Q2 2023 MultiPlan Corporation Earnings Call
Hello, everyone that the multi Panic Corporation second quarter 2023 earnings conference call will begin in one minute time to allow all participants get connected.
If you would like to ask a question. Please press star followed by one no telephone keypad. Thank you for your patience.
[music].
Hello, everyone and welcome to the multi Panic Corporation second quarter 2023 earnings Conference call.
My name is not yet and I'll be coordinating the call today.
We would like to ask a question. Please press star followed by one on the telephony keypad. Please.
Please note we will take one question and one follow up I'll pass it on.
I would now like to hand, the conference over to Luke Montgomery SVP of Finance and Investor Relations again. Thank you. Please go ahead.
Thank you Nadia good morning, and welcome to multi planned second quarter 2023 earnings call. Joining me today is <unk>, Chief Executive Officer, and Jim <unk>, Chief Financial Officer.
The call is being webcast and can be accessed through the investor Relations section of our website at www Dot multi brand dot com.
During our call we will refer to the supplemental slide deck that is available on the Investor relations portion of our website along with the second quarter of 2023 earnings press release issued earlier this morning.
Before we begin a couple of reminders.
Our remarks and responses to questions. Today may include forward looking statements.
These forward looking statements represent managements beliefs and expectations only as of the date of this call.
Actual results may differ materially from these forward looking statements due to a number of risks.
Many of these risks can be found on the second page of the supplemental slide deck and a more complete description on our annual report on Form 10-K.
And other documents, we file with the SEC.
We will be referring to several non-GAAP measures, which we believe provide investors with a more complete understanding of multi plant underlying operating results.
An explanation of these non-GAAP measures and reconciliations to their comparable GAAP measure can be found in the earnings press release, and the supplemental slide deck with that I would now like to turn the call over to our Chief Executive Officer Dale Dale.
Thank you Luke and good morning, everyone and welcome to the call.
As many of you heard at our Investor Day on June 28, multi plan is in the midst of a transformation.
This transformation began with our strict strategy review late last year, which resulted in our refreshed growth plan and led to the steps we have taken to reset the business in 2023.
And it is continuing with the execution of that plan, which pivots our business through a number of actions first we are capitalizing on the strength of our platform and our deep payer relationships.
We are enhancing our core business by becoming a product centric organization and investing in new services and solutions.
Third we have created a new data in decision Science service line and partnered with Echo health to offer BTB payments both to further our footprint in the in network and government market segments and finally, we are focused on using our cash flow to improve our capital structure.
All of this we firmly believe helps unlock the enormous potential value of our franchise to the benefit of our shareholders.
I am pleased to say that during the second quarter, we have made significant strides towards realizing our transformation and.
In our view the second quarter marked an inflection point for the company in terms of both the results, we delivered and the execution of our strategy let.
Let me take each of these points in turn.
Beginning with our Q2 results as shown on page four of the supplemental deck, we reported revenues of $238 million and adjusted EBITDA of $152 7 million.
Excluding the contribution from our newly acquired data Science company benefits Science technologies, where BST revenues up $235 9 million were above the high end of our guidance range and effectively flat from the prior quarter.
Adjusted EBITDA, which was not materially impacted by DST was near the top end of our guidance range and down about 2% from the prior quarter.
Our adjusted EBITDA margin was 64, 2% versus 66% the prior quarter, which was in line with our expectations, including a modest drag from the addition of <unk> results.
Through the first half of the year results played out as we forecasted validating our view that our results are stabilizing we have absorbed the impact of the contract renewals discussed on previous calls which are now fully reflected in the quarterly run rate that impact has been partially offset by the.
Combination of underlying organic growth in our core revenues and a normalizing volume environment.
As many of you are aware there are a number of indications that health care utilization has been picking up you saw it in the earnings commentary from some of the hospitals medical suppliers and payers and we have seen it in our first half savings volumes and revenues as shown on page six during the second quarter.
Identify potential savings for our commercial health category increased 2% sequentially following a 3% increase in Q1.
As shown on page seven identified potential savings from our percentage of savings revenue model were flattish sequentially effectively maintaining the step up in volumes in Q1, when identified but potential savings increased 4% sequentially.
Underneath the headline volume trends, we saw a positive mix shift in our identified savings, which helped our revenue yield specifically during the second quarter growth in utilization was strongest in facility services, which includes surgery radiology and lab services. These die.
<unk> are reflected in the revenue yield of our percentage of savings revenue model, which declined just one basis point. Despite previously anticipate anticipated incremental pressure in Q2 related to the aforementioned contract renewals with larger customers.
At the beginning of our 2023 guide at the beginning of 2023, our guidance incorporated a modest slipped from a recovery in volumes and we were uncertain as to how quickly we would see it.
The lift occurred a bit earlier in the year than we anticipated, which in part explains why revenues in each of the first two quarters of 2023 were at the higher end of our guidance range.
Looking forward, we continue to believe the second quarter will be the low point for the year for revenues and adjusted EBITDA and we continue to expect results for the second half of 2023 to be higher than the first half.
Given these considerations we are narrowing the range of our fiscal year 2023 guidance with a slight increase at the midpoint before the contribution from DST driven largely by our year to date results and reflecting our continued expectation for modest growth in the second half of the year, Jim will share the detail.
With you momentarily.
As I mentioned, we have been busy executing on our transformation since late 2022.
As shown on page eight during the second quarter, we advanced several critical initiatives within our growth plan.
These included establishing our new data in decision Science service line with the acquisition of DST.
Adding a b to B healthcare payment service through our new partnership with <unk> health.
These actions along with further progress we have made towards the launch of several new products to enhance our core business and position us for growth in 2024 and beyond.
As many of you heard at our recent Investor day, we could not be more excited about the acquisition of DST and the formation of our data new data in decision Science service line. We believe this is an absolute game changer for multi plan. It is the key element in our plan to expand our footprint beyond out of <unk>.
Network claim processing deepening our penetration in large and faster growing markets like in network commercial and Medicare advantage.
Founded in 2012 by data scientist and benefits experts from M. I T. Bst's mission aligns perfectly with ours, which is to improve health outcomes and reduce the total cost of care. This acquisition is consistent with the strategic priorities and the acquisition criteria we have communicated.
Over the last several quarters.
By combining dst's cutting edge technology solutions with multi plants core strengths, namely our strong payer relationships and our expansive and growing claims flows we will efficiently deliver enriched and actionable data and insights into our customers hands with decision analytics.
And software tools that allow our customers to manage the health risks of our population benchmark important network contracts assess their plans financial performance and use machine learning and AI to achieve other important business imperative our data in decision Science service line.
We'll deliver what we believe are clear market, leading value propositions versus our competition.
The combination of Bst's industry, leading products and enormous power at multi plants platform addresses some of the most pressing challenges facing our customers across the wide and expanding range of channels we serve.
As I have said demand for these solutions is already high and we expect it to increase as we continue to introduce introduce our customers to the new capabilities we offer.
As a result, we expect the financial impact to be significant we believe our new data in decision Science service line could become a $100 million business, perhaps even larger over the next several years generating significant value for our customers and significant returns for multi plant shareholders.
And we are confident we can capture this revenue because so much of the opportunity is simply about on leasing the enormous potential of what is already within our walls. As we noted a few weeks ago, we have $400 billion of incremental charge volume already on our platform that we can now begin.
Monetizing with the products that BST added to our platform.
We are also very excited about our new partnership with <unk> health.
Echo helps us deliver a b to B healthcare payment service that will streamline provider reimbursements and drive further efficiencies in the end to end claims adjudication process.
We believe this offering enhances the value we provide across our solution set and strengthens our competitive position in the key channels. We are focused on including the third party administrator and regional health plan channels as we outlined at our Investor Day in June we expect to generate between $50 million.
And $75 million of incremental annual revenue from this new service within the next several years.
As we have discussed we have identified a deep pipeline of products and product enhancements to accelerate our growth in our core out of network payment and revenue integrity and HST businesses as shown on page eight of the supplemental deck, we remain on track with all of the initiatives slated.
For 2023.
Im pleased to announce that our new balance Bill protection service for Hst's platform already has 11000 lives contracted.
This new service provides health plans and members with an additional layer of protection from the increased medical costs that result, when providers balance bill.
Specifically it helps alleviate the stress the wasted time and the administrative burdens that balanced bills create for all parties involved by working through the provider settlement process from start to finish on the members' behalf.
The launch of our balanced Bill protection service marks the achievement of an important milestone within our growth plan. The market reception has been highly enthusiastic they're early returns from this initiative are included in our second half forecast and why it wallet will not have a material impact in 2023, we.
Expect it to be one of the springboard for our growth in 2024.
Further this new service is one of several new features we have planned to evolve hst's platform and advance our vision to create an employer health care solution in a box.
The market opportunity for this turnkey solution is large and it's growing as employers and other plan sponsors of all sizes are increasingly shifting to self insured plan arrangements in an effort to more actively manage medical cost pressures.
Despite the appeal of self insuring many planned sponsors continue to struggle with the hurdles to adopting this plan structure.
Our expansion of the features on our HST platform, including the balance Bill Protection service is aimed at removing many of these hurdles.
Balanced spill protection is but one example of how we are pivoting to a product centric organization.
We are hard at work on our other 2023 core business initiatives and we have high expectations for the contribution of these products to our growth.
In total we expect our 2023 CT business initiatives to generate incremental annual revenues of $50 million to $100 million in the coming years and as we've discussed we aren't stopping there we are already making progress against new core business products scheduled for launch in 2024.
And we have a pipeline that stretches out several years.
It's all part of our plan to leverage our embedded position in the commercial health ecosystem continue to expand what is already the broad set product suite amongst our competitors and grow our core business.
Stepping back our opportunities are significant and within our reach.
All told we are targeting $200 million to $275 million of incremental annual revenue within the next several years from these initiatives as.
As we move forward, it's all about the execution of our transformation as.
As the second quarter test, we have already begun to deliver and we will continue to do so I look forward to updating you in the coming quarters as we further progress along our journey.
With that I'd like to turn it over to Jim.
Ken.
Thanks, Dale and good morning, everyone today I'll do the usual walk through of our Q2 financial results provide some commentary on our second half outlook and discuss the revisions to our 2023 guidance and as usual I'll close with a review of our balance sheet and an update on our capital allocation plans.
As shown on page four of the supplemental deck second quarter revenue was $238 million declining 18% from Q2, 'twenty, two and up <unk>, 6% from the prior quarter, excluding a $2 1 million contribution from DST, which closed on May 8th second quarter revenues were $235 9 million down <unk>.
Modest <unk>, 3% from the prior quarter.
Turning to revenues by service line as shown on page five of the supplemental deck network based services revenues declined about 10% from the prior year quarter and were effectively flat sequentially.
In analytics based services revenues declined about 22% from the prior year quarter and were also effectively flat versus the prior quarter we.
We saw relative strength in payment and revenue integrity services revenues, which declined about 12% from the prior year quarter, but increased about 9% sequentially through strong performance from our clinical negotiation clinical review and discovery health products.
Our second quarter revenues were driven by a modest sequential uplift in savings volumes as.
As detailed on page six of the supplemental deck medical charges processed increased 8% from Q1, 'twenty three to $43 1 billion and potential.
Medical cost savings increased 2% from Q1, 'twenty three to $5 7 billion.
In the core commercial health plans category, the sequential increases in medical charges processed and potential medical savings identified were both 2%.
Identified potential savings in our Pes save revenue model were effectively flat sequentially. Despite our typical seasonality in the second quarter.
As Dale noted as patients are re engaged in capacity returned in the system. We saw a positive mix shift within our savings volumes with relative strength in both inpatient and outpatient facility claims and in more discretionary categories of care, including surgery radiology in lab services.
As a result, we saw an uptick in our clinical negotiation and financial negotiation services.
This mix shift represents a partial reversal of some of the mix shift pressures that negatively affected our second half 'twenty two results.
Accordingly, as shown on page seven revenues as a percentage of identified savings our revenue yield.
Was effectively stable this quarter declining a modest four basis points for overall business, which includes both <unk> and <unk> P. M.
The revenue yield for our core percentage of savings revenue model, which is approximately 90% of our revenues declined just one basis point as our positive savings mix shift largely offset the anticipated incremental pressure of the contract renewals with larger customers.
Turning to expenses second quarter, adjusted EBITDA expenses were $85 3 million up $4 8 million from prior year quarter and up $5 1 million sequentially.
For both the year over year and sequential comparisons about half the increase in adjusted EBITDA expenses was driven by the combination of forecasted structural cost increases such as merit increases and investments in new products and services.
The remainder of the expense growth reflects the expenses contributed by BST in Q2 of 'twenty three.
Adjusted EBITDA was $152 7 million in Q2, 23 versus $209 6 million in the prior year quarter and $156 3 million in Q1, which landed in the top half of our guidance for the second quarter, despite a bit of drag from BST.
Our second quarter adjusted EBITDA margin was 64, 2%, including the impact from BST versus 66, 8% in Q1, 'twenty, three and 72, 3% in the prior year quarter.
Moving onto our outlook as shown on page nine of the supplemental earnings deck, we have revised our full year 2023 guidance to $950 to $980 million, which includes an estimated $12 million of revenue contribution from DFT under our ownership.
Excluding BSP, we are narrowing our revenue guidance to $940 to $970 million versus our prior guidance of $925 to $975 million.
Which has an implied $5 million increase at the midpoint.
On page 10 of the supplemental earnings deck, we bridge, our revised revenue guidance from our first half 'twenty three annualized revenue of $945 million.
As we have mentioned since our initial guidance in February we continue to expect second half results to be higher than our first half results.
This incorporates a few notable assumptions and moving parts.
First of all in second half 2023, we expect an incremental 1% headwind to reflect the run rate impact of larger customer renewals.
While the first half had some residual benefit of a prior contract through January the second half will not have that benefit.
Second we are maintaining our initial full year 2023 expectations for the environmental drivers of our volume, including health care utilization in health care inflation.
This conservatively implies a steady underlying volume environment going forward with modest annualized volume growth of approximately 1% in the second half.
As noted volumes of billed charges and identified savings began normalizing in the first half arguably a bit earlier than anticipated and while we believe this volume level seems likely to hold in the second half at this juncture, we arent ready to assume an additional step up in health care capacity or utilization.
And finally, we continue to believe we will capture some net new growth and early gains from our 2023 growth initiatives in the back half driving about 1% to 2% annualized growth consistent with our initial guidance.
Moving to our revised adjusted EBITDA guidance, we are narrowing our estimate to 615 to $6 $35 million, which includes a net contribution from DST of approximately negative $2 million and implies no material change at the midpoint.
We expect adjusted EBITDA expenses to be between 330 and $340 million with some additional expenses in our core business driven by hiring related to new products as well as some additional NSA expenses as <unk> volumes have increased significantly in 2023.
Of note BST will experience some extra cost burden in the next few quarters to reflect cost of integration and product development.
The combination of our revenue and adjusted EBITDA assumptions imply adjusted EBITDA margin of 64% to 65% consistent with our prior guidance, but reflecting about 100 basis points of mix related compression from the impact of BST for the year.
Moving to other notable changes in our full year 2023 guidance, we are reducing the top end of our guidance range for interest expense to reflect reduced gross debt balance on our fixed rate debt, partially offset by interest rate increases on our floating rate debt.
And now expect full year 'twenty three interest expense of 325 to 335 billion.
We are reducing our guidance for operating cash flow to $160 million to $190 million versus prior guidance of $175 million to $215 million.
This reduction in operating cash flow includes the impact of approximately 20% to $25 million of burden.
From two primary factors number one additional cash taxes related to the gain of $74 million from the cancellation of debt. This is from our $274 million of debt repurchases over the last few quarters.
And two $7 million of cash transaction expenses related to our acquisition of DST.
Excluding these items, our operating cash flow would actually be tracking very closely to our initial expectations.
I would also note that both the prior and revised guidance includes a $22 million cash outflow related to the settlement of the Delaware Defense shareholder litigation, which was onetime and nonrecurring.
And finally, we are adjusting our capex guidance to $110 million to $120 million from the prior guidance of $100 million to $115 million, reflecting a more aggressive plan for our product launches than initially budgeted and investments in BSD or.
Our other guidance items remain unchanged.
For Q3, we anticipate revenues of $235 to $250 million and EBITDA of $1 $50 million to $160 million as shown on page 11 of the supplemental deck.
This implies about 2% sequential growth over Q2, driven by the combination of BST cost savings performance and net new sales.
As Dale mentioned results are stabilizing and we feel Q2 was the inflection point, which provides the base for growth in Q3 and beyond.
Our Q3, adjusted EBITDA guidance reflects modestly higher expenses versus Q2 about $1 million on a core basis and about $5 million, including the contribution of expenses from BST.
Turning to the balance sheet and capital management operating cash flow was $7 7 million in the second quarter.
As a reminder, the second and fourth quarters are typically our lower quarters for cash flow given the timing of our interest and tax payments Q.
Q2 also included the additional cash taxes related to the gain of the cancellation of debt that I mentioned previously.
Leveraged free cash flow was negative $24 $3 million in the quarter, reflecting the lower operating cash flow and an increase in capital expenditures driven by our product Rollouts.
As shown on page 14 of the supplemental deck, we ended the quarter with $90 million of unrestricted cash down from 266 million in the prior quarter largely due to the $141 million of cash used to finance the DST acquisition.
Net of cash our total and operating leverage ratios were seven 1% and $5 one respectively.
Our long term capital allocation priorities remain unchanged, our highest priority is investing in the business, both organically and through M&A to drive growth and long term value followed by debt reduction and then share repurchases.
So those are the long term priorities, but as I mentioned at our Investor day. It is going to look a little different over the next.
Few quarters next year as shown on page 12.
We will continue to make organic investments in the business to support our platform and invest in our new data in decision Science service line.
But that will require relatively small allocation of our capital.
Our main priority near term as debt retirement.
We'll continue to look at acquisitions, but that is likely to be a lower priority for the next year or so as we focus on the BST integration and the rollout of PST products.
Frankly, we have a ton of opportunities with the assets currently under a roof. So our focus is on executing on our plan and capitalizing on those opportunities.
Finally, we'll continue to assess share repurchases.
We did repurchase about 7 million shares during the second quarter to take advantage of price dislocations in our stock. However, it's likely to contribute continued to be a small allocation of our capital going forward.
In summary, we feel very good about our execution in the first and.
And we're very confident we can deliver on the expectations in the second half.
That brings me to the end of my comments and I'll turn the call back over to Dale.
Thanks, Jim.
Before we open up the call for questions I'd like to circle back where we started this call multi plan is working hard to execute its transformation that means investing to capture meaningful opportunities in growing markets and implementing our growth plan by expanding our products and services and while it's still early.
We have a clear line of sight on where our transformation leads us in short we believe the execution of our transformation will unlock the value of our franchise over the next few years by making US a company with an accelerated growth profile, a more diversified mix of revenues by product by channel and by.
Customer and a stronger capital structure that will provide us more flexibility to shape our destiny.
As I said at our Investor day.
The leadership team and all of our employees are aggressively going after it and we will be relentless in our execution.
We know we have to deliver the results and we're on track to do just that.
Operator would you kindly open the call up to Q&A.
Of course, if you would like to ask a question steady. Please press star followed by one on actually thank you Pat.
Thank you Keith Hello, a question. Please press star followed by <unk>.
Hank you ask your question. Please ensure your mute.
Jay.
Please note we will take one question and one follow up.
Our first question today, guys, Hey, Joshua Raskin of Nephron Research LLC Joshua. Please go ahead. Your line is open.
Hi, Thanks, and good morning.
My question's around traction with health plan conversations on all the new product launches, including BST for 2024.
Curious, where the plans are showing the most interest and then Conversely, with all thats going on for the payers in terms of utilization changes in some of the impacts you are seeing there are big changes for Medicare are you seeing that slow down their process at all do you think you're you're hitting a little bit of a wall as payers are prioritizing sort of fixing things internally this year or do you feel like <unk>.
Action is picking up.
Got it thank you.
Not seeing a slowdown of payer interest in fact.
It's the opposite.
There is there is an acute interest in managing <unk>.
The uptick in utilization, helping them to manage their total cost of care, including the out of network claims that they that they see as particularly as utilization returns and so there is a strong interest across all of our payers, including our larger customers are regional health plans and our third party administrators.
For all of our products and services, we're really excited about the introduction of the BST product line. As you know we were collaborating with them since last fall around price transparency and we're now we're pleased we're pleased that we're rolling out our first phase of our price transparency product called <unk>.
Optics.
We've already been in front of our customers.
Telling them about the product.
Our plan to launch it. So we're excited we haven't seen a slowdown of interest and.
The two product set from DST that we're focused on.
Price transparency, but the second is what we call claims claims risks claims restoring and Ben insights and so all three we're out in front of our customers with those focusing on those three products, but theres an array of products behind them that we plan to launch later this year.
Got you got you and then just a quick follow up.
Topline number came in a lot stronger than the bottom line relative to our estimates and I understand some of the costs, but maybe Jim if you could just refresh like why are we not seeing that flow through and if utilization were to persist a little bit better than expected should we expect that to flow through more to the bottom line going forward.
Thanks, Josh.
We talked a little bit about first quarter.
In the first quarter call about the step up in costs and Thats really just investments Josh and it is not.
It's a little bit more of a step up in time, but it doesn't just step up every single quarter. As you saw we haven't we're going to step it may be another million dollars in Q3, so it's a little bit of a saw tooth as we move forward, but but as we start seeing volumes, it's incrementally going to drop to the bottom line, which is why we feel comfortable that we can make some investments.
And when we see the volumes, we can maintain our margins. So I wouldn't look too much into that I would look at the Q3 and we also get some burden from from benefit science, which is about 100 basis points for the year.
In our in our full year guidance, so theres, a little bit of burden as we make some investments, but again, we're making investments because we see demand, Josh and Thats kind of the main message here.
Okay. Thanks.
Thank you and as a reminder, if you would like to ask a question. Please press star followed by one on E.
Pat.
Our next question Betsy Daniel quite slight of Citigroup. Daniel. Please go ahead. Your line is open.
Hi, Thanks for taking the question.
I'd like to focus a little bit on the revenue guide for the remainder of the year and really that 1% to 2% net new sales and growth initiatives.
Are you able to provide any more detail around that which segments products will drive that growth. This year and how much of that has been sold already versus what you need to go out there and get and then as we think about 'twenty. Four is there anything that would prevent you from hitting that 4% to 5% core long term growth rate that you had provided during the <unk>.
Investor Day.
Okay. So, let's let's break it down into the two parts of the net new sales new growth initiatives you should assume if it's going to be in our Q3 Q4 guide there's a fair amount of visibility because it's implementing new.
New products and new sales et cetera, we're seeing it.
We're seeing strengthen in our HST platform, we're actually seeing strength in some upsells in our in our core.
So it's relatively broad based and then we've got some early returns from some of our new products like balance built protection. So I think it's the.
The right way to think about is it's kind of in motion and and disbursed broad based which is exactly the way you want it to be it's not it's not that lumpy.
As it pertains to the second question.
24.
We see there we think there is plenty of opportunity in the core.
Youre going to see you're going to see a couple of dynamics first of all I think its capacity increases in the system and medical and face inflation continues to roll through the system, you're going to see those tailwind very much in line, but it's also enhancements to our core that are helping we're always going to see those little headwind headwinds on the margin as we talked about.
At our Investor day, but as we think about the core tailwind in the in the the main part of our business it feels pretty healthy.
Got it Okay, and then on capital deployment, obviously repayment of debt is taking higher priority now that you are integrating VST I am just curious if you have a target leverage ratio.
And that you guys are aiming for and how quickly you can get there.
Yes, and we talked a little bit about it.
At the Investor Day, we don't really have a target per se.
Actually flip it around and say it is a function of two things the leverage ratio is a function of us growing the business in 'twenty four and beyond it is a function of us deploying our capital we're much more M&A now that we've kind of used up that excess on our balance sheet. We're in a little bit more of a pay as you go realm.
So.
If acquisitions are on hold at least for the time being just because we are integrating BSC you should assume that most of the cash flow is going to go towards.
Little bit of cash flow towards investing in the business, but most of it is going to go towards debt retirement by definition, it's not so much cash flow that is going to be a game changer on our leverage. So it is it really a function of growing our business but.
We indicated at our Investor day, we definitely want to get to a reasonable level by the time, we get to kind of that refinancing window on our debt in the 'twenty six 'twenty seven timeframe.
Got it thank you.
Thank you we have no further questions.
This now concludes today's call. Thank you all for joining you may now disconnect. Your we've just had one question come through.
Rishi Parekh of J P. Morgan Ritchie. Please go ahead your line is open.
Hi, Thanks for taking my questions and getting me in just one and I apologize I've been through.
A few other calls, but as it relates to utilization for the second half of the year can you just maybe break down your utilization expectations, just given what youre seeing out there and just from everything that we're hearing from providers relative to I just wanted to isolate that versus the pricing that we're seeing in the second outside of the NSA can you just talk about overall.
All what are the volumes ex the NSA related activities that you are saying.
And I guess, we'll start with by the way I think it is fair to say that the.
The visibility in our business has really gone up and.
We're seeing we're seeing.
An uptick in our PSA volumes and if you think about it over the first half of the year, we're up about 5% from Q4 of 2022 now it is important to recognize we are skewed towards out of network. We've got a claims lag and we've got a broader book then may be just surgery right because we've got we've got.
General physician activities as just a broader base of healthcare, but those qualifiers. Aside we're actually seeing very similar trends, albeit on a lagging basis to what the hospitals are seeing which is upticks in ASC and.
Inpatient surgeries and so inside that portion of our book, we're seeing behavior, that's very very similar.
We've lagged a little bit or just haven't seen the growth is on just kind of the classic positioning office claims, which are relatively stable and our NSA is relatively stable. So with our unique platform. It's actually very consistent with what we're seeing out there I think the other part about it is hey, okay sequentially the hospitals.
Up a couple percent on surgeries et cetera can that sustain itself connects sequentially grow every single quarter and what you heard from dailies, we're not ready to call that yet because I think there is a capacity issue here, it's not a demand issue. It's a capacity issue. If you get injured and reshape you go out and play Pickle ball.
And hurting your knee my guess is you probably three months away from seeing an orthopedic surgeon.
Just given the backlog that happens so so by definition the system had an uptick in capacity, but it's hard to it's hard to tell whether it will sustain so we're just not ready to call that yet.
You also asked about the NSA.
NSA claims and the process itself.
We think we are seeing an uptick in NSA claims volume over over fiscal year 2022.
And as importantly, we're seeing increases in the number of claims that we negotiate post payment when.
When a provider is unhappy with the payment we are seeing an uptick in the number of claims requested for negotiations as well as the number of arbitration cases that had been initiated.
So significant increases.
In the process itself related to post payment negotiation and the initiation of arbitration.
I appreciate you there thanks.
Thank you. Thank you.
Okay. Thanks.
Thank you we have no further questions. This now concludes today's call. Thank you all for joining you may now disconnect your lines.
Thank you.
Okay.
Yes.
Yes.
Yes.
Okay.
Yes.
Okay.
Okay.