Q2 2022 Multiplan Corp Earnings Call
Those payers and plan sponsors Serge.
In the second quarter, we generated $5 5 billion in potential identified savings up three 5% from the prior year on billed charges of $32 billion as shown on page eight of our supplemental deck.
Customer demand for our services remains very strong and notably as distinct from the ebb and flow of health care utilization trends last quarter, we discussed how the breadth of multi plan to medical cost management and payment accuracy solutions meets the wide range.
A planned design preferences across the broad base of employers that use our services and in the context of an extremely tight labor market. Our service breadth provides flexibility as employers plan design preferences shift between benefit cost efficiency and benefit attractiveness.
Since at least mid April there had been rising expectations that the U S economy could be headed towards a recession this year or next.
The signals remain mixed as the labor market remains tight despite other recessionary warnings.
Only time will tell whether the U S will slip into recession or diverted and how strongly that might be expressed and labor market conditions.
But it remains the case that the breadth of our solutions will continue to provide flexibility and how our services are access and in what configurations, helping employers adjust their health plan strategies as they navigate economic and labor cyclicality simply put.
We were an all weather service provider to all types of health plans.
And that position continued to be demonstrated during the second quarter. For example, we added 143 opportunities to our pipeline for current estimated $39 million in annual contract value, bringing the total active pipeline to 582 off.
<unk> and $242 million in estimated annual revenues. The 10 largest of these comprised about 37% of the total and average just under $8 million in annual revenues each.
We closed 157 deals during the quarter for an estimated $16 million in annual revenues.
Five of these have estimated annual revenues over $1 million.
New wins span all market segments and include 87, new customer relationships.
Notably about two thirds of the new revenues are attributed to our regional health plans segment, reflecting continued momentum in this very important market segment, which is a key target of our external growth strategy component and furthers our goal of diversifying our customer base.
Other business highlights during the quarter include.
A large blue plan expanding use of data eyesight <unk> ASO customers.
Five months in this plan has more than a third of its ASO lives accessing the program.
Continued momentum in building, our post payment and revenue integrity services pipeline.
At the quarter's end, we had 192 active opportunities that together are estimated to deliver $110 million in annual contract value.
The successful launch of our campaign promoting our prepayment itemized Bill review service with nine customers already requesting contracts. Our product team also has an exciting roadmap for this service that used advanced analytics to significantly expand the solutions <unk>.
Packed.
We had strong growth in our property and casualty segment after months of Covid, driven volume lags aided by the deployment of one of three new customers in this segment.
We continue to rollout our no surprises act to more payers and in the second quarter, we saw a meaningful ramp in claims processed through our NSA services.
At the end of the second quarter, we had 126 implementations completed in 29 implementations for a total of 155.
Up from a total of 124.
As of the end of the first quarter.
Notably one of our key customers that adopted our end to NSA compliance service is expected to double revenues with us by year end.
NSA related activity continues to track to our expectations with NSA related claims volumes approaching what appears to be a full run rate by the end of the quarter.
We are seeing meaningful medical cost reductions when claims are priced using our <unk> based pricing service.
Signifying this objective of the NSA is being achieved.
Meanwhile, the federal surprise Bill regulatory backdrop remains in flux.
On June 15th the office of management and budget began reviewing the anxiously anticipated final rule from CMS, which is expected to clarify requirements for the independent dispute resolution process.
At issue is the status of earlier language directing <unk> entities to treat the qualifying payment amount or <unk> as the presumed appropriate reimbursement.
And suing lawsuits challenging this interpretation of the role of the <unk> caused CMS to retrench it until it publishes the final rule.
And the plot continues to ticket.
In late July and a new ruling pertaining specifically to air ambulance services, a federal judge in Texas. Once again vacated the portions of the NSA interim final rule that had given primacy to the <unk> in the IPR process.
In addition, other parts of the administration of the IPR process, all remained vaguely prescribed or challenging to fill.
Compounding the problem CMS was late and releasing functionality needed for providers and payers to initiate the <unk> process.
As a consequence and not unexpected as payers and providers operationalize. The ICR process. We are seeing process Miss steps early in the early stages of the rollout.
In fact multi plan offers submitted on behalf of our payers have been excepted, 80% of the time since the process began early in the quarter and provider missteps processed missteps have contributed significantly to that outcome.
It is still early and we expect providers and payers to gain more familiar allergy with the process. So we are reluctant to extrapolate our experienced thus far.
But I am encouraged that the significant data and data science resources. We've invested in this part of the service positions us well and supporting our customers.
In June 2022, we acquired a minority interest of advocacy insights for $15 million cash consideration.
Abacus is a leading data management and interoperability platform that enables health plans and their providers to standardized data across the healthcare ecosystem.
This is a terrific company with unique capabilities and we see interesting commercial opportunities to pursue jointly.
Our strengths are very complementary.
Their enterprise data capabilities will help us accelerate our time to market for data offerings and they find our analytic expertise and strong distribution channel.
Very attractive.
As I mentioned at the beginning of the call. We have concluded a multi year contract renewal with one of our larger customers.
As a policy and in accordance with the terms of our customer agreements, we do not disclose specific terms of our customer contracts.
Further we are not providing 2023 guidance at this time power.
However, with the increased visibility. This extension provides we anticipate our 2023 revenue growth will be muted subject to market conditions and the implementation of our other growth initiatives.
Despite the near term financial impact we believe this renewal demonstrates the strength of multi plants value proposition the importance of the services, we provide to customers and the depth of our longstanding customer relationships.
Additionally, this customer commitment further underpins our confidence in our base business and enhances our ability to execute on our long term growth strategy.
I would like to take a moment to speak to the operating environment and how that is shaping our outlook for the remainder of 2022.
As reported by a number of hospital and health services groups and as evidenced in the lower medical loss ratios of some major health insurers utilization of health care in the second quarter was sluggish and below expectations as a significant decline in COVID-19 related patient volume was.
Got offset by higher non COVID-19 related patient volumes.
Our recent claim volume while still strong reflect some of the sequential designs all buy it with.
Our typical lag.
Additionally.
Non COVID-19 healthcare utilization and non Covid claim volume remain below 2019 levels and from where we sit today. It is a bit difficult to foresee whether those will recover in Q3 or come back more slowly.
Despite this uncertainty we continue to track against our 2022 plan and at this time, we are maintaining our full year 2022 guidance ranges for revenue of 116 to $1, two zero or $1 billion.
And for adjusted EBITDA of 852 $875 million.
That said, if the current utilization trends persist into Q3, and Q4 and accounting for some customer adjustments full year 2022 results could fall in the lower half of our guidance ranges.
In summary, our second quarter results were once again strong.
We are making meaningful progress on our on multiple fronts of our business with the pace of new business wins, and the strength of our pipeline, indicating robust demand for our services.
We remain on track to achieve our 2020 to plan. Despite the recent subdued rebound and non COVID-19 volumes.
We continue to expand our no surprises act services footprint and activity and help our customers navigate the significant complexities of achieving compliance with the new regulations.
We are investing in our business to drive growth and maintain our high levels of customer service.
We now have even more visibility into our base business with the renewal of our contract with one of our larger customers.
And we continue to work to bring the external perception of our risks in line with the realities of the business and objective that Jim and I have made a priority since assuming leadership of the company.
As I look forward I remain confident that our unique value proposition to the U S health care system together with the investments we are making in the platform will drive our long term growth and deepen our industry, leading position with our payer customers.
Yes.
Before I turn the call over to Jim I want to extend my gratitude to our more than 2500 multi plan colleagues.
The past few years have presented all manner of disruptions and potential distractions and you and yet you have soldier dawn with tireless dedication to our mission to deliver affordability efficiency and a fairness to the U S health care system, and an unyielding focus on operational.
Excellence and outstanding customer service.
Thank you.
With that I'll turn the call over to Jim to discuss our financial results in more detail.
Thank you Dale and good morning, everyone. I am pleased to have the opportunity to discuss our second quarter financial results and update you on the outlook for the remainder of the year.
As Dale noted earlier, we once again delivered another strong quarter of earnings in Q2, 'twenty two with revenues and adjusted EBITDA is squarely in line with guidance, we set for the quarter.
As shown on page four of the supplemental deck Q2 revenue was $290 1 million up 5% over Q2, 2021 and down $2 seven from and from and then normally strong first quarter, which as Dale mentioned benefited from a variety of factors, including strong claims activity related to Q4 <unk>.
The service heightened COVID-19 testing and treatment related revenues and very little impact related to the no surprises at.
Organic revenue growth remained solid in the second quarter, albeit a bit slower than we've been experienced over the last few quarters.
As shown on page five of the supplemental deck, excluding the net impact of COVID-19 on our results revenues in Q2, 'twenty, two we're up $9 million or three 1% over Q1, 2021 and down <unk> <unk> or.
Or two 4% sequentially.
Turning to our performance by service line as shown on page six of the supplemental deck Q2, 'twenty two growth over prior year quarter was attributable to 13, 2% growth in analytics based services while.
While payment and revenue integrity services was flat and network based services declined 12%.
Our payment integrity results were affected by modest weakness in our legacy prepayments business driven largely by programmatic changes at our clients and slower to implement customer contracts in our data mining services.
This was offset by growth in services acquired with BHP.
Network based revenues were lower as a result of lower COVID-19 related volumes, some shift of NSA volumes to Cupid bright based pricing service and our analytics line and some client attrition.
As detailed on page seven of the supplemental deck, we estimate the COVID-19 related revenue impact in Q2, 'twenty. Two was approximately 4 million to $6 million up from an estimated three 3 million to $5 million in Q1, 2022 and down from $9 million to $11 million in the prior year quarter.
As noted we experienced a significant decrease in COVID-19 testing and treatment related claims from Q1 as omicron various cases abated, while non COVID-19 healthcare utilization has been a bit slow to recover and remains suppressed relative to 2019.
Turning to expenses second quarter 'twenty to adjusted EBITDA expenses were $80 5 million up from $78 9 million in the prior year quarter and up from 72 six in Q1, 'twenty two and in line with our guidance. These.
These increases were consistent with our plan for expenses and driven predominantly by higher personnel costs due to increases in employee head count and annual Merit increases.
Adjusted EBITDA was $209 6 million in Q2, 'twenty two up two 1% from $205 3 million in the prior year quarter and down seven point.
1% from $225 4 million in Q1 'twenty two.
The estimated COVID-19 related.
Packed on adjusted EBITDA in the second quarter was approximately $3 million to $5 million.
As shown on page five of the supplemental deck normalizing for the impact of the COVID-19 pandemic adjusted EBITDA for Q2, 'twenty, two was essentially flat versus the prior year quarter and down six 3% sequentially.
With second quarter revenues and adjusted EBITDA, both in line with our expectations. Adjusted EBITDA margin came in at 72, 3% in Q2 22 down from 74, 3% in Q2 'twenty one.
And down from 75, 6% sequentially, reflecting the revenue and adjusted EBITDA expense trends discussed previously.
Yeah.
In the second quarter net cash provided by operating activities was $40 7 million as a reminder, our cash flow tends to be lower in the second and fourth quarters, given the timing of our debt interest and tax payments.
On the balance sheet, we had a $15 8 million increase in our accounts receivable at the end of the second quarter as compared with the end of the first quarter, which was attributable to timing of a few customer receivables and should correct within the quarter.
Turning to our outlook on page 11 of the supplemental deck, we are maintaining our guidance ranges for revenue and adjusted EBITDA.
As Dale mentioned, if current health care utilization trends persist into Q3, Q4, and Q4 accounting for some customer adjustments full year 'twenty two results could fall in the lower half of our guidance ranges.
Regarding the volume environment multiple data points are currently indicating a listless rebound in utilization and volumes post peak omicron. However.
However, the ebb and the flow of volumes representing marginal effect on our revenues in essence, the last few percent of our revenues in any given quarter.
So even if the prevailing volume environment impacts our growth on the margin in the second half I want to be clear that our core business remains very much intact.
And in the bigger picture, we are encouraged by the underlying demand for our services.
Underlying demand for our services remains very strong that we are performing against our plan and that our investments in the business will help drive long term growth.
We expect Covid has continued to be a modest drag on our results and we are maintaining our estimate of COVID-19 related revenue impact to approximately $15 million to $20 million for the full year 'twenty, two which is consistent with our first half estimates.
Our guidance implies an adjusted EBITDA margin of 72% to 73% for full year 'twenty two as outlined by the guidance and expense bridges provided in February we expect margin compression in 2022 to be driven by a combination of structural cost pressures investments in our platform to customize and enhance our solutions.
And support our NSA related solutions and targeted investments in our products and capabilities to support our growth initiatives.
Investments in our platform and growth are largely focused on the second half of this year.
Moving to our third quarter guidance is outlined on page 12 of the supplemental deck, our forecast is $280 million to $290 million in revenues and $200 million to $210 million and adjusted EBITDA.
These ranges reflect an assumption that there will be some incremental volume softness on the margin in Q3 relative to Q2.
Turning to balance sheet and capital our total on operating leverage ratio net of cash were five three and three eight times, respectively effectively unchanged from the prior quarter.
We ended the second quarter with $354 million of cash on the balance sheet as.
As we look to the second half of 'twenty, two and beyond we continue to be encouraged that our strong cash generation will enable us to strike a balance between investing to grow the business and reducing our leverage ratios over time.
As we have discussed previously we will continue to take an opportunistic but balanced and disciplined approach to deploying our cash.
That wraps up my comments I'd like to turn it over back over to Bill.
Yes.
Thanks, Jim Operator would you please.
We open it up for Q&A.
Yes.
Thank you.
I'd like to ask a question. Please press star followed by one on your telephone keypad.
Any reason you would like to remove that question. Please press star followed by two <unk>.
Again to ask a question press star one.
If youre using a speakerphone. Please remember to pick up your handset before asking your question. We will pause here briefly ask questions are registered.
My first question is with Joshua Raskin from Nephron Research Joshua Your line is open.
Thanks, and good morning.
I'll start with the first question of the growth at about 3% when excluding the Covid impact first should we annualize all of the acquisitions or.
Was there some impact from DST in there and then second how should we think about sort of that macro trend relative to the history, obviously the growth rates and share now.
Organically, showing noticeably lower than where they've been in the past and is there something in the environment I understand slower claims I understand the impact of the NSA, but just is there something more we should be thinking about.
Well, Josh I think at this point we have.
We have annualized our acquisitions into the.
Into the mix and you are right to point out that our organic growth in the quarter year over year was about three when you kind of pick out some of the COVID-19.
Covid adjustment, but I would also note at the at the beginning of the year. There was a couple of a couple of things that we're going to be headwinds the overall MSA.
Impact, which we seem to be navigating quite well, but it doesn't mean, we're we're not.
Necessarily avoiding that.
I do think we are seeing a little bit of volume softness youre clearly seeing it in the Ncos and some hospitals and providers side of things, which is impacting us on the margin.
In terms of in terms of that last extra percent or two in the quarter.
Youre right to point out that it is a little bit slower than our long term trend but.
We haven't seen any material shifts in kind of the I'll call. It the membership volume kind of client contracts et cetera.
Within this year that are demonstrated to a little bit more about volumes in NSA.
Okay and then.
If you could just give us a little bit more color I understand you can't disclose specifics around individual customers, but.
Assuming this is this your largest customer that you've renewed is that sort of the relief and then as you think about that impact on 2023.
And maybe help us understand contraction will change is again not specifics, but just directionally what would cause sort.
Sort of a big enough headwind to impact the overall revenues of the company next year.
Yes, Josh.
For the question as you know our key contact our key contracts have mutual confidentiality provisions and we have to respect customer confidentiality and we honor those provisions.
What what we can tell you is that we have signed a multiyear contract with one of our larger customers.
As we've noted it will have an impact on our 23 2023 revenues.
But with that.
But with that comes increased visibility for us I can also tell you that inside the inside the company it's business as usual, we're focused on executing and delivering for our customers.
<unk>.
And.
We the contract itself as a as a multi year contract typical with our other contracts that we negotiate.
Yes, I guess my question is just a headwind does it did they carve outs are they doing less business with you or is it really just around the pricing and your percentage of savings.
It's really it's really business as usual.
And and we continue we continue to we expect as we said Josh we expect the we can't go into the details of the specific contracts, but but we said that the growth would be muted and what we mean by muted is that it could be pretty.
Pretty limited off.
<unk> 2022 nominal.
But.
And in that way it depends on a number of factors it depends on volume environment environment at that time, whether it's all the client puts and takes impact of Covid if anything.
But at the end, we expect to at the end of 'twenty three we expect to resume normal growth thereafter.
Okay got you. Thanks.
Our next question is with Daniel graph flight from Citi.
Daniel Your line is open.
Daniel Your line is open you May proceed.
Oh, sorry.
Hey, guys. Thanks for taking the question.
Okay.
A few questions on guidance for 2022.
If we just look at the midpoint for both 2003.
Re queue guidance and in fiscal year 'twenty two guidance it implies around a 2% sequential decline in <unk> revenue and then almost.
8% sequential increase in <unk>, which would be seasonally and similar literally.
It implies around 30 basis points sequential margin contraction in <unk>, I think 50 basis points of expansion in four Q and kind of get that volume dynamic, but I was wondering if you can dig into that variability between <unk> and for Q for the remainder of the year. What gets you to the midpoint of guidance in terms of your assumptions and then any.
The qualitative guidance you can provide on how we should think about each segment networks analytics payment integrity.
Revenue integrity for the remainder of the year should we expect analytics to be driving.
Some of this growth and still seeing some attrition in networks.
Payment integrity.
Yes, okay.
Thanks, Daniel let's let's break it into two pieces.
First is our I'll call it the guidance for 'twenty, two and then.
While we expect I think it's a fair observation on on Q4, and I think it's worth a little bit of context.
In our guidance at the beginning of the year, we came out with a relatively narrow band on the overall range. If you think about is less than 2% on either side of the midpoint.
And as we explained last little bit of revenue each quarters.
To predict on the margin because.
It can be COVID-19 revenue that can be utilization.
<unk> environment, it can be client activity etcetera, but in the first quarter first quarter went our way and we outperformed we didn't adjust our guidance for second quarter ended up as we're staying on track third quarter could have a little softness but at this point, we're keeping our guidance range intact.
Make the point around pressure to achieve that midpoint in Q4, but we're not talking about a massive swing one way or the other so I think from a.
I'll call it a little bit more of a policy perspective, we think it makes sense to maintain our guidance and revisit in Q3.
But I would just say listen inside that broader range I think just based on what we're seeing in the outside world and the leading indicators whether it's.
Some of the results that we're seeing in hospitals et cetera, and their activity. We think it's prudent to be a little bit more cautious on the second half.
And obviously get sharper in Q3, so that's just a little bit on guidance and then I do think it is fair to say that.
There is.
Network and payment integrity are not going to drive the growth here I wouldn't I would note that some of the softness in network was a substitution effect.
<unk> ramped up our.
Our NSA Tpa services and some of that volume that was typically done in networks shifted over into the analytics side. So I think that is going to be a little bit of an extra driver here, but youre right.
Network and payment integrity are not going to be the big driver I think the big driver is going to be kind of that incremental volume and the analytics side in Q3 Q4.
Got it Thats very helpful and then on the <unk>.
Yes.
It seems like the acceptance rates are a little bit challenged just given some process steps.
That's at least according to your prepared remarks, I'm wondering if you still expect the NSA to have.
Less than negative 2% impact on on revenue.
This year and then if you can speak a little bit about the.
Potential for the final rules to be a little more favorable limited the primacy of the acute ta and arbitration and how that may impact.
Your product and your business overall.
Yes, Daniel obviously volumes or volumes are attracting theyre in line with projections, it's still obviously very fluid and evolving and there have been lots of puts and takes on the margin, but net net of it.
It has shaped up very much like we anticipated.
In the prior year in the prior quarters, we share the color on the loss of a few client programs some wins.
A few new programs and then less visibility as you go down in market and all of that sort of rolled up as you pointed out to up to a 2% headwind that we communicated.
Since then we've had some new NSA related wins the savings identified as I mentioned with <unk> based pricing have been meaningful perhaps slightly more than what we were projecting but.
But on the other hand, the overall volume picture as we said has been slightly weaker so when you factor in all of the original color, we provided and how it's evolved since then it's very much tracking to the expectations of that up to 2% headwind.
Relative to the to the <unk>.
<unk> about the your question about the C.
Final rulings.
It's still much it's still very much up in the year right.
<unk>.
The latest addition was the Texas ruling, which which made the cube, which made with for air ambulance claims and made the Q P. A.
No longer the primary factor variable, but made it put it on equal footing with the other variables and so we would expect that there.
We're anticipating that when the final rule comes out it will likely mirror whats there, but if not we're prepared either way with our data with our data science, we're in a great position.
To support our clients throughout the entire end to end.
Process of surprise billing from the start in terms of identifying surprise bill repricing them either at <unk> or some other methodology performing all of the analytics performing the postpaid negotiation and then ultimately ultimately working with them on the <unk> process, So no matter, which way the rules go and we think that will come out.
More balanced we're ready.
Got it and last one for me.
A little bit about the.
Longer term question.
I guess that the contract renewal, it's going to lead to some headwinds in 2023, so little growth in 2003 on on top line, but what gets you to a mid single digit growth rate after two.
2023 and are there any.
Other large contract renewals coming up within the next year that might weigh on 2024 and beyond.
Yes so.
Sure I think but let's let's talk a little bit about 23, the starting point and then kind of resuming growth thereafter, because I think that's a.
A smart question.
I guess, you're thinking about 'twenty two 'twenty three deals still in a kind of talked about nominal growth in the year and realistically. It's very early to tell just given six months out and a lot of chain.
Changes in the environment, but could that could that be nominal growth, yes could it be flattish, yes, but I think what's important to understand here is that.
We've got we feel like we've got a really good.
Ability to two.
Start the course have resumed the course of growth I should say in 2024, and 2025 off that base and that is that is everything about enhance extend and.
Enhancing our offerings et cetera, we feel like there is always going to be a.
Strong tailwind on volume growth and.
The expanding our scope of services, which gives us some confidence where we are working hard to continue to build out the.
The other customer markets that we serve which will be a tailwind and we think that we've got a good line of sight for the next couple of years and in a day.
Now I'll turn it over to you is too.
If we're going to say much about any things down the road, but it.
It is part of our normal course of business that we have these.
These contractual negotiations, but but we've navigated that in the past and we feel like we're going to be in good shape to do that in the future.
<unk>.
As Jim said and then Daniel as you know, we can't we can't speak to the details of specific customer contracts and when they renew.
We have said in the past that our larger contracts typically have a multiyear term than that.
This case the length of this extension was consistent with what we typically come out on contracts terms so they automatically.
They typically come up.
Every few years and for US what's important specifically about this extension as it provides a fairly long line of sight and that visibility for us.
As it is with all multi year contracts, it's very helpful to planning and.
And to resource allocation as we execute on our growth strategy.
Thanks for taking all my questions Scott really appreciate it.
Thanks.
Our next question is with Steven Valiquette from Barclays.
Steven Your line is open.
Hi, This is Stephanie on for Steve just one quick one from me I was wondering if you could maybe I'll start there.
Our color either quantitatively or qualitatively on the softer volume observations you sited.
How much would you attribute to softer utilization Chinese MSA.
On the same path.
There is a bit of a lag in the claims but just any more color you can add there would be helpful.
<unk>.
Yes, I'll just kind of give you a.
Kind of a big a big picture view.
With our revenue is coming down a little bit in the quarter, we're not talking tens of millions of dollars. We're talking about one 2% to 3% in total, but but that's pretty darn important in terms of dropping to the bottom line and so I would say, it's probably equal measure of.
Volumes in Q2 is a little bit of volume softness it was a little bit of Covid.
We had some excess COVID-19.
<unk>.
Revenues, a COVID-19 testing revenues because the omicron in Q1, so that was a little bit of a tough compare.
<unk>.
Generally speaking those were kind of two of the big drivers I think the.
Alonge here is where we're seeing a little bit of incremental softness on the margin going into into June exiting June and going into July and so that.
It does explain I think the marginal shift a little bit in guidance. So we are dependent on the.
Kind of that last little bit too to deliver our.
Margins.
Go back to what I said in the call very importantly, the core.
The core large majority of our revenues are very highly visible very well spoken for it is just that last couple of percent in the quarter, that's always tough to predict.
Okay got it thanks, so much.
Our next question is with Cindy Motz from Goldman Sachs.
Your line is open.
Oh, Thanks, and thanks for taking my question, Yes, a lot of my questions were answered, but I just say in general.
Quarter, you guys pretty much.
Did what you said you were going to do in this quarter, I mean, especially counting the COVID-19 impacts and everything and I. Appreciate the caution obviously the macro comments, but overall I mean relative to what we see with other companies doing when do you think that you are.
If people money more recession resistant and general like and even Jim What you are seeing next year I mean, we want to see a shift more to ABS correct.
We're ahead of expectations slightly there and Thats, what I would think that in payment integrity of the higher margin part of the business. So to that end in terms of obviously revenue growth youre talking about 'twenty three but how.
How do you see EBITDA margins going in 'twenty three do they I mean is there declines or they stay up or any color you could give us there would be great. Thanks.
Yes, so I'll just I'll come back on to come back to that visibility.
Feels like it's two questions number one.
There is there is a high degree of visibility in our business and we keep chugging along and it failed sale commented, we're kind of an all weather solution.
We kind of we kind of like our chances.
In terms of being ready for any economic shifts but.
The reality is is that incremental revenue is as I stated previously is really kind of what that state that last $10 million to $20 million of the year et cetera is pretty important.
So turning to 2023 it is fair to say that we have a platform that the costs are largely fixed it's people. It's the technology.
The external spend for technology et cetera, and we're not making a dramatic shift in terms of what we see in terms of the demand from clients next year and so we are going to see some softness as that.
Some of that marginal revenue lack of growth drops down I don't think were ready to do any predictions yet, but you should just assume that this is not a highly variable cost base. It just isn't and in fact our clients.
We made commitments to our clients and we want to deliver and so on the margin work.
Cost conscious company I've ever encountered but the reality is is that we are holding a little bit through the that incremental volume.
Okay.
And so okay. So I understand so but I don't think we should expect to see any dramatic shift necessarily there because you are very cost conscious and overall it feels like the momentum is still pretty good with it with the customers even in new areas as well.
Yes, I think.
We've said this before and I have been coming in from the outside have been really pleased we do have.
We do have intriguing prospects, we've got a really good.
Competitive positioning and market and it doesn't mean, there's not competition et cetera, but we've got a really privileged position in this marketplace and we've got a right to win we need to invest in the business.
We need to expand our products and services.
And.
That's one of the reasons why we think we've got an opportunity now that we've got a little bit of runway here.
Post NSA and kind of new.
The new management team in place and getting the.
Getting some of these contract renewals behind US is it gives us some opportunities to kind of go after it in growth.
Great. Thanks for taking my question.
At this time there are no further questions. So as a reminder to ask a question. It is star one on your telephone keypad.
There are no further questions. So I'd like to pass the conference back to the management team for any closing remarks.
Thank you operator.
We appreciate everyone's time today. Thank you for your continued support and confidence and.
Enjoy the rest of your summer. Thank you.
That concludes today's call. Thank you for your participation you may now disconnect your line.
Okay.