Q4 2020 Multiplan Corp Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the multiplayer Corporation fourth quarter 2020 conference call.
At this time all participants are in a listen only mode.
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I'd now like to hand, the conference over to your speaker today, Sean a CASM ex.
V P of Investor Relations. Thank you. Please go ahead Madam.
Thank you, Chris Good morning, and welcome to market plans fourth quarter and full year 2020 earnings call. Joining me today is Mark payback, Chairman and Chief Executive Officer, Dale White, President per market, and David Rodman Chief Financial Officer.
This call is being webcast and can be accessed through the investor Relations section of our website at www dot multi pin dot com.
Also available on our Investor Relations website, it will be a supplement slide deck for today's call. In addition to the fourth quarter and full year 2020 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. 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 to do so.
Certain financial measures, we will discuss on this call are non-GAAP financial measures. We believe that providing these measures helps 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 to the extent of it.
Well without unreasonable effort is available in the earnings press release and in the slides included in the Investor Relations portion of our company's website.
I would now like to turn the call over to our Chief Executive Officer, Mark Payback Mark.
Thank you Shannon and welcome everyone to multi plans fourth quarter and full year 2020 earnings call before we begin I'd like to say that we hope everyone is staying safe and healthy.
We'd also like to acknowledge them within 2000 outstanding multiplayer colleagues for their tireless effort and thank our customers for their enduring trust and partnership.
We were very pleased to announce our results today.
Reporting stronger than expected results in the third quarter day, we delivered even stronger fourth quarter results exceeded both our revenue and adjusted EBITDA guidance for the fourth quarter and for the full year.
With the continuing impact of Covid revenues for the fourth quarter were up 14, 2%.
For Q3, 2023, 6% over the fourth quarter of last year.
Adjusted EBITDA for the fourth quarter was strong up 17, 8% over Q3 and up four 5% over last Q4, 2019 again, even with the continuing impact of Covid with a full year 2020, while revenues and adjusted EBITDA declined modestly compared to the full year 2019.
We believe that excluding the impact of Covid. Both would have grown we began 2020 with excellent momentum and delivered strong first quarter results.
The Covid pandemic unfolded, we responded quickly by enabling our teams to work remotely to ensure the health and safety of our employees, while continuing to provide uninterrupted service for our customers like many other companies our revenues absorbed a large hit in Q2 as health care utilization declined however, by staying focused and ready to help our.
We made solid solid progress in Q3, which carried into an excellent Q4.
We are incredibly proud of the dedication and professionalism of our people and because of their efforts. We are well positioned to continue that momentum into this year. We are excited about our plans for 'twenty. One we are deeply engaged with our customers in planning and implementing numerous engagements that will generate meaningful reductions in the cost of health care and drive performance for our.
<unk> as well as from multi plan.
Making significant investments in machine learning and artificial intelligence to identify more clinical aberrations and leveraged public in our own claims data to generate incremental health care savings, you're leaning hard into advancing our technology to further improve our data and analytics.
Hence our claims processes and expand their implementation bandwidth to drive additional growth.
Also very busy integrating our November acquisition of HST and our February acquisition of Discovery Health partners to further enrich our solution suite deliver additional value and utility to our customers and add 300, new colleagues multi plan.
Q4, 2020, multibillion delivered more concrete significant accomplishments accomplishments in any other quarter in the history of this company not only do we complete the merger transaction the transform multiple into a public company, we simultaneously restructured our debt to reduce interest expense.
And debt maturity and increase our operating flexibility let.
Let me linger on the word operations those of you that have followed this company. They were at the time no that down to where our core we are operators, we create lasting and increasing value to our relentless focus on operational excellence. As a result, we are better positioned than ever to work with our customers to develop and implement unique and customized solutions.
Help them identify and address opportunities to make health care more affordable efficient and fair.
The fourth quarter was really an extraordinary quarter for the company. We are excited to continue that performance throughout 'twenty, one with that I'd like to turn the call over to Darryl White, who will provide a business update and further discuss our recent acquisition.
Ill.
Thank you Mark good morning, everyone.
As you just heard we delivered a strong fourth quarter, we generated revenue up 14, 2% over Q3 and up three 6% over Q4 2019.
<unk>. Our Q4 2020 performance was slightly ahead of our performance in Q1 2020, the last quarter before Covid.
<unk> debt, our business and that of our customers is both plant and adaptable.
With the onset of Covid and subsequent Lockdown, we saw a dip in claims charges in Q2.
The start of Q3, we began to see a rebound so the reduction in claim charges appears to have been the only temporary.
That said the claims mix has been and continues to be different with more lower dollar claims, which makes sense considering all of the COVID-19 testing telehealth and to some extent the COVID-19 treatment services.
Weekly Covid testing claims between mid June at the height of the pandemic.
And now are up by a factor of 10.
Telehealth volume Spike starting in April and reached what has become a new normal running about the same from week to week since may.
Treatment services are about 50% less costly on average now compared to the early months as the health care system has stabilized around effective protocols.
These trends together with the limited health system capacity for non urgent services due to the recent surge in Covid testing testing and cases leads us to expect continued pressure on the business as a result of COVID-19 into 2021.
These headwinds should abate as 2021 progresses.
Spurred by their own Covid, driven business impacts our customers have heightened interest in initiatives to strengthen cost management and payment accuracy. For example in the second half of 2020, we were engaged by a payer to collaborate on developing a Medicare advantage network across multiple.
States.
We reached agreement with another national payer to add data eyesight services to their solution hierarchy, which is now scheduled to deploy June July one of this year.
We implemented program changes with all of our top payer customers to generate more savings.
Since our November acquisition of Hsp, we wasted no time and taking to the market. The next generation of reference based pricing services.
We call it value driven health plan services, a new low cost high engagement health plan design that is remember empowered provider friendly and network compatible.
And it's the only reference based pricing service that comes with a national independent NCQA accredited physician network tightly integrated which at this point is one of the most sought after use of reference basic reference based pricing.
Cross selling activities are already bearing fruit.
Have two new employer groups covering about 2200 lives implementing through a tpa that already works with our companies.
We just completed training of over 160 sales and account services of a tpa that has worked with multi plant for years and is now a new preferred tpa of HST and we've begun to introduce the value driven health plan approach to both provider sponsored an independent health plans.
Interest is very high, particularly as health care payers seek new lower cost approaches to offering health benefits for employers emerging from the Covid pandemic financially strapped.
Mark mentioned, how operations is that our core.
As we do every year in 2020, we plan for an operational component to our revenue growth through service improvements and enhancements that improve our ability to identify and deliver on savings on the claims that we already received.
We implemented our first use of machine learning in this area.
Model that prioritizes claims and then negotiators work you based on the predicted likelihood of success and level of savings.
We saw an immediate productivity gain with negotiators working claims with a higher likelihood of success and are now beginning to see a lift in savings.
Also this year, we built the model for predicting acceptance of payment integrity fighting on lab claims, which beginning in the spring will be made available for our reviewers as additional consideration.
Ultimately, we expect to use the model to automatically accept these findings where confidence is high.
Which will also improve productivity and savings.
And we closed on the creation of a model for improving network matching accuracy, which will help deliver similar benefits for this service category. Starting later this year.
As the underpinning of our enhanced growth strategy machine learning is all of this is also the subject of the steering committee within multi plant that has identified over 50 potential use cases across all of our solution areas as well as key operational functions, including sales and finance.
We've also performed comparative testing with a large number of big data companies and selected a partner to help drive these and other promising machine learning use cases.
And finally, as we just announced last week, we closed on the acquisition of Discovery Health partners.
Together with HST. This acquisition of discovery deliveries emphatically on our external growth strategy to strengthen penetration with our in network claims and underserved markets such as government and third party administrators.
It greatly expands our footprint with Medicare advantage and managed Medicaid plans.
It fills out our payment integrity product line with post payment services, and additional prepayment of analytics and functionality, including coordination of benefits and subrogation.
It strengthens our impact on the payers in network claims.
And it adds a new service category focused on improving revenue integrity for plants that receive premium dollars from CMS.
We have an aggressive integration plan for discovery, starting with our sales and account sales and marketing functions to hit the ground running on our many opportunities to cross sell and upsell into discoveries nearly 80 health plan customers.
Before I turn it over to Dave I want to speak to the federal surprise billing legislation called the no surprises Act, which was passed late last year and goes into effect on January one 2022.
The rulemaking process is now underway to translate the spirit of the legislation into specific details that plans and providers can deliver to.
In the meantime, we are engaged with our customers and exploring a number of service concepts that will facilitate their compliance.
The act gives payers latitude in determining the amount they will reimburse and then requires a negotiation followed by arbitration should the provider not agree with that reimbursement.
The act in a separate mandate called the transparency and coverage rule, which was finalized last November also establishes requirements aimed at creating price transparency and encouraging consumer shopping to help control the cost of health care.
We are engaged with our customers to test concepts to meet these requirements as well in fact that no surprises act introduced a new transparency requirement for payers, which we believe may presenting from May present, an interesting use case for our expand growth strategy.
While the outcome of the rule, making process will ultimately determine the impact of surprise billing. We believe the overall impact of this legislation is unlikely to have a material negative impact and could be a modest positive as we help our customers achieve compliance.
I'll now turn it over to Dave who will talk about the financials Dave.
Thank you Dale and good morning, both our press release. This morning in marks comments a few minutes ago on this call help bill already covered our strong performance from Q4, and our meaningful progress from Q2 to Q4 and 2020, let me add a few comments.
About Q4, and the full year 2020, along the way I'll also review some key assumptions to help those of you maintaining financial models of the company, including some thoughts about COVID-19 and the related recent acquisitions and cash flow.
Our net loss in 2020 of $529 $6 million included $405 8 million of stock based compensation related to investing in value of class B.
Units of multi plan, which vested upon the closing of the transaction on October $831 7 million of transaction costs, which have been expensed in the period and $103 million of costs related to the extinguishment of debt, our Pic Holdco notes and our seven eight and one 8% debentures, which were.
Basically paid off in October of this past year all in connection with the merger with Churchill on October eight and subsequent replacement with.
Of those nodes by comparable debt.
These three expenses aggregating 510.
$45 million represents substantially all of the difference between the net loss of $5 $56 4 million in 2020 and net income in 2019. In addition substantially all of the difference between the net loss of $182 4 million in Q4, and net income of $11 8 million in Q4.
2019 is from $106 million of the.
The same stock based compensation transaction costs in the fourth quarter of $26 million and again to $103 million of costs related to the extinguishment of the Pic Holdco and seven 8% debentures.
Before getting into the numbers, let me spend a few moments on our budget process over the years really over the last decade.
We have established and refined but bottom up process, where Dale and his team Bill day revenues plan for the coming year for each additional individuals' significant accounts for a larger accounts. These plants can be quite detailed and underpinned by significant data and analysis and the result is an explanation for revenues and.
For the resources needed to service these very important accounts, but there's no magic to it just a lot of methodical dedicated work the expectations for these accounts are then added together and combined with department level and cost center budgets to become net revenues and cost budget for the company as many of you are aware.
<unk> our cost structure is largely fixed there are some variable components that flex with claims volume and <unk>.
Overall scale, but mostly fixed.
But over the relatively short period of a single year. The main driver of our performance continues to be revenues.
While we will not provide guidance for the current year given the uncertainty.
Of the Covid impact and the wide variations of potential impacts into 2021. We are pleased that we will continue to expect organic growth in the mid single digits, excluding the impact of Covid.
Spend a minute on the impact of Covid as many of you are aware Covid had a significant impact on our company in 2020. For example, our revenue was down $45 million compared with 2019 or about four 6%. We believe this impact on our results understates the actual impact of Covid prior to the emergence of Covid are.
Original 2020 budget included meaningful organic growth such that we estimate the actual impact of Covid in 2020 was approximately 110 to 120 million.
Dollar reduction in our revenues for 2021, we are hopeful that this will moderate somewhat it is of course virtually impossible to know in advance what past Covid will take in 2021, although we are all very optimistic and hopeful it's important to remember that we previously reported there were.
No material Covid impact.
Multi plants Q1 2020 results.
<unk> Q2 results reflected a significant impact from Covid Q3 results reflected a modest.
Moderation of the Covid impact from the Q2 levels in Q4, while excellent relative to expectation still carrying some level of COVID-19 impact.
It's also important to remember the health care volumes and trends tend to have a bit of a delayed impact on our results typically six to eight weeks, depending on the specifics of the episode and the site of care. This results in a timeshare shift that could impact us in 2021, specifically, we believe that.
Heavy COVID-19 volumes towards the end of 'twenty and early 'twenty, one could affect our results. This year again. It is our current expectation that this COVID-19 impact should abate as we progress throughout 2021, while our overall cost structure is substantially similar between 2020. One there are two major spin.
<unk> items that differ first our public company costs in 'twenty 'twenty, one are expected to approximate 20% to $25 million. These costs include costs related to legal investor relations additional accounting expenses, both in salaries and consulting fees insurance costs investor relations costs and the developing.
And testing our policies to be Sarbanes compliant by the end of 2021. We've previously noted that we expected expenses.
As near these levels they came in modestly higher than we anticipated primarily due to D&O insurance costs and we are optimistic that these expenses will be relatively stable if not actually decline going forward. The other item of note in our adjusted EBITDA expense structure is incremental investment in the business.
We have added approximately $10 million to $12 million of additional investments in the business for 2021, primarily around our it spend including machine learning and artificial intelligence with Dell, which Dale and Mark talked about an expansion of our sales force among other minor initiatives. This is in addition to our typical annual.
Capital expenditures.
$70 million to $75 million in 2021, we are big believers investing aggressively to continue to advance our solutions portfolio and deliver incremental savings and functionality to our clients and partners and you should expect us to continue. This approach. We believe these investments will yield meaningful returns over time.
We expect depreciation of approximately $60 million to $65 million.
For 2021, consistent with $61 million in 2020, we expect amortization of intangible assets of approximately $3 40 to $3 45 from 2021 again consistent with $335 million in 2020. Please recall that this is a 100% non cash and relates primarily to the acquisition by Hellman <unk> Friedman.
In 2016, and the acquisitions of HST in November 20, and Discovery Health partners in February 2021, as previously discussed we expect interest expense of approximately $280 million to $290 million. In 2021. This reflects a reduction of $40 million to $50 million as a resulting from.
As a result of refinancing our Pic Holdco notes and debentures in Q4 of 2020, we expect our cash interest expense in 2021 to be approximately $70 million less in 2020.
We do not yet have an exact estimate of equity compensation for 2020. One as most of you were prior to Q4 multi plan was a private company and as you also have the transaction the equity incentive program is being reworked that should be completed prior to when we reported Q1, and we will give you an update that at that time, but we.
The range to be $10 million to $20 million as for taxes, we expect an effective tax rate for 2021 of 25% to 28%. This rate assumes existing tax law and does not contemplate any changes at the state or federal levels, we expect our fully diluted earnings share.
Shares outstanding for EPS calculation to approximate $660 million to $670 million million shares. We expect capex for 2021 as I previously stated up roughly $75 million to $80 million, we are evaluating a number of potential opportunities for incremental investment that would create.
Additional value to our customers and partners and we May update this estimate during 2021, we have a high return threshold for all of these investments with those core assumptions address let me now turn to cash flow as those of you who follow the company are aware, we have a long history of generating significant operating and free.
Cash flow with a high conversion rate of adjusted EBITDA margin to cash we expect that to remain a key element of multi plans financial debt dynamics, turning for a moment to the balance sheet and the capital structure. We ended 2020 with leverage at the operating level of about five times debt to adjusted EBITDA.
And at the consolidated holding company level of about six eight times. We have previously commented that we intend to meaningfully reduce these levels over time, both through growth in adjusted EBITDA from organic growth and reduce the impact of COVID-19 and through the allocation of free cash flow achieving our growth goals for the year.
It will help drive deleveraging as well the application of the significant anticipated free cash flow, we just discussed.
That said it is important to remember that we have previously noted debt.
<unk>.
If there are meaningful opportunities to grow and expand our business through M&A and other investments, we will aggressively pursue them with but with a highly selective and rigorous strategic approach. So while our overall orientation is to delever, we feel comfortable with the strength of our business day in cash flow to support our current net opera.
<unk> leverage of five times.
Due to the variability of COVID-19 case trend and public policy responses to the COVID-19 pandemic across different regions and multi plants national footprint and the uncertainty and evaluating the impact of those dynamics on the company's customers and operating and financial results. The company is not providing annually.
Our quarterly guidance at this time the company will continue to monitor the impact of the COVID-19 pandemic on its business and may elect to communicate guidance later in 2021, while the company is not providing guidance. It anticipates Q1, 2021 revenues and adjusted EBITDA will reflect substantially similar opt.
<unk> performance as Q4 of 2020 adjusted for.
The usual seasonal softness of Q1, the impact of $2 million to $3 million of additional public company costs and the possible impact of the operational disruption related to the extreme weather in Texas during February with that I will turn the call back to Mark for his closing comments Mark.
Thanks, Dave Thanks deal.
Before we go to Q&A I'd like to offer a few closing thoughts.
I'm extremely excited about our company's future multi play multi plan plays a central role in identifying addressing savings opportunities.
Health care system and remains a critical partner delivering tens of billions of dollars in value to our payer customers day.
And process integration into their workflows.
Foundation for growth as a long standing strength of our business model, which includes our data and our algorithms our platform and our provider network.
We are already connected to more than 700 payers $1 2 million providers. We believe we are unique among the competition and providing an enterprise level platform that has capacity and scale help even the largest and most complex of our payer customers address challenges and opportunities.
Decades, now the strength of our business model has been and continues to be re elected in.
Our financial results.
The financial hydraulics of multiplayer powerful vast majority of our revenues are recurring.
We have very limited customer turnover and are fortunate that many of our customers with many of our customers. We routinely increased the level and scope of the engagement we remain excited about our organic growth.
Turning to operations as we expand our relationship with our customers.
Also over time made significant investments in technology and as a result, many of our processes are highly automated.
Automation leads to a virtuous cycle of high margins.
To a high level of cash flow a portion of which is reinvested to further drive our technology drive value for our customers and the host cycle repeats again and again 2020 was quite a year for every person every family every company. We are proud to have navigated the year successfully and we recognize the challenges or not.
Yet we are optimistic that the worst is behind us and the 'twenty one will be another year of meaningful progress.
Before opening for questions I went to establish one ground rule.
We have deep respect and gratitude for the unique relationships that we have with our customers. We also have great respect for our investors, including those of you on the call today, we understand that investors would like to understand every possible detail about our company. We also understand that we have a duty of confidentiality to our customers. Our goal is to honor our.
With both our customers and use the investors do that successfully we will not be able to answer questions regarding specific customers.
Guarding businesses owned by those customers.
We would appreciate it.
For those asking those questions to respect disposition.
With that I'd like to open the floor to your questions. Thank.
Thank you.
At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.
Again, as a courtesy to others, we ask that each participant limit themselves to one question and if necessary one follow up question before returning to the queue.
The first question comes from Josh Raskin of Nephron Research Your line is open.
Hi, Thanks, Good morning, guys.
First question, just actually a series of numbers clarifications first the $110 million Covid impact in 2020, how much was in the fourth quarter. I think you said the second part would be I think you said $20 million to $25 million of company costs public company costs in 'twenty in 2021, what is that versus 2020, and then I think.
I Couldnt get the Capex number I don't know if you said 70 to 75 or 75% to 80. So just some quick clarifications, there and then I've got a question.
Theyre going to walk through that.
The Capex number is 70% to 75.
The.
Well actually at $75 to $80 is where we are now it was about 72 last year relative.
Relative to Q4, we estimate that the Covid impact was probably $12 million to $16 million, which is lower than it was in Q2, and Q3 jobs, but still certainly higher and.
The last question was what was the third one the <unk>.
The company costs in 2020 public public company costs in 2020, we're relatively nominal they were only about $2 million to $3 million.
Most of that occurred late in the fourth quarter.
Obviously, the big numbers to D&O coverage zone.
Gotcha and then my real question is just maybe you could talk a little bit about 2021 I understand that.
There's a lot of uncertainty with Covid et cetera, but maybe if you could just talk broadly about customer retention I know, you're not going to talk specifically about any individual customers.
I understand that but maybe any meaningful additions or subtractions again without naming names to start the year any big changes that we should know about and then if you could just remind us of the seasonality.
What is causing the lower <unk> number I guess I'm just not us.
We don't have a ton of history here, So I guess from Madison sees.
Seasonal weakness in <unk>.
Let me talk about seasonality and then turn it over to Mark and Dale for the for the customer discussion.
And it's not a deep seasonality, it's probably 1% to 2% kind of as you go from Q4 to Q1.
Mostly it's a byproduct of obviously in Q1, most people are on calendar year health plans and so.
Your new deductible your new codebase kick in and people tend to be a little bit.
Reluctant to utilize a lot of services, obviously services that they have.
They use but elective stuff generally is.
Pushed into later in the year after that they kind of have a sense of where they are from a health plan perspective, and what deductibles that they've used up so it's a relatively minor number Josh I'd say you know, it's probably 1%.
Because we really are not heavily seasonally adjusted but there is a slight softness generally in Q1.
Okay.
Mark.
Josh look weird weird deeply engaged in discussions with our customers, we have a high level of persistency and the relationship and services. We offer to those customers continues to expand Dale why don't you just without naming names I want to just talk again about some of the projects that we have that are being implemented in other discussion.
That are underway to reinforce the fact that Oh, Eric we are evaluable component, helping them rain in health care costs and make sure that the health care can be made more affordable to their customers and their subscribers.
Yes, Thanks, Mark as Mark said, we have a number of projects underway with our customers to continue to.
To strengthen.
Their response, and affordability and payment accuracy and they range and are across a number of.
Of engagements if you will as I mentioned, we're collaborating with Payors on the development of Medicare advantage and networks as everyone knows Medicare advantage is growing significantly.
And.
And that's an opportunity for us we continue to expand our our data eyesight services in our reference based pricing services into and to payers.
We have.
We have implemented a program changes with a number of our with a number of our clients and and and we continue to add new clients.
Through through our expanded sales efforts, we're continuing to add new clients across the commercial market. The third party administrator market and blue's market as well.
And we're really excited right I mean, I think you've heard that in my remarks, and Mark's opening comments about the opportunities through the acquisition of HST and discovery work.
Super excited about both of these and we've wasted no time and try and hitting the market hard.
With initially HST.
And the next generation of reference based pricing services and we're already beginning to look at opportunities to cross sell discoveries.
Services into their customers and to ours.
And.
They clearly widened and deepened our payment integrity suite and <unk>.
The addition of premium the premium services.
Coordination of benefits the subrogation.
We're excited about those opportunities as well.
Were also in line.
Guys, Mark I'm, sorry, Joe get finished no no go ahead.
Ill finish.
The words are important, but I'm going to I'm going to guide you to the numbers even in even in a COVID-19 environment.
Revenues for the fourth quarter were up over 14% over Q3.
And they were up they were up three 6% over the fourth quarter of last year.
That should punctuate.
<unk> of the relationship and it wasn't growing expansion of the business as customers recognize the value we bring to the marketplace.
Yes, I mean that's helpful.
I don't want to put words in your mouth, but is the bottom line is we sort of think about 2021 as a jumping off point is for accused the right run rate that will be maybe 1%, 2% seasonality, maybe some disruption from taxes, but the remainder up the base businesses is intact with potential opportunities to new acquisitions, new customers is that a fair way to frame 2021.
<unk>.
Organic supplemented by opportunistic inorganic M&A activities and it leverages the incredible efficiency because in addition to the the other metric I'd Guide you to obviously in addition to the revenue growth.
Look at the adjusted EBIT or EBITDA growth.
Q4 versus Q3 up 17 plus percent.
Four 5% over Q4 of last year.
Perfect perfect. Thank you.
Your next question comes from Daniel Grossly of Citi. Your line is open.
Thanks for taking the question guys.
Just focusing back on that 2021 guide or lack thereof. It seems like it's just COVID-19 right now that's preventing you from providing that type of <unk>.
Clarity.
And if I heard you correctly and for Q that Covid impact was around call. It 12 to 16 million and you. It doesn't sound like you expect that to increase heading into <unk> into <unk>.
So putting this all together it does seem like you have some clarity into 2021 right now it seems like.
The impact of Covid has decreased substantially from <unk> 'twenty I mean, it seems like in the back half of 2021, you expect that to be even further dissipated. So I guess I'm just curious what do you need to see at this point to get more clarity for 2021 and provide that type of annual.
Guidance.
I think Daniel we probably need to see another you know.
40% to 60 days to just see how it plays out obviously as we talked about we have kind of a delay in our claims from six to eight weeks. So we clearly wanted to make sure we understand what happened in <unk>.
Q4 in terms of claims and how that impacts us.
We're excited about the vaccine rollout we're excited about.
A lot of the company opening up as you know I live in Florida.
If we were 100%, Florida based cafe, we'd probably be a little bit more optimistic on.
Lesser Covid impact, but you know, we're a national company with a national footprint and our five largest markets are California, New York, Illinois, Texas, and Florida, and so, Texas, and Florida are a little bit different than the other three in terms of how much they've opened so far theres been a lot of discussion about I think California pretty much open to.
In April.
And I think we just.
If you sat in a room.
Total asked everybody what do you think the Covid impact is and wrote down a number that that number just varies quite significantly depending on your everybody's point of view and the data that we have.
And it made it really difficult for us to say.
We're going to settle on this number given not really having a 100% of the information we think we needed to settle on that number.
Understood Okay.
Despite the impact of Covid.
We would not have been able to achieve these kind of results.
And among our customers among the customer base that we have.
Yeah, Yeah understood. Okay, and then just going back to the surprise billing comments you made it seems like.
Now you you expect that could.
We will not have a negative impact on yet and could even be positive.
Look at the literature of similar legislation.
Legislation passed at the state level out of network claims dropped pretty dramatically. So was wondering if you can bridge us too.
No net impact in profit and possibly positive impact given we're likely to see claims out of network claims dropped.
At the national level when this legislation is implemented.
Why don't you speak why don't you speak to the role we played at the state level.
When when surprise billing legislation was implemented at the insured book of business and then I'll punctuate that after that is true.
Yeah, Let me take that Daniel from two perspectives. One as you. All know there is there has been surprise billing legislation on a state level.
Four four <unk> per.
Per year for several years now in fact, I think about 30 states.
Have surprise are faced with surprise billing legislation on the fully insured business and we have had played a role with those in.
Inside those states with our health plan customers on helping them to achieve compliance.
Okay in response to this to the state legislation that's in place and we played a vital and critical role.
In that regard.
As you also noted the legislation at the federal level has just passed.
And we only have the statute HHS has to work through the rule, making and you know and until it has critical questions about the process will remain unsettled.
At the same time.
The way the law.
The way the law was passed it certainly protects consumers from receiving balance bill when they seek emergency care and other.
Other ancillary related services related to that emergency care. The state does not include any benchmark payment standard for insurers to upfront.
Front to pay out of out of network providers.
30 day payer right period for payers and providers to negotiate and if those negotiations fail.
<unk> four independent.
Dispute resolution, we think and believe all of these features of the statute.
Suggest that multi plan has the opportunity to continue to play a critical role.
And helping.
Our clients to achieve savings for our customers and the planned members. They serve after the legislation goes into effect.
Yes.
On the reliance that debt.
Those payer customers have have a multi plan to deal with the state level surprise billing legislation that same reliance will take place at a federal level with the insured book of business arent, even a broader broader scale because of the added complexity and the size of that ASO market governed by the recently enacted surprised.
Legislation.
And I'll just echo it's early on the rulemaking is still needs to run its course, but we're already in discussions with a number of our customers about how to work with them how to help them with Bob solutions, how to help them comply under the new statute.
Understood Alright, I appreciate all the color guys. Thanks.
Thanks Kim.
If you would like to ask a question press Star then the number one on your telephone keypad.
The next question comes from Andrew <unk> of Goldman Sachs. Your line is open.
Hey, guys. Thanks for taking my questions.
Look following up on the guidance as we think about your one Q and extrapolate it to the full year.
Is there a reason to believe that covered lives using your product should change materially after one Q or given that as you mentioned the healthcare plans are typically renewed at the end of the year in November December.
Are they covered lives going to be rather consistent through the course of the year and then I have a follow up thank you.
Yeah, do you want to take that.
Yeah.
You would expect most of the bill.
<unk> to remain consistent.
Throughout once you get past January but there are changes that take place.
Adequate throughout the year based on their very cyclical in terms of.
When an employer groups renew with their payers and providers January is a big month for that April July and October tend to be smaller, but relatively meaningful months when payers benefit plants typically renew so theres. Some theres simple typically some ups and downs throughout the course of the year.
I would add to that look as you know.
Our top 10 national customers represent about.
It's about 80% of our revenues.
And that relationship with those top 10 continues to grow continues to expand.
As they expand their commercial book of business day.
Expand their government business, particularly Medicare and Medicaid.
We bring our services of networks analytics and payment integrity, along with that so it's an interest.
The expansion of lives.
How they use our services on a much broader a much broader footprint.
Alright, great. Thanks, and then maybe following up on that last comment so in terms of.
Switching programs and.
Adding to the services that you're providing for these customers.
Can you guys just update us on sort of where you are with recouping revenues from the programs that ended up getting suspended in 2018 and that were resolved at the end of the fiscal year 19, just given the growth that you saw year over year.
Even including the impact of the.
Covid headwinds it does seem like there was a large benefit so I'm just curious how that's evolved throughout fiscal year 'twenty and then how you're looking at it continuing to expand over the next year. Thank you.
Dave do you want it even a step into that.
Oh.
Yeah.
Yeah.
Mark make a couple of comments first and then I'll add onto you.
But.
Again I'll go back to my previous comment.
Yes.
We are deeply embedded in English.
And then national customers those top 10 of those top 10 customers.
That business continues to grow and expand we wouldn't have achieved those results without without the expansion.
Regaining business that was that was that.
Suspended previously.
Plus adding adding new business through the two new installations and new programs that are being rolled out by air.
By our by our customers, we're not going to talk about.
Customers, but when I look at the top.
Top customer base, our business continues to expand.
Dan in terms of revenues claims claims and charges submitted claims that we match and re price.
And the discounts that they use to drive efficiency.
And cost of cost savings.
Right.
The revenues from that particular customer continue to grow so I mean to a great extent 2018 2019, what happened is behind us.
Obviously.
That customer has.
As has moved moved on and corrected what.
Impacted our revenues in those two years.
And our growth from that customer continues to grow every quarter.
And so we believe that in 18, and 19 is behind us and debt.
All of our customers are.
Working very closely with Dale on new initiatives, and new savings opportunities and continue to grow.
Moving forward I'll leave it.
They have implemented they have reinstalled and re implemented those programs that were suspended previously and they've added they've added new services and new installations that multi plan has brought to the market.
Let me just add let me just add a comment that debt like we have done for decades now we work with our customers.
Every year every month every day to find additional opportunities to generate.
Savings and more value with our customers and we do that through our sales and account management team are fully and deeply engaged with our customers to follow their needs from their desires and their direction that their focus.
And we work with them on identifying new initiatives and things that we get debt either expand what we do for them today moving to payment integrity and additional services help them focus on Medicare advantage. If they are pursuing Medicare all of those things take place and took place throughout two.
And in 'twenty, despite despite COVID-19.
Yes.
Your next question comes from Rishi Parekh of Barclays. Your line is open.
Thanks for taking my question just going back on that last question.
You processed about $26 billion of claims and.
Q4, 19, and $29 billion of claims in Q4 'twenty.
Can you bridge debt increase can you just give us an idea just going back on the last question. We know that there are some challenges with some payers how much of that increase is USAID improves through the year was realized in Q4 I don't know even know if you have this level of detail, but how much of it was due to delayed.
Delayed procedures that were in Q4, I'm, just trying to better understand the run rate and also better understand your take rates for our two.
2000 22021.
Yeah.
Oh.
We don't really have the ability to analyze how much is cash.
Catch up from delayed procedures.
You know our revenues as a percentage of our.
Savings is up.
Five 2%.
In Q4, that's up over numbers that were in the high force 4849 in the previous quarters.
Q1, I think was about 5.1.
Q4 last year was about $5 two so we're basically.
At a revenue as a percentage of savings similar to where we were in Q4 last year in Q1, which really didn't have much COVID-19 impact and that's in spite of the fact that you know as Dale mentioned in his call.
A higher percentage of our claims are COVID-19 related claims which result in.
A less savings number and lower reimbursement then.
Then what our claims had been previously so we're we're pretty proud of where we are revenue as a percentage of savings and it is certainly <unk>.
Spanned it and rebounded from the levels that we were at in Q2, and Q3, which was primarily driven by Covid.
As you know the delays were largely with and diagnostic and elective procedures and we don't have that level of detail to discern elect us from non non.
Non of letters, but we can look at the charges that we received and the relationship with our customers and again, we would not have produced these.
These kind of results quarter over quarter and year over year.
Without without debt expansion.
<unk> seen yet.
Then on your guidance for the year your organic growth rate is consistent to what you said in the past, but you also talked about opportunities you've made two acquisitions HST discovery Youre working with somebody MA plans you have the blue's opportunity as well how should we think about those opportunities in 'twenty. One is it mid single digits high single digits low single digit type.
Our growth expectations, and putting aside COVID-19 I get that Covid has an impact and as <unk>.
Impacting your view on 'twenty, one by putting aside all of that what do you think those opportunities are for these new programs.
Programs, where you're winning.
Largely speak again to the attraction of HST and disc.
A discovery and then let's talk about again, the aggressive integration and cross selling that is well underway.
With those two programs to expand our Tam and also expand the scope of services, we can bring to the market.
Sure like we do every year.
Let me, let me speak to a couple of different points. So like every year, we look for opportunities within our existing customer to customer gains to deepen the relationships that we have through the implementation of.
There are additional services too.
Two we always look for new opportunities from new logos and.
Through our sales channel in them as Mark mentioned earlier, we expanded our day, we expanded our our sales talent last year.
Late last year, and expect them to drive additional opportunities and growth through through the addition of new logos and new opportunities.
It took the Hs team discovery HST.
As.
<unk> was acquired in November 2020, and it expands our analytics based services category by adding a new line of value driven health plan services and there are significant.
Second opportunity for US we're excited about it because of the position has the next generation of.
Health care services and reference based pricing that it brings to the market.
And to book for both our Tpa market space, and our regional health plan or a provider sponsored.
Independent of health plans.
<unk> is also interesting to us very excited about that opportunity because it does a couple of different things it certainly adds.
Payment integrity and revenue type.
<unk> services.
It grows our government market footprint, adding several new Medicare advantage and in new Medicaid customers.
It's expanding our portfolio of payment integrity products from two to six.
And we now have six.
Much more deeper and wider suite of payment integrity services spanning both pre and post payment modalities and significantly.
Strengthening and our ability to land and expand.
And it also adds another service line focused on on what we called premium payment accuracy for Medicare advantage plans and.
With the opportunity to look at Medicaid and perhaps.
Perhaps AC eight exchange based plans it improves it increases our footprint.
In network claims as we've mentioned before in our extend strategy one of our goals is not only to deepen our relationships and regional health plans on Tpa, but it's also to extend our reach into in network claims of the payer and the addition of discovery does that at the same time, there's a number.
<unk> of clients that we don't work with today or they don't work with US today in the cross sell off would be the cross selling opportunities between multi plan, adding data on that day, but discovery services are discoveries cross selling multi plant services into its unique client base and it's something we will pursue this year as well.
Okay.
There are no further questions at this time I will now return the call from our presenters.
Thank you very much. We appreciate your continued support and we look forward to speaking with you again following era.
Our Q1 earnings call. Thank you very much stay safe.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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