Q1 2024 MultiPlan Corporation Earnings Call

Angela: Good morning everyone, and welcome to the MultiPln Corporation first quarter 2024 earnings call. My name is Angela, and I'll be coordinating your call today. During the presentation, you can register to ask a question by pressing star followed by 1 on your telephone keypad. If you change your mind, please press star followed by 2. I would now like to hand the conference over to Shawna Gasik, AVP of Investor Relations. Thank you. Please go ahead.

Good morning, everyone and welcome to the multi plan Corporation first quarter 'twenty 'twenty four earnings call. My name is Angela and I'll be coordinating your call today.

During the presentation you can breakfast that you asked the question by pressing star followed by one on your telephone keypad. If you change your mind. Please press star followed by team.

I would now like to hand, the conference over to Sheldon Gothic a V. P of Investor Relations. Thank you. Please go ahead.

Shawna Gasik: Thank you, Angela. Good morning, and welcome to MultiPln's first quarter 2024 earnings call. Our speakers today are Travis Dalton, Chief Executive Officer, and Jim Head, Chief Financial Officer. The call is being webcast and can be accessed through the Investor Relations section of our website at MultiPln.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 first quarter 2024 earnings press release issued earlier this morning. Before we begin, a couple reminders.

Sheldon Gothic: Thank you Angela good morning, and welcome to multiply in its first quarter 2024 earnings call. Our speakers today are Travis Dalton, Chief Executive Officer, and Jim had Chief Financial Officer the.

Sheldon Gothic: The call is being webcast and can be accessed through the investor Relations section of our website at multi client dot com.

Sheldon Gothic: 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 first quarter 2024 earnings press release issued earlier this morning.

Shawna Gasik: Our remarks and responses to questions today may include forward-looking statements. These forward-looking statements represent management's beliefs and expectations only as of the date of this call. Actual results may differ materially from those forward-looking statements due to a number of risks. A summary of these risks can be found on the second page of the supplemental slide deck and a more complete description in our annual report on Form 10-K and other documents we file with the SEC.

Speaker Change: Before we begin a couple of reminders.

Speaker Change: Marks 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 those forward looking statements due to a number of risks a summary of these risks can be found on the second page of the supplemental slide deck anymore.

Speaker Change: Police description in our annual report on Form 10-K, and other documents, we file with the SEC.

Speaker Change: We will also be referring to several non-GAAP measures.

Which we believe provide investors with a more complete understanding of multi plans underlying operating results and explanation of these non-GAAP measures and reconciliations to their comparable GAAP measure can be found in the earnings press release and in the supplemental slide deck with that I would now like to turn the call over to our Chief Executive Officer Chad.

Shawna Gasik: We will also be referring to several non-GAAP measures, which we believe provide investors with a more complete understanding of MultiPln's underlining operating results. An explanation of these non-GAAP measures and reconciliations to their comparable GAAP measures can be found in the earnings press release and in the supplemental slide deck. With that, I would now like to turn the call over to our Chief Executive Officer, Travis Dalton. Travis? Thank you, Sher

Chad: As Don Travis.

Travis S. Dalton: Thank you, Shawna. Good morning, everyone, and welcome. I'd like to begin my first earnings call by expressing how excited I am to be leading the MultiPlan team and how inspired I am by the opportunity to work with great clients, Passion Associates, and serve a mission that really matters, which is to bend the cost curve in health care. I would like to share with you some of my thoughts about my first two months, which have been quite eventful at the helm of MultiPln. As you heard me say during our last earnings call, I chose to join MultiPln because I saw the critically important and valuable role we play in reducing the cost of health care.

Chad: Thank you Shannon good morning, everyone and welcome I'd like to begin my first earnings call by expressing how excited I am to be leading the multi plant team now expired I am by the opportunity to work with great clients passionate associates.

Chad: The mission that really matters, which is to bend the cost curve in healthcare I.

Chad: I would like to share with you some of my thoughts about my first two months, which have been quite eventful at the helm of multi plan.

Chad: As you've heard me say during our last earnings call I chose to join multi plan because I saw the critically important and valuable role we play in reducing the cost of health care.

Travis S. Dalton: We combine data, analytics, and technology with expertise to make healthcare more transparent and affordable for all. I believe we have a unique opportunity to take this value proposition and serve stakeholders across the entire healthcare ecosystem. Leveraging data and insights to better serve our core clients and create value across the broader ecosystem is fundamental to how we will complete our journey to becoming a world-class public company that delivers sustainable growth. In my first two months on the job, I've engaged with our associates, and our clients.

Chad: We combined data analytics and technology with expertise to make health care more transparent and affordable for all.

Chad: I believe we have a unique opportunity to take this value proposition and serve constituents across the entire health care ecosystem.

Chad: Leveraging data and insights to better serve our core clients.

Chad: Value across the broader ecosystem is fundamental to how we will complete our journey to becoming a world class public company that deliver sustainable growth.

Chad: My first two months on the job I've engaged with our associates our clients strategic.

Travis S. Dalton: Strategic Industry Partners, and many provider health systems. These engagements have demonstrated the incredible integrity and professionalism of the MultiPln team, reinforced my confidence in the potential of the company, and validated my commitment to helping this company carry out its critical mission in the health care market. Positioning MultiPln for accelerated and sustainable growth begins with a devotion to business fundamentals that drive performance excellence. Business success will come as we serve clients, understand the problems the market is trying to solve, and create mechanisms to deliver value.

Chad: Strategic industry partners and many provider health systems. These engagements have demonstrated the incredible integrity and professionalism of the multi planting.

Chad: Reinforce my confidence in the potential of the company and validated my commitment to helping this company Carryout. It's critical mission in the health care market.

Chad: Positioning multi plan for accelerated and sustainable growth begins with the devotion to business fundamentals that drive performance excellence.

Chad: Success will come as we serve clients understand the problems the market is trying to solve.

Chad: Create mechanisms to deliver value.

Travis S. Dalton: I've taken two important initial steps that reinforce accountability and build upon our longstanding record of service excellence. First, I have established a core operational framework centered upon the principles of clarity, alignment, and focus. Clarity of mission and purpose, alignment of accountability and leadership, and focus on operational metrics that matter. To that end, we have established over 30 corporate key performance indicators to measure and manage the business proactively. You are what your record says you are, and we will keep score and be accountable.

Chad: I've taken two important initial steps that reinforce accountability and build upon our long standing record of service excellence.

First I've established a core operational framework centered upon the principles of clarity alignment and focus.

Chad: Clarity of mission and purpose alignment of accountability and leadership focus on operational metrics that matter.

Chad: To that end, we've established over 30, corporate key performance indicator indicators to measure and manage the business proactively.

Chad: You are what your record says you are and we will keep score and be accountable.

Travis S. Dalton: Second, I am also focused on the alignment of our talents. MultiPln has an exceptional leadership and management team with deep domain experience and dedication to our important mission. Combining that talent with new leadership and perspective will be an accelerant for us going forward. To ensure rigor, discipline, and operating cadence as we proceed, I've established a new Chief Operating Officer position that will report directly to me, and I've already onboarded a new leader to fill this important role. Jerry Hogg joined MultiPln on March 11th and has already begun a structured assessment of the organization and will lead the team that designs and defines the new MultiPln operating model to enable and support our growth.

Chad: I'm also focused on alignment of our talent mulch.

Chad: Multi plan has an exceptional leadership and management team with deep domain experience and dedication to our important mission.

Chad: Combining that talent with new leadership in perspective will be an accelerant for us going forward.

Chad: Sure rigor discipline and operating cadence as we proceed I've established a new chief operating officer position that will report directly to me and I've already on board a new leader to fill this important role Jerry Hall joined multi plan on March 11th and has already begun a structured assessment of the organization and will lead the team that does.

Chad: And the bonds, the new multi plant operating model to enable and support our growth.

Travis S. Dalton: Another key addition to my executive leadership team is my chief of staff, Jackie Kwan, who, along with our chief operating officer, will drive our key performance indicators and deliver timely management reporting that will enable real-time course adjustments as we manage the business. This will enable us to drive top-line growth while proactively managing bottom-line performance with predictability. Cheri and Jackie both have extensive experience in publicly-run, product-focused growth companies, and this will be invaluable to us as we proceed.

Chad: Another key addition to my executive leadership team as my Chief of staff, Jackie Kwon, who along with our Chief operating Officer will drive our key performance indicators and deliver timely management reporting that will enable real time course adjustments as we manage the business.

Chad: This will enable us to drive top line growth, while proactively managing bottomline performance with predictability.

Chad: Gary and Jackie both have extensive experience in publicly run product focused growth companies. This will be invaluable to us as we proceed.

Travis S. Dalton: In addition, given the revenue growth potential of our existing product portfolio, we added three new senior sales leaders to our team, each of whom has deep experience and relationships in key adjacent markets. The expansion of our sales team demonstrates our commitment to investing in growth and our intent to compete more aggressively in all of our market segments. Furthermore, we're also focused on what we call fit for growth, which includes initiatives like product life cycle management, data science, data platform development, and process automation.

Chad: In addition, given the revenue growth potential of our existing product portfolio. We added three new senior sales leaders to our team each of whom have deep experience and relationships in key adjacent markets.

Chad: The expansion of our sales team demonstrates our commitment to investing in growth and our intent to compete more aggressively in all of our market segments.

Chad: Furthermore, we're also focused on what we call fit for growth.

Chad: Which includes initiatives like product lifecycle management data science.

Chad: Data platform development and process automation.

Travis S. Dalton: These initiatives will support accelerated growth that we will achieve with strategic enhancements to existing products for our core business and by introducing new, innovative products that expand the value we provide to adjacent and new vertical markets. This framework of clarity, alignment, focus, talent, and fit for growth will enable us to sharpen our focus on our horizons for growth, which include the following. Horizon 1, or what I call the now, delivering on our 2023 and 2024 product roadmaps.

Chad: These initiatives will support accelerated growth that we will achieve with strategic enhancements to existing products for our core business and by introducing new innovative products.

Chad: Span the value, we provide to adjacent and new vertical markets.

Chad: This framework of clarity alignment focus talent and fit for growth will enable us to sharpen our focus on our horizon for growth, which include the following horizon, one or what I call. The now delivering delivering on our 2023 and 2024 product roadmap attack.

Travis S. Dalton: Attacking competition in target markets, driving value into our core client base. As you see on page 9, we are progressing on schedule with our product development roadmap, and I am encouraged with our focus on achieving our milestone. Horizon 2, or what I call NIR, is accelerating the evolution of organic product development while bringing to market new data and decision science products with insights to serve clients across the health care continuum. We are doing market and partner research now. I'm excited to continue to update you on that as we progress with more to come. Verizon 3, or what I call Next.

Chad: Attacking competition in target markets and driving value into our core client base has.

Chad: As you see on page nine we are progressing on schedule with our product development roadmap and I am encouraged with our focus on achieving our milestones.

Chad: Ryzen two are what I call mirror is accelerating the evolution organic product development, while bringing to market new data in decision science products with insights to serve clients across the healthcare continuum, we're doing market and partner research now I'm excited to continue to update you on that as we progress with more to.

Chad: Come.

Chad: Horizon, III or what I call next a world class product company strategically positioned to take advantage of licensed software.

Travis S. Dalton: A world-class product company strategically positioned to take advantage of licensed software, platform products, and data assets across multiple market segments as healthcare evolves. We will do all of this while continuing to manage our financial position, repay our debt, and prudently allocate our capital. This will be a multi-year journey, but I believe we are well-positioned for the future and will complete our transformation to a company that has a diverse product set, strong organic revenue growth, and fortified business and financial models.

Chad: Platform products and data assets across multiple market segments as healthcare evolves.

Chad: We will do all of this while continuing to manage our financial position repay our debt and prudently allocate our capital this will be a multiyear journey, but I believe we are well positioned for the future. It will complete our transformation to a company that has diverse product set strong organic revenue growth and fortified business in <unk>.

Chad: <unk> models.

Travis S. Dalton: Turning to the quarter, we had several notable successes. First, we received a positive 73 net promoter score across all of our clients, which is 25% higher than the prior year and in the top quartile of the global benchmark, demonstrating our value proposition to our clients and our dedication to service and operational excellence. We will continue to earn that reputation and our clients' trust every day. Second, we increased our sales pipeline and closed 73 opportunities, representing a 36 percent year-over-year increase in new sales.

Chad: Turning to the quarter, we had several notable successes.

Travis S. Dalton: Third, we signed four new logos with HST's value-driven health plans, and we've made progress going to market through our HST platform to sell our new balance bill protection product. Fourth, we closed our first PlanOptics sale in the first quarter, and our pipeline of PlanOptics business is gaining momentum. Platform Transparency Products and Predictive Analytics will be an important part of our future, and we are beginning to see our efforts converting in the market. Fifth, we close our sale for auto pay and our supplemental. Carrier Products

Chad: First we received a positive 73 net promoter score across all of our clients, which is 25% higher than the prior year and then the top quartile of the global benchmark, demonstrating our value proposition to our clients and our dedication to service and operational excellence.

We will continue to earn that reputation and our clients' trust everyday sector.

Chad: We increased our sales pipeline and closed 73 opportunities representing a 36% year over year increase in new sales third we signed four new logos with Hst's value driven health plans and we've made progress going to market through our HST platform to sell our new balance Bill protection.

Chad: Fourth we closed our first plan optics sale in the first quarter and our pipeline of plan optics business is gaining momentum platform transparency products and predictive analytics will be an important part of our future and we are beginning to see our efforts converting in the market.

Chad: We closed our sale for auto pay in our supplemental carrier products and finally with regard to strategic partnerships, we are expanding and deepening our conversations with potential partners about how we can work together on promising new growth opportunities, which I plan to tell you more about in the coming quarters.

Travis S. Dalton: And finally, with regard to strategic partnerships, we are expanding and deepening our conversations with potential partners about how we can work together on promising new growth opportunities, which I plan to tell you more about in the coming quarter. From a financial point of view, our quarter was impacted by a cybersecurity incident at a major medical claims clearinghouse. Disrupted Claims Flow Across Healthcare and Ultimately Downstream to Our Platform. Despite this disruption, first quarter revenues were $234.5 million, and first quarter adjusted EBITDA was $146.8 million, both slightly below the low end of our guidance range.

Chad: A financial point of view, our quarter was impacted by a cyber security incident at a major medical claims clearinghouse, which disrupted claims low cross healthcare and ultimately downstream to our platform. Despite this disruption first quarter revenues were $234 5 million first quarter adjusted EBITDA was $146 eight.

Chad: Million, both slightly below the low end of our guidance range, excluding the disruption in claims slow, which we estimate to be $5 million to $6 million of revenue in the quarter. Our first quarter results would have been in line with our guidance during the quarter, we generated free cash flow and reduce the face value of our debt by over $24 million.

Travis S. Dalton: Excluding the disruption in claims flow, which we estimate to be $5-6 million of revenue in the quarter, our first quarter results would have been in line with our guidance. During the quarter, we generated free cash flow and reduced the face value of our debt by over $24 million.

Travis S. Dalton: Despite dealing with several exogenous events, it was a solid quarter, and we made material progress on key priorities. Looking forward, we expect our second quarter results to show improvement over our first quarter, and based on what we know today, we are affirming our FY 2024 guidance at this time, as Jim will discuss in a moment. Before I turn it over to Jim to review the financial results for the quarter in more detail, I want to make a few additional comments. I am pleased with the performance of the team as we navigated several notable external events in the healthcare market. Every challenge presents an opportunity.

Chad: Despite dealing with several exogenous events it was a solid quarter and we made material progress on our key priorities.

Chad: Looking forward, we expect our second quarter results to show improvement over our first quarter and based on what we know today, we are affirming our FY 2020 for guidance at this time as Jim will discuss in a moment.

Speaker Change: Before I turn it over to Jim to review the financial results for the quarter in more detail I want to make a few additional comments.

I am pleased with the performance of the team as we navigated several notable external events in the health care market every challenge presents an opportunity we were able to pull together quickly as a management team and respond as a unit.

Travis S. Dalton: We were able to pull together quickly as a management team and respond as a unit. The team and company remain focused on delivering value and service to our clients. We will not be distracted by extraneous noise or uncontrollable events from this important mission in health care. It's been an exciting and rewarding two months on the job.

Jim: <unk> and company remain focused on delivering value and service to our clients, we will not be distracted by extraneous noise or uncontrollable events from this important mission in healthcare, it's been an exciting and rewarding two months on the job I want to reiterate that one of the most important reasons I came to multi plan was my belief in the mission of the.

Travis S. Dalton: I want to reiterate that one of the most important reasons I came to MultiPln was my belief in the mission of the company and the integrity and dedication of our associates to that mission. MultiPln has been bringing affordability, efficiency, and fairness to U.S. healthcare for over 40 years. This includes over 1.4 million providers that we contract with directly through our network today, and we work with those providers and many others daily to ensure that they are compensated for their critical services with accurate and swift reimbursements, using our solutions to minimize friction.

Jim: Any and the integrity and dedication of our associates to that mission.

Jim: Multi plan has been bringing affordability efficiency and fairness to U S health care for over 40 years. This includes over $1 4 million providers that we contract with directly through our network today, and we work with those providers and many others daily to ensure that they are compensated for their critical services with <unk>.

Jim: <unk> and Swift reimbursements, using our solutions to minimize friction.

Travis S. Dalton: I have had the pleasure of serving providers for 22 years, and I still do. I wouldn't have come to MultiPln if I didn't believe we provided an important service for all the constituents of health care. We will continue to serve our mission by bringing data, analytics, and innovation in an objective manner to the healthcare industry to reduce costs and the administrative burden for all, eliminate balance bills, and lower out-of-pocket expenses for millions of healthcare patients.

Speaker Change: I had the pleasure of serving providers for 22 years and I still do I wouldn't have come to multi plan. If I didn't believe we provide an important service for all the constituents of health care. We will continue to serve our mission by bringing data analytics and innovation in an objective manner to the health care industry to reduce costs and administrative burden.

Speaker Change: For all eliminate balanced bills and lower out of pocket expenses for millions of health care of patients. It is my firm belief that there is enormous potential value yet to be realized as we expand our clients our product offers offerings and bend the cost curve in healthcare I will now turn it over to Jim.

Travis S. Dalton: It is my firm belief that there is enormous potential value yet to be realized as we expand our clients, our product offerings, and bend the cost curve in health care. I will now turn it over to Jim.

James M. Head: Thanks, Travis, and good morning, everyone. I would like to begin by echoing Travis's comments. We're excited about carrying our strategy forward and then with the new members of our management team. The executive transition has been smooth.

Jim: Thanks, Travis and good morning, everyone.

Jim: I'd like to begin by echoing <unk> comments, we are excited about carrying our strategy forward and then with the new members of our management team.

James M. Head: We've made several pragmatic changes to our operating model that will accelerate our progress. We successfully navigated a difficult industry-wide challenge, and the company is energized. Today, I will walk through the financial results for the first quarter of 2024. I'll then turn to our outlook for Q2. And I'll close with a review of our balance sheet and an update on our capital allocation activity.

Jim: The executive transition has been smooth we've made several pragmatic changes to our operating model that will accelerate our progress.

Jim: We successfully navigated a difficult industry wide challenge and accompanies energized.

James M. Head: As shown on page four of the supplemental deck, first quarter revenue was $234.5 million, a decrease of 0.9% from Q1-23, and a decrease of 3.9% sequentially. Our revenues fell just shy of the low end of our guidance range for the quarter, despite the disruption to our claims volumes caused by the clearinghouse cyber outage that Travis mentioned previously. While it's difficult to quantify precisely, we estimate this disruption impacted our first quarter revenues by roughly five to six million, and excluding this impact, our revenues would have been within our guidance range for the quarter.

Jim: Today, I will walk through the financial results for the first quarter of 2024, I'll, then turn to our outlook for Q2, and I'll close with a review of our balance sheet and update on our capital allocation activities.

Jim: As shown on page four of the supplemental deck fourth first quarter revenue was $234 5 million.

Jim: A decrease of <unk>, 9% from Q1, 'twenty, three and a decrease of three 9% sequentially.

Jim: Our revenues fell just shy of the low end of our guidance range for the quarter. Despite the disruption to our claims volumes caused by the clearinghouse cyber outage that Travis mentioned previously.

Jim: While it's difficult to quantify precisely we estimate this disruption impacted our first quarter revenues by roughly $5 million to $6 million and excluding this impact our revenues would have been within our guidance range for the quarter.

James M. Head: Turning to revenues by service line, as shown on page 5 of the supplemental deck, relative to Q4-23, network-based revenues declined 11.6% sequentially, or $6 million, driven largely by the impact of the aforementioned claims volume disruption to our complimentary network, fee-for-service, and property casualty business. Also impacting the service line were a non-recurring customer credit and some client attrition.

Jim: Turning to revenue by service line as shown on page five of the supplemental deck relative to Q4 'twenty three network based revenues declined 11, 6% sequentially or $6 million driven largely by the impact of the aforementioned claims volume disruption to our complementary network fee for service and property casualty businesses.

Jim: Also impacting the service line, where a nonrecurring customer credit and some client attrition.

James M. Head: Our analytics-based revenues fell 2.1% sequentially, largely due to the claims volume disruption. Our payment and revenue integrity revenues declined 0.6% sequentially, also reflecting the impact of the clearinghouse outage on claims volumes for our prepay solutions, offset by strength and our discovery health post-pay solutions. Versus the prior year quarter, network-based revenues declined 19.3%, analytics-based revenues grew 5.0%, and payment and revenue integrity revenues grew 4.8%. Excluding a $3.8 million contribution to revenues from BST, which is reported in our analytics-based revenues, first quarter consolidated revenues were $230.7 million, down 3.9% sequentially, and down 2.4% from the prior year.

Jim: Our analytics based revenues fell two 1% sequentially largely due to the claims volume disruption.

Jim: Our payment and revenue integrity revenues declined <unk>, 6% sequentially also reflecting the impact of the clearinghouse outage on claims volumes for our pre pay solutions offset by strength in our discovery health post pay solutions.

Jim: First as the prior year quarter network based revenues declined 19, 3% analytics based revenues grew 5.0% in payment and revenue integrity revenues grew four 8%.

Jim: Excluding a $3 $8 million million contribution to revenues from BSP, which is reported in our analytics based revenues first quarter consolidated revenues were $230 7 million down three 9% sequentially and down two 4% from the prior year quarter.

James M. Head: Our first quarter results reflected volatility in claims volumes, with the clearinghouse cyber outage impacting our claims flows, particularly in March, given our typical claim lag relative to dates of medical service. As shown on page 7 of the supplemental deck, total first quarter billed charges decreased 4% sequentially to $41.5 billion, and identified potential savings decreased 3% sequentially to $5.7 billion. In our core commercial health plan segment, billed charges decreased 6% sequentially to $18.3 billion, and identified potential savings decreased 3% sequentially to $5.4 billion. The sequential decreases were more acute in physicians' claims compared to facilities-based claims. We believe the larger hospital systems were able to quickly switch to alternative clearinghouses or find other workarounds to route claims to payers.

Jim: Our first quarter results reflected volatility in claims volumes with the clearinghouse cyber outage impacting our claims flows, particularly in March given our typical claim lag relative to dates of medical service.

Jim: As shown on page seven of the supplemental deck total first quarter billed charges decreased 4% sequentially to $41 5 billion and identified potential savings decreased 3% sequentially to $5 7 billion.

Jim: In our core commercial health plan segment built charges decreased 6% sequentially to $18 3 billion and identified potential savings decreased 3% sequentially to $5 4 billion.

Jim: The sequential decreases were more acute and physician claims compared to facilities based claims.

Jim: We believe the larger hospital systems were able to quickly switch to alternative clearinghouses or find other workarounds throughout claims to payers.

James M. Head: Although the clearinghouse outage continued to affect our April volumes, and we haven't digested the full impact given our claims lag, we continue to believe this is largely a timing issue, as our cost containment solutions are still required for claims coming through the payer. In terms of the utilization environment, we note the relatively strong first quarter facility volume data reported by the public.

Jim: Although the clearinghouse outage continued to affect our April volumes, and we Havent digested the full impact given our claims lag. We continue to believe this is largely a timing issue as our cost containment solutions are still required for claims coming through the payers.

Jim: In terms of the utilization environment. We note the relatively strong first quarter facility volume data reported by the public.

James M. Head: Operators were able to work around the clearinghouse disruption by the end of the first quarter. The largely exogenous weakness in our volumes was exacerbated by a decline in revenues as a percentage of identified savings, or what we call revenue. As shown on page eight of the supplemental deck, our revenue yield declined about four basis points sequentially for the overall business, which includes both PSAVE and PEPM. In our core percentage of savings revenue model, which is approximately 90% of our revenues, our revenue yield fell about 10 basis points in the quarter, which had an impact of about $4.4 million on our revenue. That included about five basis points of decline from idiosyncratic yield shifts.

Jim: Operators, who were able to work around the clearinghouse disruption by the end of the first quarter.

Jim: The largely exogenous weakness in our volumes was exacerbated by a decline in revenues as a percentage of identified savings on what we call revenue yield.

Jim: Shown on page eight of the supplemental deck, our revenue yield declined about four basis points sequentially for the overall business, which includes both <unk> and <unk>.

Jim: In our core percentage of savings revenue model, which is approximately 90% of our revenues our revenue yield fell about 10 basis points in the quarter, which had an impact of about $4 4 million to our revenues.

Jim: That included about five basis points of decline from idiosyncratic idiosyncratic yield shifts.

Jim: Most of which are temporary and likely to abate and about five basis points of decline from our customer credit that we expect to run off in Q2.

Jim: Importantly, none of the decline in our PC revenue yield was related to any contract changes with our customers.

James M. Head: Most of which are temporary and likely to abate, and about five basis points of decline from a customer credit that we expect to run off in. Importantly, none of the decline in our PSAVE revenue yield was related to any contract changes with our customers. Turning to expenses, first quarter adjusted EBITDA expenses were $87.7 million, increasing $7.4 million from the prior year quarter, but up only $0.4 million sequentially. The increase of $7.4 million over Q1'23 was driven by the combination of the acquisition of BST.

Jim: Turning to expenses first quarter adjusted EBITDA expenses were $87 7 million, increasing seven 4 million from the prior year quarter, but up only 0.4 million sequentially.

Jim: The increase of $7 4 million over Q1, 'twenty three was driven by the combination of the acquisition of DST.

James M. Head: Structural Cost Increases and Investments in the Business Year-over-Year. For the sequential comparison, the modest increase in adjusted EBITDA expenses reflected tight expense controls as we held the line on expenses amid the external pressures on our revenue. Adjusted EBITDA was $146.8 million in Q1'24, down 6.1% from $156.3 million in the prior year quarter and down 6.4% from $156.8 million in Q4'24. Our Q1 adjusted EBITDA was 2% below the lower end of our guidance due to the external pressures on our revenue.

Jim: Structural cost increases and investments investments in the business year over year.

Jim: For the sequential comparison, the modest increase in adjusted EBITDA expenses reflected tight expense controls as we held the line on expenses amid the external pressures on our revenue.

Jim: Adjusted EBITDA was $146 8 million in Q1, 'twenty four down six 1% from $156 3 million in the prior year quarter and down six 4% from $156 8 million in Q4 23.

Jim: Our Q1, adjusted EBITDA was 2% below the lower end of our guidance due to the external pressures on our revenue.

James M. Head: Adjusted EBITDA margin declined to 62.6% in Q1-24, down 180 basis points from 64.2% in the prior quarter and down from 66% from the prior year. Our first quarter margin was driven largely by the combination of lower revenues against our largely fixed expenses.

Jim: Adjusted EBITDA margin declined to 62, 6%.

Jim: In Q1, 'twenty four down 180 basis points from 64, 2% in the prior quarter and down from 66% from the prior year quarter.

Jim: Our first quarter margin was driven largely by the combination of lower revenues against our largely fixed expense base.

James M. Head: As the volume environment normalizes, we expect our margin to track back to a 63 to 64 percent range in line with our prior comments. Turning to our second quarter guidance, as outlined on page 11 of the supplemental deck, we anticipate revenues of $235 to $250 million and adjusted EBITDA of $145 to $160 million. Our second quarter projections reflect slightly lower visibility related to the ongoing and uncertain impact of the clearinghouse outage on our claims volume.

Jim: As the volume environment Normalizes, we expect our margins track back to a 63% to 64% range in line with our prior commentary.

Jim: Turning to our second quarter guidance is outlined on page 11 of the supplemental deck, we anticipate revenues of 235% to $250 million and adjusted EBITDA of $145 million to $160 million.

Jim: Our second quarter projections reflect slightly lower visibility related to the ongoing and uncertain impact of the clearinghouse outage on our claims volumes are.

James M. Head: Our view is that the claims volume disruption is largely a timing issue, and we began to see signs that our volumes were normalizing in the back half of April. So, despite the shortfall in our Q1 results and our lower visibility for Q2, our expectation is that revenue growth will accelerate in the second half, and we are maintaining our guidance for fiscal year 2025. As you are aware from our press release, based on the recent performance of our stock price, we conducted an impairment test in the first quarter of 2024, which incorporates current financial market conditions, including our share price, market discount rates, and other factors. Based on this test, the estimated fair values of our goodwill and indefinite live assets were less than their carrying values.

Jim: Our view is that the claims volumes disruption is largely a timing issue and we began to see signs of our that our volumes were normalizing in the back half of April.

Jim: So despite the shortfall in our Q1 results and our lower visibility for Q2, our expectation is that revenue growth will accelerate in the second half and we are maintaining our guidance for fiscal year 2024.

James M. Head: As a result, we recorded non-cash impairment charges of $516.4 million for our goodwill and $2.7 million for our intangibles and recognized the charge in our GAAP earnings results. To clarify, the impairment charge was not driven by changes in our outlook for the business or our cash flow projections but instead by our stock price and implied cost of capital. Turning to the balance sheet and capital allocation, our operating cash flow was $49.7 million in the first quarter, and our levered-free cash flow was $19.2 million.

Jim: As you are aware from our press release based on the recent performance of our stock price. We conducted an impairment test in the first quarter of 2024, which incorporates current financial market conditions, including our share price market discount rates and other factors based on this test the estimated fair values of our goodwill and indefinite lived assets.

Jim: We're less than their carrying values.

Jim: As a result, we recorded noncash impairment charges of $516 4 million for goodwill and $2 7 million for our.

Jim: Our intangibles and recognize the charge in our GAAP earnings results.

Jim: To clarify the impairment charge was not driven by changes in our outlook for the business or our cash flow projections, but instead by our stock price and implied cost of capital.

Jim: Turning to the balance sheet and capital allocation, our operating cash flow was $49 7 million in the first quarter and Levered Levered free cash flow was $19 2 million.

James M. Head: As a reminder, the first and third quarters are typically our higher quarters for cash flow, given the timing of our interest and tax. As shown on page 14 of the supplemental deck, we ended the quarter with $59 million of unrestricted cash. Net of cash, our total and operating leverage ratios were 7.4 times and 5.4 times, respectively.

As a reminder, the first and third quarters are typically our higher quarters for cash flow given the timing of our interest and tax payments.

Jim: As shown on page 14 of the supplemental deck, we ended the quarter with $59 million of unrestricted cash.

Jim: Net of cash our total and operating leverage ratios were seven four times and five four times respectively.

James M. Head: We continue to be disciplined in allocating our capital with a near-term focus on debt reduction. As shown on page 12 of the supplemental deck, during the first quarter, we used $18.2 million of our cash to repurchase or repay $24.4 million of our debt, including $21.1 million face value of our 6% senior convertible PIC notes. We also allocated $10.5 million of our cash toward the repurchase of 11 million shares in the quarter. Our long-term capital priorities remain the same.

Jim: We continue to be disciplined in allocating our capital with a near term focus on debt reduction.

Jim: As shown on page 12 of the supplemental deck during the first quarter, we used $18 $2 million of our cash to repurchase or repay $24 4 million face value of our debt, including $21 1 million face value of our 6% senior convertible Pik notes.

Jim: We also allocated $10 $5 million of our cash towards the repurchase of 11 million shares in the quarter.

Jim: Our long term capital priorities remain the same.

James M. Head: Our highest priority remains investing in the business to drive growth and long-term value. You should expect us to continue making a series of small but critical organic investments to support our platform, including our new core products and our data and decision science services. With our remaining cash flow, we will primarily focus on debt reduction.

Jim: Our highest priority remains investing in the business to drive growth and long term value.

Jim: You should expect us to continue making a series of small, but critical organic investments to support our platform, including our new core products and our data and decision Science service line.

Jim: With our remaining cash flow, we will primarily focus on debt reduction.

James M. Head: While our long-term priorities have not changed, following the acquisition of BST, in the near term, we will emphasize organic investments and debt reduction and de-emphasize M&A. Finally, as I mentioned, we spent $10.5 million on share repurchases in the first quarter. Additional share repurchases will not be a priority for the remainder of the year as we will focus on debt retirement.

Jim: While our long term priorities have not changed following the acquisition of <unk> in the near term, we will emphasize organic investments and debt reduction and deemphasize M&A.

Jim: Finally, as I mentioned, we spent $10 5 million on share repurchases in the first quarter.

Jim: Additional share repurchases.

Jim: Repurchases will not be a priority for the remainder of the year as we will focus on debt retirement.

James M. Head: Before I end, I want to reinforce Travis's comments regarding the value MultiPln provides to the entire healthcare ecosystem. We serve a critical role as a longstanding, data-enabled intermediary between providers, payers, employers, and consumers. We provide widely accepted services that reduce healthcare costs, including for patients, and make healthcare transactions more efficient, transparent, and fair for all parties involved, including 1.4 million providers, over 700 payers, over 100,000 employer plan sponsors, and tens of millions of consumers. In 2023, we identified $23 billion in potential medical cost savings across all of our products, and we reduced out-of-pocket costs and reduced or eliminated millions of balance bills. Consider a few facts.

Jim: Before I had I want to reinforce <unk> comments regarding the value of multi plan provides to the entire health care ecosystem.

Jim: We serve a critical role as a longstanding data enabled intermediary between providers payers employers and consumers.

Jim: We provide widely accepted services that reduce health care costs, including for patients and make healthcare transactions more efficient transparent and fair for all parties involved including $1 4 million providers over 700 payers over 100000 employer plan sponsors and tens of millions of consumers.

Jim: In 2023, we identified $23 billion and potential medical cost savings across all of our products and we reduced out of pocket costs and reduced or eliminated millions of balanced bills.

Speaker Change: Consider a few facts.

James M. Head: In 2023, we processed $15.4 million in out-of-network claims through our platform. $15.4 million. This service solves a significant problem for all parties involved because there is no contracted price between providers and payers for out-of-network services, and there is often a wide gap between the provider's list price and what employers are willing to pay for out-of-network services under their benefit plan design. Our platform sits between these parties and serves a valuable role in helping to determine a fair price, which, in the case of MultiPln, and our services, is accepted without appeal by providers 98% of the time. That's 98%.

Speaker Change: In 2023, we priced $15 4 million out of network claims through our platform $15 4 million.

Speaker Change: This service solves a significant problem for all parties involved because there is no contracted price between providers and payers for out of network services and there is often a wide gap between the providers list price and what employers are willing to pay for out of network services under their benefit plan designs.

Speaker Change: Our platform sits between these parties and serves a valuable role in helping to determine a fair price, which in the case of multi plan.

Speaker Change: And our services is accepted without appeal by providers, 98% of the time that's 98%.

James M. Head: Further, it is widely known and transparent throughout the industry that out-of-network reimbursements are consistently priced at a premium to contracted in-network rates for the same service, even after cost containment tools like ours are applied. By the way, our average revenue per claim across our out-of-network pricing services in 2023 will be $44 per claim. That's $44.

Speaker Change: Further it is widely known and transparent throughout the industry that out of network reimbursements are consistently priced at a premium to contracted in network rates for the same service even after cost containment tools like ours are applied.

Speaker Change: By the way our average revenue per claim across our out of network pricing services in 2023.

Speaker Change: $44 per claim.

Speaker Change: That's $44.

James M. Head: Further, our services insulate millions of health care patients from balance bills annually. In 2023, MultiPln priced over 15 million out-of-network claims that were accepted without appeal or dispute, including over 10.5 million claims for which we contractually eliminated balance bills for patients through our provider network, negotiation, and surprise bill service. Nearly everyone agrees that the No Surprises Act was good for consumers, and in 2023, the number of balanced bills we eliminated was approximately equivalent to the number eliminated by the No Surprises Act, according to a recent survey conducted by AHIP and the Blues Association.

Speaker Change: Further our services insulate millions of health care patients from balance billed annually in.

Speaker Change: In 2023, multi plan priced over $15 million out of network claims that were accepted without appeal or dispute.

Speaker Change: Including over $10 5 million claims for which we contractually eliminated balance bills for patients through our provider network negotiation and surprise Bill services.

Speaker Change: Nearly everyone agrees that the no surprises act was good for consumers and in 2023, the number of balanced bills. We eliminated was approximately equivalent to the number eliminated by the no surprises act. According to a recent survey conducted by <unk> and the Blues Association.

James M. Head: And importantly, we didn't just start eliminating balance bills on behalf of consumers in 2022. When the No Surprises Act went into effect, we've been solving this problem for decades. That brings me to the end of my comments. I'll turn the call back over to Travis.

Speaker Change: And importantly, we didn't just start eliminating balance bills on behalf of consumers in 2022.

Speaker Change: When there are no surprises.

Speaker Change: Went into effect, we've been solving this problem for decades.

Speaker Change: That brings me to the end of my comments I will turn the call back over to Travis.

Travis S. Dalton: Thank you, Jim. Let me say a few closing words before I open up the call to questions. As I said earlier, it's been an exciting and interesting first two months on the job. As I mentioned, the experience has strengthened my conviction about the value and potential of this company. I will also note that it has not been without challenges. I like to think of myself as realistic but optimistic, and every challenge creates opportunity, as I've noted.

Travis S. Dalton: Thank you Jim Let me, let me say a few closing words before I open up the call to questions.

Travis S. Dalton: As I said earlier, it's been an exciting and interesting first two months on the job as I mentioned the experience has strengthened my conviction about the value and potential of this company I will also note that has not been without challenges.

Travis S. Dalton: I'd like to think of myself as realistic, but optimistic and every challenge creates opportunity as I've noted the reality is that it has been a difficult moment as we contended with a number of external pressures include.

Travis S. Dalton: The reality is that it has been a difficult moment, as we've contended with a number of external pressures, including macro uncertainty in healthcare, as well as some company-specific adversity that was largely out of our control. However, I believe we should take the challenges head-on and stay focused on our clients and the markets that we serve. Optimistically, these challenges have presented an extraordinary opportunity for our management team and associates to band together, sharpen our points of view, and develop as a team.

Travis S. Dalton: Including macro uncertainty in healthcare as well as some company specific adversity that was largely out of our control eye.

Travis S. Dalton: I believe we should take the challenges head on and stay focused on our clients and the markets that we serve opt.

Travis S. Dalton: Optimistically. These challenge have posed an extraordinary opportunity for our management team and associates to band together sharpen our point of view and develop as a team I also see tremendous opportunity for the company to execute better and evolve overtime across the healthcare continuum.

Travis S. Dalton: I also see tremendous opportunity for the company to execute better and evolve over time across the healthcare continuum. I'm confident that as we continue to enhance our foundation and quicken our execution velocity, we will realize our transformation into a world-class company. Would you kindly open the call for questions? Thank you.

Travis S. Dalton: I am confident that as we continue to enhance our foundation.

Travis S. Dalton: Quick in our execution of velocity, we will realize our transformation to a world class company.

Speaker Change: Would you kindly open the call for questions.

Travis S. Dalton: <unk>.

Operator: Thank you, Travis. Everyone, if you would like to ask a question, please press star followed by 1 on your telephone keypad now. If you change your mind, please press star followed by T. When preparing to ask your question, please ensure your device is unmuted locally. We'll pause here briefly as the questions are being recorded. The first question is from Joshua Raskin with Nathron Research, LLC. Your line is open.

Speaker Change: Thank you Travis everyone. If you would like to ask a question. Please press star followed by one on your 10.

Speaker Change: Thank you Pat.

Speaker Change: Have you changed your mind. Please press star followed by T y.

Speaker Change: When preparing to ask a question. Please ensure your devices and mutant.

Speaker Change: Okay.

Speaker Change: You may ask a question of being registered.

Speaker Change: The first question comes from Josh Raskin with Nephron Research LLC.

Joshua Richard Raskin: Your line is open.

Joshua Richard Raskin: Hi, thanks. Good morning.

Joshua Richard Raskin: Hi, Thanks, good morning.

Joshua Richard Raskin: I just wanted to talk about the change outage and you gave guidance. The last day of February which was a couple of weeks into that outage. So relative to guide results relative to guidance that was given at that time did the outages last longer than expected or were more claims impacted than you expected and then how did you size that five to six.

Joshua Richard Raskin: I just want to talk about the change outage. And, you know, you gave us guidance on the last day of February, which was a couple of weeks into that outage. So, you know, relative to results, relative to guidance that was given at that time, did the outage just last longer than expected, or were more claims impacted than you expected? And then how did you size that five to six million impact? You know, and I'm sort of a little surprised that 2Q guidance wouldn't reflect a little bit more of that pent-up claims processing. I would have thought you would have seen a larger cohort in April.

Joshua Richard Raskin: Million impact.

Joshua Richard Raskin: Sort of a little surprised that <unk> guidance wouldn't reflect a little bit more of that pent up claims processing I would've thought you would've seen a larger cohort and in April.

James M. Head: Thanks, Josh. It's Jim here.

Joshua Richard Raskin: Okay.

Jim: Josh It's Jim here.

Jim: Why don't we kind of March through this so when we did put out guidance, we were clear that the.

James M. Head: Why don't we kind of march through this? So when we did put out guidance, we were clear that the outage, the clearinghouse outage, was days old, maybe a week old. And so we really didn't have a sense for how this was going to play out. And I think at a conference in March, we kind of updated that a little bit. But we started to see the effects of this. We actually saw a little bit at the tail end of February.

Jim: The outage the clearinghouse outage was days days old.

Jim: Maybe a week ago.

Jim: And so we really didn't have a sense for how this was going to play out and I think at the conference in March we kind of updated that a little bit, but we started to see the effects of this we actually saw a little bit at the tail end of February and then it kind of hit us much.

James M. Head: And then it kind of hit us much more squarely in March. So when we sized it up, it was both, you know, kind of our average claim volume from a static perspective. We looked at client activity, and what I would say, Josh, it was pervasive.

Jim: More squarely in March so when we sized it up it was both.

Jim: Kind of our clay average claim volume and from a static perspective wed.

Jim: We looked at client activity and what I would say Josh. It was pervasive every kind of every payer client we were seeing things slow down a little bit it was less so at some of the larger customers, but as you get into the smaller customers and in some of our primary business et cetera, It really started hitting as well.

James M. Head: Every, you know, kind of every payer client, we were seeing things slow down a little bit. It was less so at some of the larger customers. But as you get into the smaller customers and in some of our primary business, et cetera, it really started hitting. As we marched through April, it was persisting in the beginning, and it's starting to abate in the second half of April. So here we are in May.

Jim: March through April.

Jim: It was persisting in the beginning and it's starting to abate in the second half of April. So here. We are in May. We think this is going to persist for is going to take a little while to work through the system and so we're you're seeing us be a little bit cautious is it doesn't feel like it's a complete snapback in six to eight weeks time period.

James M. Head: We think this is going to persist, it's going to take a little while to work through the system. And so where you're seeing us be a little bit cautious is it doesn't feel like it's a complete snapback in the six to eight weeks time period, particularly on the physician claims, which were more, I think, hit more deeply by this outage. And so we're just trying to make sure that we give ourselves a little room for this to work through the system.

Jim: Particularly on the.

Jim: The physician claims which were more.

Jim: I think hit more deeply by this outage.

Jim: So we're just we're just trying to make sure that we give ourselves a little room for this to work through the system, but importantly, we those claims need to be repriced.

James M. Head: But importantly, those claims need to be repriced, and our payer clients and the employers they serve need those cost containment services for all the reasons that we've talked about. So that's kind of how it's playing out right now. We're trying to be as accurate in real time as possible, but it is, you know, the upstream flows are somewhat out of our control, and we're working through it.

Jim: And our payer clients and the employers they serve.

Jim: Need those cost containment services for all the reasons that we've talked about so that's kind of how it's playing out right now we're trying to be as accurate and real time as possible, but but it is.

Jim: Upstream flows are somewhat out of our control and we're working through it.

Joshua Richard Raskin: Gotcha. All right, that's perfect. And then, just switching topics to the NSA, I'm curious about demand for some of the NSA-related products, especially the rules-based processing. Are clients reticent at all to sort of lock something in now with, you know, the uncertainty that still sort of exists, or are the plans just moving ahead because they need a solution for the current This is Travis.

Speaker Change: Gotcha, Alright, Thats perfect and then just switching topics the NSA I'm curious about demand for some of the NSA.

Speaker Change: Related products, especially the rules based processing, our clients' reticence at all to sort of lock something in now with.

Speaker Change: The uncertainty that that.

Speaker Change: Still sort of exists or are the plans just moving ahead, because they need a solution for the current situation.

Travis S. Dalton: This is Travis. Yeah, actually, I think it's a real opportunity for us over time. You know, I think it's, you know, it's here to stay. I think that's becoming more well understood. I think the rules will continue to be defined.

Travis S. Dalton: This is travis.

Travis S. Dalton: Yeah actually I think it's Ah represents a real opportunity for us over time.

Speaker Change: Yes, I think it's.

Speaker Change: It's here to stay I think thats, becoming more well understood I think the rules will continue to be defined.

Travis S. Dalton: And for us, you know, we think we offer an incredible service in that space, and there will be continued demand for it. I also think we have the ability to automate some of our processes. Inside of that, so, you know, my view is that we continue to look at the company, figure out how to grow the top line but also create operating leverage. That's actually an area where we can create some automation and operating leverage over time. So we view NSA as a real opportunity for us on the business side, but also an opportunity to serve an important function market. So, I'd say we remain positive about that and positive about the demand.

Speaker Change: And for US we think we offer an incredible service in that space and there'll be continued demand for it.

Travis S. Dalton: I also think we have the ability to automate some of our process inside of that so.

Travis S. Dalton: My view is as we continue to look at the company figure out how to grow top line, but also create operating leverage that's actually an area, where we can create some automation and operating leverage over time. So we view NSA has a real opportunity for us.

Travis S. Dalton: On the business side, but also an opportunity to serve an important function market.

Travis S. Dalton: So I'd say, we remain positive on that positive on the demand.

Speaker Change: Okay. Thank you.

Speaker Change: Okay.

Operator: Thank you. The next question is from Daniel Grosslight with CISI.

Speaker Change: Thank you.

Speaker Change: Next question is from Danielle <unk> with Citi.

Danielle: Your line is open.

Daniel R. Grosslight: Hey, this is Luis Alfred Daniel. I wanted to ask if you're changing your go-to-market strategy at all, given another recent loss that has been filed?

Danielle: Hey, this is luis on for Danielle and wanted to ask if you or change your go to market.

Luis: Given recent lawsuit that's been filed.

Operator: Yeah, we're having trouble hearing the question. So could you repeat it? Are we changing our go-to-market strategy?

Speaker Change: Yes, we havent trouble hearing that.

Operator: And I didn't hear the second part of it.

Luis: Question. So could you repeat it are we changing our go to market strategy and I didn't hear the second part of it.

Daniel R. Grosslight: Yeah, given the recent lawsuit that was filed, I'm just wondering if that has any implications for an agenda market strategy.

Speaker Change: Yes, given that the.

Speaker Change: Recent lawsuit that was filed just wondering if that had any implications on go to market strategy.

Travis S. Dalton: No, no, none at all. None at all.

Speaker Change: No no none at all not at all we're going to continue to yes, we're going to continue to aggressively attack the market, we're going to not only focus on core but as I mentioned, we're going to look at our adjacent markets Tpa's consultants brokers.

Travis S. Dalton: We're going to continue to aggressively attack the market. We're going to not only focus on core, but as I mentioned, we're going to look at our adjacent markets, TPAs, consultants, and brokers. We're confident in the services we provide. I said this, but we offer an array of solutions across providers, members, employers, and health systems. We're aligned with the goals of NSA and otherwise. I'm just going to make this comment of, you know, my view. I believe that there's a mutual interest out there that providers want fair payments, and they also want, you know, to reduce friction.

Speaker Change: We're confident in the services we provide.

Speaker Change: This but yes, we offer an array of solutions across providers members employers and health systems.

Speaker Change: We're aligned with the goals of NSA and otherwise.

Speaker Change: I'm just going to make this comment of <unk>.

Speaker Change: My view I believe that there is a mutual interest out there that providers won't fare payments.

Speaker Change: They will also want.

Speaker Change: To reduce friction and I think payers want to manage risk and do the same thing and we play an important function inside of that.

Travis S. Dalton: And I think payers want to manage risk and do the same thing. And we play an important function inside of that. But, you know, we're going to continue to do what we've done for 44 years, which is deliver quality and capability and products and services to the market. And, if anything, we're going to continue to sell aggressively in those markets because we have real value to bring.

Speaker Change: But we're going to continue to do what we've done for 44 years, which is deliver quality and capability in our products and services to the market. So.

Speaker Change: If anything we're going to continue to sell aggressively in those markets, because we have real value to bring.

Operator: Gotcha. In fact, I can take another minute. I want to ask if there's any change in managing the self-employer, self-insured employer side of ESAP versus TEPM given some of the controversies raised in a recent article. Yeah, I think the

Speaker Change: Got you and if I can sneak another one I wanted to ask if there is any change in advancing that suffering for a self insured employer side for <unk> versus <unk> given the controversy degrees in a recent article.

Travis S. Dalton: Yeah, I think the what you're alluding to is, you know, 100,000 plan sponsors that oftentimes are serviced to go to market through some of the big ASO platforms or TPAs. I don't, you know, We haven't seen a behavior switch because it takes time. I think there's always been.

Speaker Change: Yes, I think the.

Speaker Change: Whats your what Youre alluding to is.

Speaker Change: 100000 plan sponsors that oftentimes.

Speaker Change: Our services go to market through some of the big ISO platforms our ppas.

Speaker Change: Yeah.

Speaker Change: We haven't seen a behavior switched because it takes time.

Speaker Change: I think theres always been.

Travis S. Dalton: You know, and we even talk about it, various models that are fit for purpose here. So we have ongoing discussions where we talk, and this is before any of this, the press talking about creating more of a subscription or a, you know, PEPM type of model or a per claim model versus the percentage of sales. What you may see over time is a little bit of an evolution on that. But in the end, I think the employer plan sponsors want us to be motivated.

Speaker Change: And we even talk about it.

Speaker Change: Very varying models that are fit for purpose here. So we have ongoing discussions where we talk and this is before any of this the press talking about creating more of a subscription or a <unk> type of model or per claim model versus a percentage of sales. What you may see over time is a little bit of an evolution over that but in the end.

Speaker Change: I think the.

Speaker Change: The employer plan sponsors want us to be motivated.

Travis S. Dalton: And, you know, and some element of that will probably remain in our model. But, as we talked about at Investor Day, we're trying to shift the overall model of the overall portfolio of the business to more of a subscription type business. But that's mostly through product introduction versus a shift in the core.

Speaker Change: And in some element of that will probably remain in our in our model, but as we talked about at Investor Day, we are trying to shift the overall model of the overall portfolio of the business to more.

Speaker Change: Call it subscription type.

Speaker Change: Type business, but thats, mostly through product introductions.

Speaker Change: Versus a shift in the in the core.

Speaker Change: Thank you.

Operator: Thank you. As a reminder, everyone, if you would like to ask a question, please press star followed by one on your telephone keypad now. The next question is from Madison Aron with J.P. Morgan. Your line is open.

Speaker Change: Thank you.

Speaker Change: Remind everyone. If you would like to ask a question. Please press star followed by one on your telephone keypad now.

Speaker Change: The next question is from Nelson <unk> with Jpmorgan. Your line is open.

Madison Aron: Hi, thanks for taking my questions. First of all, you mentioned that debt retirements could be your focus going forward. Post the quarter, have you repurchased any debt?

Nelson: Hi, Thanks for taking my questions.

Nelson: First on you mentioned that debt retirement is going to be a focus going forward.

Nelson: Post the quarter have you repurchased any debt.

James M. Head: We don't disclose that, Rishi, but I guess the right way to say it is we're in a realm in which we are kind of pay-as-you-go. As I noted, our second quarter cash flow is typically lower because we've got tax payments and a lot of interest payments. And so we're just being very flexible and opportunistic as we march through the year. Also, note that pricing is changing a lot on our bonds. You saw that, particularly post-April 25th. So all of it looks a little bit more enticing across the entire capital stack. So we're just gonna be flexible as we go along, Rishi, and I think you'll measure our progress quarter to quarter.

Nelson: We don't disclose that reshaped, but we I guess the right way to say it is we're in a realm in which we are kind of pay as you go.

Nelson: We as I noted our second quarter.

Nelson: Cash flow is typically lower because we've got tax payments and a lot of interest payments and so we're just being very flexible and opportunistic as we as we March through the year. I'd also note that pricing is changing a lot on our bonds you saw that particularly post April 25.

Nelson: So.

Nelson: All of it.

Nelson: Little bit more enticing across the entire capital stack. So we're just going to be flexible as we go along Richie and I think I.

Richie: Thank you will measure our progress.

Nelson: Quarter to quarter.

Madison Aron: Yep. And so you're reaffirming your guidance. And I realize that, you know, revenue performance is usually split pretty evenly across the quarters. And this time around, it's probably going to be heavily weighted toward the second half. But given all the performance indicators that we're hearing out there, all the increased utilization, I know in the past, you guys have been somewhat conservative on the utilization views. But what are you not seeing?

Nelson: Yes.

Speaker Change: So youre reaffirming your guidance.

Speaker Change: And I realize that the revenue performance is usually split pretty evenly across the quarters and this time around is probably going to be heavily weighted towards the second half, but given all the performance indicators that we're hearing out there all the increased utilization. So I know in the past you guys have been somewhat conservative on your utilization views, but what are you not seeing or what are we.

Speaker Change: Are you seeing on the utilization front going into through the year I would have thought at least the revenue guide would have been higher.

James M. Head: Or what are you seeing on the utilization front going into the year? I would have thought that at least the revenue guide would have been higher. Is there something, are you seeing that utilization benefit? And if you are, is there an offset that we're just not thinking about? I'd just love to get your thoughts on why reaffirm the guidance if the performance indicators out there are pretty positive?

Speaker Change: Is there something or are you seeing that utilization benefit and if you are is there an offset that we're just not thinking about just love to get your thoughts on why reaffirm the guidance if the performance.

Speaker Change: Indicators out there are pretty positive.

James M. Head: Yeah, and, you know, Rishi, I think there's no doubt that it's back end loaded. We just, again, we're starting at, but we start off at a little bit of a deficit here. And so we're just, we're going to see how this plays out, particularly in the second quarter, and see how the clearinghouse outage works its way through the system. So you're right in the sense that the facilities-based claims have been stronger than physician claims.

Speaker Change: Yes.

Speaker Change: Richie I think.

Speaker Change: There's no doubt that it's back at backend loaded we just again, we're starting at but we started off at a little bit of a deficit here.

Travis S. Dalton: And so we're just we're going to we're going to see how this plays out, particularly in the second quarter and see how see how the.

James M. Head: The clearinghouse outage works its way through the system. So you are right in the sense that.

Speaker Change: The facilities based claims.

Speaker Change: Have been stronger than physician.

James M. Head: But our book is, you know, kind of half physician, half facilities, if you will. So we did see some strength year over year, clearly, on the facility side. But sequentially, though, it was a little bit soft, and we think that's because of the outage.

Speaker Change: Physician claims, but our book is kind of half position have facilities. If you will so we did see some strength year over year clearly on the facility side.

James M. Head: Sequentially, though it was a little bit soft and we think thats because of the outage.

James M. Head: But on the physician side, it was relatively flat year over year. And so what you saw was continuing to see the supply side of the facilities recover. And so we're definitely going to be seeing the benefit of that over the year. But we also have a mix, you know, a mix of both physicians and facilities. So, you know, it mutes some of that upside, but it also creates a little bit more stability.

Speaker Change: And on the on the physician side it was relatively flat.

James M. Head: Year over year and so.

Speaker Change: What you saw is the <unk>.

James M. Head: <unk> to see that.

James M. Head: The supply side on the facilities recover and so we're definitely going to be seeing the benefit of that over the year, but we also have a mix.

James M. Head: A mix of both physician and facility so it mutes.

Travis: It means some of that upside, but it also creates a little bit more steadiness.

Travis S. Dalton: Okay. You know, during, and Travis, I appreciate your comments from the beginning of the call, and I look forward to just hearing your thoughts on the long-term trends over time. But during investor day, you guys highlighted a number of initiatives and growth plans that include your new acquisitions, and you also put out some leverage targets as well. So, you know, when you were talking about reassessing the business or just evaluating all these performance indicators, has anything changed in the long-term view of the business or just the view on these acquisitions? And then when you talk about these reassessments, there's a component of your business, I understand, that you just can't control.

James M. Head: Okay.

James M. Head: During and trying to say I appreciate your comments from the beginning of the call.

Travis S. Dalton: And I look forward to sharing your thoughts on the long term trends over time, but during the Investor Day, you guys highlighted a number of initiatives and growth plans that include your new acquisitions and you also put out some leverage targets as well so when.

Travis S. Dalton: When you were talking about reassessing the business. We're just evaluating all these performance indicators has something changed in the long term view on the business or just the view on these acquisitions and then when you talk about these reassessment theres a component of your business I get that you just cant control, but given this is all about topline when you talk about these 30 performance indicators what does that mean.

Travis S. Dalton: <unk> to us.

Travis S. Dalton: Yeah, there's a couple of questions in the question, so let me just start talking. Yeah, we are absolutely committed to the 23-24 growth plan or roadmap. So we're tracking on that. We're executing on it. If anything, you know, we're working hard to try to drive more velocity with that and move more quickly on those products, which is why we're implementing, you know, product lifecycle management product processes and interlocks inside the company. But I won't bore you with all that.

Travis S. Dalton: Yes.

Speaker Change: There's a couple of questions in the question. So let me just start talking.

Travis S. Dalton: Yes, we will absolutely are committed to the 'twenty three 'twenty four growth plan and roadmap so.

Travis S. Dalton: We're tracking on that we're executing on it if anything.

Travis S. Dalton: We're working hard to try to drive more velocity with that and move more quickly on those products, which is why we are implementing.

Travis S. Dalton: Product lifecycle management product processes, and <unk> inside the company I won't bore you with all of that that's operational stuff that helps us produce more faster for the market.

Travis S. Dalton: That's operational stuff that helps us produce more faster for the market. So, we're absolutely committed to that. Beyond that, you know, we'll be moving, we'll be looking aggressively at those adjacent markets and products we have, and, you know, we'll build out from the core, is how I look at it. So, the core of the business is healthy. We have good products and services that we offer, and we'll look at new market segments, which I've talked about in the past, and then, ultimately, I think we have data assets that we can utilize both internally to build better stuff with data science but also potentially externally.

Travis S. Dalton: So we are absolutely committed to that.

Travis S. Dalton: Beyond that we will be moving will be looking aggressively at those adjacent markets and products, we have and we'll build out from the core.

Travis S. Dalton: I look at it so the core of the business is healthy.

Travis S. Dalton: Have good products and services that we offer.

Travis S. Dalton: And we will look at new market segments, which I've talked about in the past.

Travis S. Dalton: And then ultimately.

Travis S. Dalton: I think we have data assets that we can utilize both internally to build better stuff with data science, but also potentially externally.

Travis S. Dalton: And so, you know, that's how I view the businesses, kind of that inside out view as we go forward. But we're fully committed to the work that we've done, and we'll build and grow from that, because it's really a healthy, sustainable way to grow and build a business over time. And so that's a focal point for us, for sure. And what was the second half of the question? I probably missed

Travis S. Dalton: So.

Travis S. Dalton: That's how I view the businesses kind of that inside out to you as we go forward.

Travis S. Dalton: But we're fully committed to the work that we've done and we will build and grow from that because it's really a healthy sustainable way to grow and build the business over time and so.

Travis S. Dalton: That's a focal point for us for sure and what was the second half of the question I, probably prefer I'm missing is just the new.

Travis S. Dalton: So we've basically identified kind of five pillars that we think we need to execute on to run a great public company. Serving our clients, being, you know, attacking and fit for new growth, so new products and new ideas and development. Operational excellence through the use of our tools like Salesforce and ERP, which we're implementing, so we can get better insights into the business and predictive models around our revenue growth and otherwise, talent and people, and then innovation. And we sat down as a group, and we did a bottoms up and a top down. And we identified metrics and performance indicators. I'm happy to share those with you.

Travis S. Dalton: So there's so we've.

Travis S. Dalton: We basically identified five pillars that we think we need to execute on to run a great public company.

Travis S. Dalton: Serving our clients.

Travis S. Dalton: Being attacking and fit for new growth, new products, and new ideas and development.

Travis S. Dalton: Operational excellence through the use of our tools like Salesforce and ERP, which we're implementing so we can get better insights into the business and predictive models around our revenue growth and otherwise.

Travis S. Dalton: And people.

Travis S. Dalton: Then innovation and we sat down as a group, but we did a bottoms up and a top down and we identified metrics and performance indicators I am happy to share those there won't be a secret.

Travis S. Dalton: It won't be a secret. And we're going to track benchmarks and performance against that. And I think by looking at those five vectors all together, we will gain momentum and understanding as a company, and we'll be able to predict the business, and we'll also be able to accelerate growth. And so that's kind of the operating model that we're seeking to drive through.

Travis S. Dalton: And we're going to track benchmarks and performance against that and I think by looking at those five vectors altogether that will gain momentum and understanding of the company and we will be able to predict the business will also be able accelerate growth and so thats kind of the operating model that we're seeking to drive through.

Travis S. Dalton: I would not call this a revolution. It's more of an evolution.

Travis S. Dalton: And I call. This a revolution, it's more of an evolution and.

Travis S. Dalton: I think what we're finding is as the demand side is strong we've got a lot of opportunities and what we're trying to do is sharpen our focus on our operating model. So we can stay really.

Travis S. Dalton: Aligned on what's going to be the best and highest use of our energy yes.

Travis S. Dalton: Yeah, and I've said to the team, and we'll, you know, as we... There's no shiny lure here, right?

Travis S. Dalton: And I think what we're finding is that the demand side is strong. We've got a lot of opportunities. And what we're trying to do is sharpen our focus and our operating model so we can stay really aligned on what's going to be the best and highest use of our energy.

Travis S. Dalton: And that said to the team and we will.

Travis S. Dalton: That's not what we're doing. We've got a good business. It's fundamental.

Travis S. Dalton: There is no shiny leuer here right. That's not we're doing we've got a good business it's fundamental.

Travis S. Dalton: We're going to build great stuff for our core clients were and continue to enhance our products. We've got 20 product enhancements in the pipeline as part of our process and then we're going to look for new market insights and opportunities in other segments and across the continuum of health care and I think we have some assets to build on and we'll see.

Travis S. Dalton: That's what I believe and I think the market will bear that out.

Travis S. Dalton: We're going to build great stuff for our core clients, and we're going to continue to improve our products. We've got 20 product enhancements in the pipeline as part of our process, and then we're going to look for new market insights and opportunities in other segments and across the continuum of healthcare. I think we have some assets to build on. And we'll see. But that's what I believe, and I think the market will bear that out.

Speaker Change: If I could just squeeze in two more questions. One can you just give us an idea as to you talked about facilities, but how behavioral health and recovery.

Madison Aron: If I could just squeeze in two more questions. One, can you just give us an idea as to how behavioral health and recovery volumes have been trending over the course of the last few quarters? And second, you know, there's been a lot of negative headlines over the last several weeks, and I get it. You guys are just going to continue, you know, focusing on what you need to do.

Madison Aron: Volumes have been trending over the course of the last few quarters and then second there's been a lot of negative headlines over the last several weeks and I get it you guys are just going to continue focusing on what you need to do most of the headlines and articles that we saw arguably nothing new for those who have covered this credit for a long time, but yes.

Madison Aron: Most of the headlines and articles that we saw, arguably nothing new for those who have covered this credit for a long time; there's a domino effect, and, you know, you have the Klobuchar letter now to the FDA and DOJ. I would love to just get your thoughts as to how you guys are viewing this, how deep this goes, and how you are managing this process. Thank you.

Madison Aron: There's a domino effect and you have the Clos, which are.

Madison Aron: Now to the FDA and Doj Love to just get your thoughts as to how you guys are viewing those how deep the Cisco and how are you managing this process. Thank you.

James M. Head: Yeah, Rishi, I'll take behavioral health. I mean, I think the trend, I think you rightly notice that the trends are growing in behavioral health. And it's interesting, there's a lot of out-of-network activity around that because these companies are sprouting up and rapidly growing, and there is not a deep level of in-network activity.

Madison Aron: Yes.

Speaker Change: <unk> I'll take the.

James M. Head: The behavioral health I mean, I think the threat.

James M. Head: I think you rightly noticed that the trends are.

James M. Head: Growing in behavioral.

James M. Head: And it's interesting there is a lot of out of network activity around that because just because.

James M. Head: These companies are are sprouting up and rapidly growing.

James M. Head: There is not a deep level of in network activity.

James M. Head: So we're seeing some trends up there, but it's still not a giant piece of our business, Rishi. But it's clearly an area of growth. So more to come on that, but I think the payers are very focused on this as well and making sure that we're staying on top of this. And I think the trends will be pretty strong going forward.

James M. Head: So we're seeing we're seeing some trends out there, but it's still not a giant piece of our business Rishi.

James M. Head: But it's clearly an area of growth so.

James M. Head: More to come on that but I think it's.

James M. Head: The payers are very focused on this as well.

James M. Head: Making sure that.

James M. Head: That we're that we're staying on top of this arena and.

James M. Head: I think I think the trends will be pretty strong going forward.

Travis S. Dalton: And on the second part of the question, Yeah, I think we split. A good part of our call today was kind of answering what we believe is the value proposition of the company with facts and information. I think, you know, we're going to continue to do that. In my view, I kind of look at this as You know, it just, to me, it really illustrates that we need to explain what we do.

Rishi: Yeah and on the second part of the question.

Travis S. Dalton: Yes, I think we spent.

Travis S. Dalton: Part of our call today kind of answering what we believe is the value proposition of the company.

Travis S. Dalton: With facts and information I think.

Travis S. Dalton: We're going to continue to do that.

Travis S. Dalton: In my view I kind of look at this is.

Travis S. Dalton: Yes.

Travis S. Dalton: To me it really illustrates that we need to explain what we do.

Travis S. Dalton: So, I think we have an opportunity, actually, to talk about the value we bring, our brand. I view it as us having a bigger voice than we probably ever had. We're known now. We're out there. So, that's not a bad thing.

Travis S. Dalton: So I think we have an opportunity actually to talk about the value we bring our brand.

Travis S. Dalton: I view it as us having a bigger voice than we probably ever had we're now now we're out there so.

Travis S. Dalton: It's not that's not a bad thing will go out and educate.

Travis S. Dalton: We'll go out and educate. I expect us to go talk to stakeholders, policymakers, those in the industry, and really have an open, honest dialogue. And as I said earlier, I truly believe this. I spent 20 years on the provider side, that there's a mutual interest in healthcare. I just truly believe that. And I don't impute motive.

Travis S. Dalton: I expect for us to go talk to stakeholders policymakers those in the industry and really have an open honest dialogue and as I said earlier I truly believe this I spent 20 years on the provider side that there is a mutual interest in health care I, just truly believe that and I don't impute motive.

Travis S. Dalton: I believe that everyone wants us to work well, and we play an important role in rationalizing that market. And I think that's an important thing to do. But is it well understood? Not really.

Travis S. Dalton: I believe that everyone wants us to work well and we play an important role.

Travis S. Dalton: And rationalizing that market and I think thats important thing to do.

Travis S. Dalton: Is it well understood not really but the <unk> of health care is a problem across lots of different vectors not just in this space.

Travis S. Dalton: But the opaqueness of healthcare is a problem across lots of different dimensions, not just in this space. And we're going to continue to do that. We'll manage through it. We'll engage proactively. And we'll continue to express the virtues of our brand as we see it. And that's what it is, but most importantly, we're staying focused, as you noted, and not getting distracted. We have a lot of work to do. Thank you.

Travis S. Dalton: But we're going to continue to do that we'll manage through it we'll engage proactively.

Travis S. Dalton: And we will continue to.

Travis S. Dalton: Press, the virtues of our brand as we see it and.

Travis S. Dalton: And that's what the that's but most importantly, we're staying focused as you noted and not getting distracted we have a lot of work to do.

Travis S. Dalton: Thank you.

Operator: Thank you. As a reminder, everyone, if you would like to ask a question, you may now press star followed by one on your telephone keypad. We currently have no further questions. That will be the end of today's call. Thank you everyone for joining us. You may now disconnect your line.

Travis S. Dalton: Thank you.

Travis S. Dalton: My next few months. Thank you I'd like to ask a question you May press star one on your telephone keypad.

Operator: We currently have no further questions that will be concluding today's call. Thank you everyone for joining you may now disconnect your lines.

Operator: We currently have no further questions that will be.