With a hybrid approach the biggest risk to multi plan is on claims under $750.
Your multi plan may be asked to provide the reference price and the process. The claim for the payer may choose not.
To send the claims to us for processing and we were then not make any revenue on those claims is.
It is important to note that claims at or below $750 make up only 7.1% of the potential savings that multiplus identifies from surprise bill related claims and only 1.5%.
The potential identified savings when adding nine non surprise bill related claims.
This is another data point supporting the statement I just made that analysis suggests the impact of two multi plan when a federal surprise building low could be less than expected. So as you can see only in a few select cases that is in a high.
Hybrid approach for claims under 750 as the claim run the potential risk of not being sent by the payer to multi plan.
Again. This is why we believe that the potential passing of a federal surprise building law will have a fairly limited impact on multi plant business.
Next slide please.
Lastly, let me share with you our analysis of what we have seen in 30 states that have already enacted surprise billing laws.
There are a few different approaches states take to mandate, which should happen if that anesthesiologists that I just mentioned isn't in the health plans provider network, where in multi plan provider network wasn't successful.
We negotiated.
I've already explained the dispute resolution and hybrid approaches which are deployed in seven states and nine states respectively.
Another five states use a payment standard a reference pricing to set prices for these services with no prescribed option for dispute resolution and nine 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 two major federal proposals, making their way through the lawmaking process.
Those are very similar to the dispute resolution and hybrid mechanisms used at the state level.
The main difference between.
I think in the state laws and the federal is that the federal will affect our risks are regulated plans or.
Orissa is the federal law that regulates self insured employers.
This is an important distinction because claim charges for self insured and payers accounted for approximately 78% of all clean charges that multi plan processes.
Between the operate in all these states both before and after enactment of these laws and as you can see on the chart on on page nine the the 30 states represent a sizable 87% share of that potential savings identified for both self insured and fully insured commercial customers, we analyze the 18 states.
Laws enacted after 2015 looking at fully insured potential savings identified one surprise bill related claims in the year ago prior and the year following enactment let.
Let me focus on the states with surprise billing laws that are similar to the two major federal proposals.
First the seven states.
So a dispute resolution account for approximately 21% of our total potential savings for customers and response to the law multi plant customers opted to no longer sense surprised over the claims accounted for only 0.9 tenths of 1%.
Only 0.9 tenths of 1%.
Of the pre enacted potential identified savings from surprised all 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 doing 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 impacts of Cove. It in the last two quarters.
Second the nine states that employ a high.
Hybrid mechanism accounted for approximately 51% of the total identified savings from surprise bills we.
We lost approximately 3% of our surprise building leaded 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 told the loss in surprise building ready 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 center.
5 billion claims to multi plan for processing.
Net loss amounted to only 2.2% 2.2% of our total potential.
Identify savings on surprise Bill related claims in the year preceding the enactment of states surprised going laws noodles.
Notably in the two categories were proposed federal legislation might land dispute resolution in the hybrid approach the percentage drop was less than 1% 0.9 tenths of a percent.
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 plant.
Plan was underwritten nor do we know whether the facility were services were rendered was in or out of network, which is important for non IAR services.
Well, we've made reasonable assumptions. The analysis shows that we grew identified potential savings from some surprise overland and claimed by 28% from the 12 month period.
More in the 12 month period. After these 18 states inactive their surprise billing laws, even accounting for the the known loss of 2.2% of that business as a direct result of the laws.
Multi plant has been in business for nearly 40 years, we have worked with many of our customers and especially the large payers.
How much of that time, we evolve as the market evolves, we didn't stand still as the states pass the surprise going laws, we created new approaches to help our customers operationalize.
And comply with these laws these.
These actions account for much of the 28% growth in identified potential savings in these states.
The surprise doing 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 multi plan is in the business of reducing medical spend and we do this through a variety of technologies and data driven methodology.
Jeez that administer claim repricing and settlement that is at the core of what any federal surprise booing law would require we are well ahead of the game and being prepared to help payers operationalize. It federal Bill, which we believe is not likely to be enacted and operationalize until 2023, if it bill is passed.
In the near term.
Let me next slide please.
Let me now hand things over to Dale for a business update.
We will start off by telling you a bit about our business they'll hit on three facts.
First we are a data analytics company in the large and growing 3.8 trillion dollar us health care system.
System.
Second our customers our commercial health care payers, they 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 on over 100 and on overall.
Hundred $6 billion of medical claims in 2019 in short and without question without us.
Here with before or 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 know who haven't met me I'm Dale White president of payer markets.
Since multi plan is new to the public markets I would like to explain a bit about what multi plan does and how it does.
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 three part enhance extend and expand strategy will drive our growth in the coming quarters.
In 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 marks tagline and tell you that multi plans core mission is to make health care more affordable.
The U.S. healthcare system is.
A 3.8 trillion dollar market growing at around 5% per year.
Over 1.2 trillion dollars of this is estimated to be overcharging unnecessary services errors potential fraud waste and abuse for administrative friction costs.
As our job at multi plan is to reduce the end costs to our customers by identifying and advising them on how to reduce the cost of settling medical claims we.
We do this by leveraging our large network of 1.2 million providers within we have contracted rates as well as through our market.
Leading data and analytics that help set fair rates, where we don't or 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.
Haas 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 dollar health care market that includes Medicare Medicaid and commercial health coverage today, we focus.
Cory Merrily on the 1.3 trillion dollar commercial market and within that segment, primarily in the commercial out of network space, which is about 10% of that were about a $130 billion of medical staff.
We are the largest player in the commercial out of network space and work with payers.
[laughter] offering both fully insured and self insured business.
We serve healthcare payers that account for at least 80% of all commercial covered lives than us.
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 the in adjacent markets.
We highlight two adjacent fees on 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 comers.
Personal relationship so we enter into those sales discussions as a known and trusted partner and.
And second we have a lot of room to grow both in adjacent commercial segments like T A's and regional health plan as well as property and casualty payers in fact, the acquisition we recently in.
Announced will accelerate our penetration within the TCPA 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 develop severe elbow pain, so James scheduled an appointment with a pediatric orthopedics Dr. Smith, who is an out of network provider.
Jane will have to pay a co payment.
$50 in this example, and the Doctor bills $1000 to Jane's health insurer.
Without multi plan Jane's health insurer, the payer might try to negotiate a reduction of the bill.
But more likely will apply the plans usual and customary benefit rate of say 800 dollar.
Emitters.
Jane OWS per portion of the plans co insurance, which is 40% in our example, another $320 lesser co pay.
So James out of pocket up to $520, because there was no network contract.
And Dr.
Dr. Smith has the right to build or the difference between his $1000 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 $1000 Dr. Bill actually cost.
Cost of three parties, a total of 12 of $1200.
Next slide please.
Now, let's see how things are different with multi plan.
In this case when James Insurance company receives that Bill from Dr. Smith, the Bill is electronically sent to multi plan.
Maybe dr. Smith is one 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.
For advice that payer to pain amount supported by our claims data and.
Britain's let.
Let's say, we reduced the claim to $600 under in 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 co insurance and copayments.
Ill, just say, the insurer and Jane money and the provider and payer both incurred lower administrative expenses. So in this example, the $1000 Dr. Bill actually cost the three parties a total of $700.
We charged to healthcare payer a percentage of realize.
We 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 yours.
In this case, we saved the payer consumer and.
Hi, Vitor $500 in medical and administrative costs for which the payer paid $40 to multi plan.
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 at.
Out of the $100 billion dollars plus in claim charges process through multi plan roughly $45 billion.
Presented a savings opportunity and we identify potential savings equal to approximately 40% of these claims charges.
Next slide please.
Let me switch gears now and talk about multi plans three dot owes strategic growth plan.
Thanks.
Looking at the healthcare value chain today, we delivered value.
Two critically important areas for our payer consumers multi plan is the leader in pricing and payment integrity, primarily for out of network claims.
We intend to continue.
Dr. initiatives to improve in these two 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.
Are they are critically important constituents in the healthcare 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.
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 three part growth strategy.
Next slide please.
Our three 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 base 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.
Where that are underpinned.
And traded this.
This includes commercial in network claims.
Government and other adjacent segments like TPS 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 to $37 up $37 billion in Tam.
Next slide please.
Here you can see the project.
Adjusted revenues and adjusted EBITDA attributed to the three growth strategies, which we present that on analyst day.
Our acquisition of Hsp announced on Tuesday contributes to both the enhance and extend strategy 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 that 15 priority initiatives that are driving the enhance extend and expand strategies.
Paul Galant, our president of Nu Mark.
It is focused on the expand strategy and together we have identified the initial K T. I 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.
Cornerstones of the enhanced 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.
Sure 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 close deal and we have a number of very interesting opportunities in the pipeline.
Hi, Brian.
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 NCCN, which were subscale in revenue and had no EBITDA when we bought them.
They now make up approximately.
Only 70% of multi plans business and drive, 75% plus margins and we expect similar growth with hsp.
We are also looking at medium large and even transformative acquisitions, especially in the extend and expand segments of our growth strategy.
Jim.
I am very pleased about this new addition to the moat to multi plan for a number of reasons not the least of which is its projected growth, particularly considering when considering the relationships and scale that multi plant can use to support and further accelerate that growth.
HM QE is a reference based pricing service, but its not a traditional referenced based pricing company. It takes what has historically been an adversarial strategy luminance limited in its use to the small end of the commercial health market.
And has repositioned into a collaborative approach that we know has extensive.
Perfect and appeal to health plans.
HST delivers new services that can be deployed in the TCPA market could deepen our penetration there starting with that 44% of its TT customers that don't work with multi plant today.
Today, the outlook for HST in 2000.
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 multi plant distribution or cross selling we are extremely excited about the business.
HST joins multi plan with 2020 revenue is 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 multi plan has proven can take the right product well beyond the space at AACR.
Pies as a standalone business.
Next slide please.
I will now stop and pause and turn it over to Dave who will talk about the financials.
Dave.
Thank you Dale first.
First as Mark said earlier, we delivered a strong quarter our revenue growth grew to 23.5.
$5 million in Q3 up 8% versus last quarter and down only 9% versus Q3 2019, the year over year decline is due to covered which impacted us last in Q3 than in Q2, but didn't cause a drop in realized customer savings that drive a big part of our economics customer sales.
Dennis over 1 million covered related claims, including many covert test at relatively low dollar amounts and many of our payer customers chose not to have those test negotiated down or negotiated an adjudicated at amount higher than they might normally have adjudicated that is a bulk of while revenues were down year over year.
Our identified potential savings on the cobot 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 national Dave.
Stay was not only driven by lower covet impact. It was also driven by signing new customers and other initiatives associated with our three part strategy next slide.
We have all been affected by call that.
As well as the follow on effects over the last several months.
Analysts here are three examples of how we have 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 simple.
Similar logarithms, which strengthen the system and we are ready when more charges come we.
We are deploying agile teams to capture the opportunities and address new markets.
We're off or growing our offerings and sales force for government business as we expect some shift in membership to these lines of business in future calls.
Once we believe in through cycle investing and we continue to build new capabilities for the opportunities ahead. For example, we are fine tuning our logarithms to identify cost savings opportunities for Tele health claims that we see increasing significantly we looked at a lot of ways to understand the impact of Cove. It.
We are worried to cope payors.
Would lose customers and they have as businesses close in contrast, we lost a few accounts all small and our growth initiatives more than compensated for any lost revenue.
Next slide.
On this slide we compare Q3 2020 Bucks.
Budgeted revenue.
Q3, 2019 actual revenues in Q3 20.
20 actual revenues on analyst day, we thought the covert 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.
Altered in approximately $184 million to $194 million of revenue in Q3, and even lower if you assumed a $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 cobot are unusual and we believed you deserve to look at this data, but in the future. We may not necessarily provide these bridges in every call next slide.
Well 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.
Three.
Next slide please.
Our Q3 2020, adjusted EBITDA reached a $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 cover that 2020 has been in the pending its 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 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.
This class B plant 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 increase and we are delivering more value for our customers for claims so its been.
To the unified 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.
I doubt were identified versus normal rates, because they did not want to negotiate down the cost of covered tests and perhaps certain cobot related procedures.
Next slide please.
While it is common for people to calculate revenues as a percentage of identified savings we want to reiterate.
This metric can be misleading for two fundamental reasons first there are timing differences between these two numbers as claims takes 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.
Five 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 in settlements as we sort some odd items out with our payers and providers, where they provide us corrections.
Thats just normal course of business.
Yes, 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 zero in some cases, if they believe it is in the.
For us interest in a given provider relationship or regulatory environment as noted on the slide revenues as a percentage of savings for Cobra related claims are 15% to 20% lower than normal experience through the cry out the crisis, we have seen the medical expense ratio of our customers decline and we believe that payers.
The often not taking as much of the potential identified savings as we indicate.
To them. Another example is that we have seen very large influx of claims associated with covance. They.
They are lower dollar clams, and many payers have elected not to challenge their cost our payer contracts as mark and Dale of many.
And our normally three to four 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 was $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. and Orange churns. Our audit fees go up we have to be Sox compliant by December 31, 2021 board fees.
Seasonal 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.
Actually around the impact of a second covered 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.
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 may be new procedures therapies et cetera. This would.
Via 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 there.
This year, obviously, we overlaid covert impacts and that we and we believe we will have to consider cobot 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.
We wanted to give you an update of how we're thinking about it obviously there is a lot of uncertainty here, so I wouldn't really call it guidance, but on analyst day week.
Cassidy a billion 85 million to $1.125 billion in revenues and 845 date hundred 70 million and adjusted EBITDA for 2021, we have not adjusted this forecast are and are currently in the process of developing our 2021 budget, we expect to complete the 20.
Bored running on 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 mentioned in our capital allocation framework. We strongly believe that organic growth is the most value accretive so to the extent that that needs capital. We funded second in line is value accretive M&A. We are obviously thoughtful about this and don't do M&A just.
As for M&A sake, it has to be the right company address right price.
Get over our return threshold.
We have a goal or target to maintain about four to 4.9 times 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 Thanks, Dave.
Multi plant has always had great leadership.
We've enhanced that leadership team as we've gone public including Paul Galant our.
Lab president of new markets.
I also want to tell you that were actively building investor relations function.
Dedicated executive to be responsive to investors and lenders going forward.
This will give you a much more accessibility to in contact with us as we go forward.
We are also planning a non deal road show.
Shortly so I look forward to speaking with you again soon.
Let's now open up the.
Two good questions.
Thanks.
As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound or hash key.
Now.
Please standby well we've compiled the culinary roster.
Okay.
Your first question comes from Josh Raskin from Nephron research.
Hi, Thanks. Good morning appreciate the extended call. This morning, obviously very timely.
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 gosh why you ask your second question.
Gotcha, all right second question just.
Thanks.
You know you've talked about a couple of times small customer losses et cetera are any of those customers going to competitor offerings and if you are losing them what exactly are they doing.
Dale you want to speak to the.
Thanks to the competition and customers.
Sure.
Sure I mean, the customers. It really is a function of their cost management strategy and and as and I think as we've said it they have been.
And flows.
As the economy does and in.
In reality, there interest can be it can.
Aggressive or Jim.
It can in aggressive or generous to health and benefit approaches and that ebbs and flows always with the economy. So so if we do lose a small number of customers.
They may.
They may be changing your strategy there.
Maybe.
Using.
Another type of service.
They may be a reorienting their strategies to include payment integrity, there's lots of reasons why the small customers.
Move around and.
And we're excited about the addition of HST and the opportune.
In beauty to work with them and the addition of the referenced based pricing program.
Program that it brings.
All right, which brings national next question HST versus Napa card can you compare and contrast, I understand they are both in the reference pricing worlds, but it sounds like you believe HST is little bit different.
Yes.
You know large why don't you speak to the unique nature of the the collegial approach to the marketplace.
For HST and and then we do the comparison to what the navigator and offering it really is about which is largely focused on.
Patient advocacy if you will.
The supplement yes, I can get ill take the first part of that question.
It just tease approach I mean, I think as I said in my remarks drives.
There are a number of reference base pricing companies that have been around.
For a while and many of them were adversarial in nature and what what excited us about HST was twofold.
One was their collaborative approach with providers they take a very.
Very collaborative very engaged.
Approach with the provider community and 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.
But they also have a patient advocacy center.
Bad debt that they can utilize to engage with the member if any issues come up as the members navigating their way through the.
Through the delivery system. So from those two points that their collaborative approach is not adversarial it fits nicely with our provider network strategy.
And during gauge meant on the front end.
With the member and with the provider is what excited us about the HFT model.
But just to follow up on the basic Mark the basic mechanics, I just want make sure I get the basic mechanics, right and that's a base mechanics are they're using a reference price to reprice claims crack and I'm, assuming it's typically off of some sort of percentage of Medicare is that are those sort of the similarities of the approaches to those two companies.
Yes, so let's have a.
Heavy referenced based pricing often times using Medicare as the as the reference point and then they both have both navigate card and HST have a.
Consumer advocacy advocacy program that they try to mitigate the exposure to higher exposure that those members would have.
Out of pocket costs for both in network, which will be the co insurance and deductibles and also for the out of out of network of charges as well at the same time.
Dress issues relative to.
Abrasion or potential abrasion with providers in a brush potential abrasion with the subscribers.
Yes.
One more and then maybe I'll jump in queue.
Your next question comes from Daniel gross light with Citi.
Hi, guys. Thanks for taking my questions and I appreciate all the color that you're getting on this call. It's very helpful.
No one of the contention that short report is that basically.
Your contracts are not enforceable.
So can you you go into more detail on.
What a typical contract entailed.
And whats preventing someone like a United.
Rob.
From from using something like a navigate art Wow Phil.
Being in contract with you simply shifting clean fit to navigate.
Well, we are contracts, our contracts with a large payers or multi year.
United been under multi year contracts.
It's 99.
For.
Cigna since 1992.
And in essence 99 before.
As an example, the contracts you know multi year, they automatically renewable and when we sit down and do the contract.
It really changes is the scope of <unk>.
Which is we provide them.
It's not an adversarial contract renewal process, it's they sit down with our team that they look at how we how in the Hell how together we can enhance the value.
In a rating more savings through the solutions.
We have identifying.
I agree just billing or or clinical or have aberrations to our payment integrity product Oh.
What the basis of those contracts is the continued value that we provide those payers are both their insured book of business, where it where they're taking their medical risk.
And then for their self insured business, where they provide an array of administrative services.
None of which are the multi plan at a network solutions.
Got it and can you just speak to the exclusivity.
Built into the contract in it that it's kind of neat thing preventing.
A large there from shifting claims to another similar.
Similar service.
I think in almost every case.
The out of network business more multi plan is in that first position and receives all almost all the out of network claims. So we get first look at all the out an out of network claims Asian goes.
The provider provider sends that claim to the payer to payer sees it that providers in their network, if they're not in the <unk>.
Customers proprietary networks, they electronically send that to to multi to multi plant. We get first look on that and as bill Dave and I also mentioned last year we.
We received a $106 billion in charges from from those payer as payer customers. We also Taylor Taylor our solution set of networks negotiation at eyesight.
To meet the goals and objectives of the ore that payer on to maximize savings.
Obviously, the more savings we can generate for the pay or the more revenue we can generate for for for multi plant and we have a high persistency pride persistency rate and generate significant savings as they as we referenced were $19 billion on over $100 billion in charges receive that last year.
Got it okay.
And then just going to use your example of.
Hi, Jane intact here, yes.
Dr. Dr. Smith is not contracted with land youre using your rifle.
Got it.
What's stopping in Russia.
Going to Jane and balance billing for that or.
Hundred dollars that Ah that you say is there anything.
That that prevent down filling when when I say it.
[noise] Dale I think I think it'd be useful why don't we take a step.
And for an industry.
Education here why don't we take a moment and explain to the to the to the growth.
Our data Isight works and the experience we've had using it since 2011 and we have a very low appeal rate because it's not a black box adequate analytically, driven and there's a methodology that.
We walk that through the provider we have an appeal rate that is middle single digits. What are we talking about the mechanics of how that I said actually works.
Sure.
As as Mark.
Mark said very well.
Data eyesight is a methodology that.
Word of establishes a grade of reimbursement for the provider.
It does it does bad 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 white facilities and.
Life claims.
Meaning it takes into account severity of illness or injury.
And it take and just for wages. So it takes into account the difference in geography.
Refi and a rise at a rate of reimbursement.
For the facility and and it's designed and as Mark said, it's very transparent.
You know with a 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 but we have a team of individuals that if the provider raised their hand or has any questions about how the claim which Matt.
How the claim was reimburse the methodology behind the claim.
And either a position or.
Facility, then we have a team of of advocates that engage with that provider too.
Education provider help to provide or understand the methodology helped provide or 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.
Our.
Our MPL rate with the providers have been for the most part very low.
Yes sub supplemental to that when.
When you look at our network the 1.2 million riders under contract then.
When you look at our analytical negotiation services or the.
Those claims by contract by agreement, but there is no balance billing and the member is held is held harmless from any surprise drilling and we seen over time that out of network providers.
Out of network providers, often after some experience with multi plan either you know for the negotiation.
Medical services or data eyesight will become a network provider for all the benefits the provider guest from being a network member within within multi point.
Well the network you guys to grow.
Year over year is now $1.2 million providers in a national sales.
Yeah that makes sense I guess you.
Have indeed around.
Parents of member.
Our kind of stuck with it you're right Bill.
Of those.
Claims that where you don't have a contract and Eric just purely.
Relying on eyesight.
Historically, the appeal rate has been in the 4% to 5% range.
Going back to 2000 or 2011, and the overwhelming majority of those cases.
Yeah, the <unk> there.
As a there's the negotiation results in a settlement.
And then 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 in the queue on the I'm, just surprised billing I thought that breakdown.
Of your revenue was down.
Extremely helpful. Here I guess net as we look at the around 11.4% of a of a bill that are either settled using your your network or a three year negotiated process, what's the risk here that.
That a surprise bill.
Federal legislation really just albeit some of the need for your for your complementary network. So they are.
Your plant, we'll just say no we'll just rely on the benchmark or whatever.
It will be.
And we won't.
As much on.
Right.
Most of my sports their Threeg network.
You know the.
You know I'm not prescient enough to know what will come out of Washington, D.C. I think it was as we said in the presentation. I think we have these two to two models, but I look at the use of experience we've had.
Had operating is 30 states and based on that it's been it's been it's had an immaterial impact on our business and that.
Network business, our complementary network business Nick.
Our negotiation services has continued to flourish and grow.
I I make the conclusion that it'll be a slow.
Similar experience at a federal level with the you know with the self insured, though resupply plans.
Got it alright, guys. Thank you.
Your next question comes from Rishi Parekh from Barclays.
Good morning, and thank you for taking on my questions and also thank you for all the details that you provided I wanted to clarify one item on the U and on your Nations Youtube video and navigate a they talk about the about price, enabling strategies and savings on bill charges. It seems as if they have some type of analytical platform now I get it I.
It may not be that real Boston 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 u. in each business, but.
Given their platform and assuming that they are active and considering you NHS public comments that their indexing out of network claims to Medicare do you expect to see.
See certain types of you and age claims such as EDI claims or lap claims shifting over to navigate hard and even if it does well you still have a role in these claims.
Dale your well why don't you comment on the way I think well I don't want to comment on the way that multi.
The multiplex is used by United across all their book of business because in that regard never gotten quite honestly is another product offering that United brings to the marketplace.
And one of the off <unk> embedded or included in that regard offering is our payment integrity product because we have we.
I have a robust very effective prospective payment integrity product, which I believe is the gold standard in best in class I. We've we've you haven't guard as a reference based pricing product that United will bring to a certain segment of their their marketplace.
And then but you know how to use.
Our all our solutions to enhance their offering lower their mettle.
Medical costs lower administrative costs.
And improve their go to market strategies.
Dale can continue supplement.
No I think you're right Mark I mean, it is clearly one of the you know it is one of the several programs.
The United Healthcare offers.
And now it really gets down to the choice of the employer to adopt a reference based pricing program depends on a number of strategies and are objectives and or health plan then and.
We and.
It is on how they want to go about minute minimizing planning costs and.
And.
And.
Hey, smart sales, United users and no radio services from multi plan, depending on back configuration, there, you're you're commuting more clients.
And you know that United has it look United is a market leader and has a very diverse.
Customer base.
And that caused for offering a variety of health plan options to the employers and the employers often often offer an offer more multiple benefit plans and I see navigate card as a as a one of the plans that United Healthcare will offer there there there are often short answer.
<unk> customers.
And just like we've been doing since since the early Ninetys, we provide value added services and they will they will take they will take us along because we can we can improve the performance of that that that product. It's very analogous to you know when United Reddys a product to go on.
So the AC a exchange market.
The exchange business, that's another product offering to that segment of the population no accident, though access multi plain surface as well to to produce better medical cost management.
Sales of egregious success at building at the same time identify collaborate.
On the ones that are that are inherent in some of the care is being delivered today.
And with that can you just maybe provide us a an idea or quantify the number of.
Like I said I've actually migrated over to referenced based pricing and what your expectations are for 21 versus 20.
I don't I don't believe we have that we have that data at hand.
To respond to that.
Okay, and then revenue space.
I do think excuse me I do think it bears repeating a and the guys have said this a bunch 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.
Now the guard, it's a it's a reasonable question.
It's certainly not impacting our business.
Right I think a follow up on Josh is the earlier question do you need 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 I could just ask one more you know in the past.
You've talked about which is that you had this I guess you call. It revenue sharing agreement with your payers are your customers and that you NH makes money on your services other than the cost saves and that creates some stickiness with these customers I was hoping that you could if you could just quantify what this amount is with you in age.
Total with all your payers that so we could better understand that yes.
I mean is it 50 million to 100 million is it 200 million 300 million.
I don't I can't tell you the the <unk>.
I can't tell you that I can answer that question I truly don't know.
[noise]. Thank you for your I'll hop back in thanks.
Your next question comes from Andrew Kugler.
With Goldman Sachs.
Hey, guys. Thank you for taking my questions here. So first just to stay on my end first no. Historically claims your pricing 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 Hasnt previously.
In service are there any sort of regulations or any kind of a resell legislation that prevents this and does it shouldn't matter if the repricing amount is based on a negotiation.
Or a non standard reference price like cost plus which is why you guys do compare.
There to maybe a more standard reference price such as a multiple of Medicare like navigate seems to do or percent of bell charge like has historically been the ER added network repricing amounts in the past.
And do you see the market shifting anytime soon to insourcing versus outsourcing.
Okay.
That.
Our customers are customers view us as a partner.
They they outsource the.
The.
Repricing of out of network claims because we have a we have a market data advantage.
Comparable data database across 700 plus payer.
Summers.
We're highly automated were highly efficient and we can reprice that is out of network claims in a very timely accurate manner that makes it much more cost effective for that for them to use us than than to internalize those services.
We have sought we have impressive size and scale, we have a different differentiated data it.
Data advantage.
We have incredible speed and accuracy in persistency in those claims.
And for for nearly 430, 40 years as payers, who recognize that value and thats why the business, where they continue to do business with us in our business has continued to grow your year over year.
Let me, let me just add something.
Mark if I may.
You know when 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, Payors, it's not a single.
Okay pay or database. It is claims from 700 players it is very very different.
Then what any single payer can do on their own which is why they all come to multi plan 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, what 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 that regard solutions like <unk>.
Berger the consumer facing.
He can go on the website and seats Trubridge nice product, but it's a consumer facing product that helps.
Consumers to negotiate Dr. bells, and it's done on a one by one basis, so fundamentally different than what we do we're an enterprise solution, we processed 300.
Third and 60000 claims a day seven days a week from 65 days a year.
So we support and we are very much in favor of products like in that regard because they help consumers and one of our strategies and expand.
You May you may now is for us to start.
Right services to providers and consumers. In addition to payers. So this is all quite consistent but the notion 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 does that just factually inaccurate.
[music].
Yeah.
We would now like to turn the conference back over to Mr. Mark tape back.
Thanks, Thank you very much I like to leave you with a couple of thoughts may.
Do you plan for decades.
Has enjoyed a market leading position.
It's impressive scale.
Scale in a market differentiated data advantage.
Mission critical.
Well nature of that product.
Really has created a crew it competitive moat around our company drives high recurring revenues.
And the attractive financial we have.
Loses.
Strong convert 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.
Yeah.
Yeah.
Ladies.
And gentlemen, this concludes today's conference call. Thank you so much for participating you may now disconnect.
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