- Q3 2022 Revenues of $250.5 million, Net Income of $19.7
million, and Adjusted EBITDA of $172.2 million
- Decrease in Revenues of 13.1% over Q3 2021, driven by lower
volumes and unfavorable mix of identified potential medical cost
savings, predominantly the result of softer patient utilization of
healthcare services
MultiPlan Corporation (“MultiPlan” or the “Company”) (NYSE:
MPLN), a leading value-added provider of data analytics and
technology-enabled end-to-end cost management, payment and revenue
integrity solutions to the U.S. healthcare industry, today reported
financial results for the third quarter ended September 30,
2022.
“Third quarter 2022 was a challenging quarter for MultiPlan.”
said Dale White, CEO of MultiPlan. “While the predominant driver of
the shortfall was a decline in patient utilization of healthcare
services, our results nevertheless fell short of our expectations.
Despite the quarter’s results, our confidence in our business
remains high. We continue to deliver best-in-class Adjusted EBITDA
margins and generate significant cash flow. And even as we adjust
to more difficult market conditions, we continue to drive
meaningful progress on all fronts, by selling new business,
building our pipeline, investing in our people and solutions to
drive growth, managing our costs, and delivering high levels of
value and service to our customers.”
The Company remains focused on its mission of delivering
fairness, efficiency and affordability to the U.S. healthcare
system and on driving sustained long-term growth by enhancing its
product offerings to payors, extending into new payor customer
segments, and expanding its platform to serve MultiPlan’s 1.3
million providers, its more than 700 payor customers, and 60 plus
million consumers.
Business and Financial Highlights
- Revenues of $250.5 million for Q3 2022, a decrease of 13.1%,
compared to Q3 2021 revenues of $288.2 million.
- Net income of $19.7 million for Q3 2022, a decrease of 74.8%,
compared to net income of $78.2 million for Q3 2021.
- Adjusted EBITDA of $172.2 million for Q3 2022, a decrease of
21.2%, compared to Q3 2021 Adjusted EBITDA of $218.4 million.
- Net cash provided by operating activities of $109.0 million for
Q3 2022, compared to $167.0 million for Q3 2021.
- Free Cash Flow of $88.2 million for Q3 2022, compared to $146.6
million for Q3 2021.
- The Company processed approximately $31.4 billion in claim
charges during the third quarter of 2022, identifying potential
medical cost savings of approximately $5.3 billion.
The third quarter 2022 results reflect an estimated
COVID-related revenue impact of $4-6 million and an estimated
COVID-related Adjusted EBITDA impact of $3-5 million, as compared
to an estimated COVID-related revenue impact of $8-10 million and
an estimated COVID-related Adjusted EBITDA impact of $6-8 million
in Q3 2021.
2022 Financial Guidance
The Company is updating its Full Year 2022 guidance, detailed in
the table below:
Financial Metric
Prior FY 2022 Guidance
Updated FY 2022 Guidance
Revenues
$1,160 million to $1,200 million
$1,075 million to $1,090 million
Adjusted EBITDA
$850 million to $875 million
$765 million to $780 million
Cash flow from operations
$380 million to $420 million
$360 million to $380 million
Capital expenditures
$90 million to $100 million
$90 million to $100 million
Interest expense
$280 million to $290 million
$295 million to $305 million
Depreciation
$65 million to $70 million
$65 million to $70 million
Amortization of intangible assets
$335 million to $345 million
$335 million to $345 million
Effective tax rate
25% to 28%
26% to 29%
The Company’s annual guidance assumes an estimated COVID-related
revenue impact of approximately $15-20 million, and an estimated
COVID-related Adjusted EBITDA impact of approximately $12-15
million.
The Company anticipates Q4 2022 revenues between $235 million
and $250 million and Adjusted EBITDA between $155 million and $170
million.
Conference Call Information
The Company will host a conference call today, Tuesday, November
8, 2022 at 8:00 a.m. U.S. Eastern Time (ET) to discuss its
financial results. Investors and analysts are encouraged to
pre-register for the conference call by using the link below.
Participants who pre-register will receive access details via
email. Pre-registration may be completed at any time up to and
following the call start time.
To pre-register, go to:
https://www.netroadshow.com/events/login?show=c4404ef1&confId=42446
A live webcast of the conference call can be accessed through
the Investor Relations section of the Company’s website at
investors.multiplan.com/events-and-presentations. Participants
should join the webcast ten minutes prior to the start of the
conference call. The earnings press release and supplemental slide
deck will also be available on this section of the Company’s
website.
For those unable to listen to the live conference call, a replay
will be available approximately two hours after the call through
the archived webcast on the Investor Relations section of the
Company’s website or by dialing (866) 813-9403 or (929) 458-6194.
The replay access code is 004428.
About MultiPlan
MultiPlan is committed to helping healthcare payors manage the
cost of care, improve their competitiveness and inspire positive
change. Leveraging sophisticated technology, data analytics and a
team rich with industry experience, MultiPlan interprets clients'
needs and customizes innovative solutions that combine its payment
and revenue integrity, network-based and analytics-based services.
MultiPlan is a trusted partner to over 700 healthcare payors in the
commercial health, government and property and casualty markets.
For more information, visit it www.multiplan.com.
Forward Looking Statements
This press release includes statements that express our
management’s opinions, expectations, beliefs, plans, objectives,
assumptions or projections regarding future events or future
results and therefore are, or may be deemed to be, “forward-looking
statements”. These forward-looking statements can generally be
identified by the use of forward-looking terminology, including the
terms “believes,” “estimates,” “anticipates,” “expects,” “seeks,”
“projects,” “forecasts,” “intends,” “plans,” “may,” “will” or
“should” or, in each case, their negative or other variations or
comparable terminology. These forward-looking statements include
all matters that are not historical facts. They appear in a number
of places throughout this press release, including the discussion
of 2022 outlook and guidance and the long-term prospects of the
Company. Such forward-looking statements are based on available
current market material and are management’s current expectations,
beliefs and forecasts concerning future events impacting the
business. Although we believe that these forward-looking statements
are based on reasonable assumptions at the time they are made, you
should be aware that these forward-looking statements involve a
number of risks, uncertainties (some of which are beyond our
control) or other assumptions that may cause actual results or
performance to be materially different from those expressed or
implied by these forward-looking statements. These factors include:
the impact from the COVID-19 pandemic and its related effects on
our projected results of operations, financial performance or other
financial metrics; loss of our customers, particularly our largest
customers; decreases in our existing market share or the size of
our Preferred Provider Organization networks; effects of
competition; effects of pricing pressure; the inability of our
customers to pay for our services; decreases in discounts from
providers; the loss of our existing relationships with providers;
the loss of key members of our management team; pressure to limit
access to preferred provider networks; the ability to achieve the
goals of our strategic plans and recognize the anticipated
strategic, operational, growth and efficiency benefits when
expected; our ability to identify, complete and successfully
integrate acquisitions; changes in our industry; interruptions or
security breaches of our information technology systems and other
cyber security attacks; our ability to protect proprietary
applications; our inability to expand our network infrastructure;
our ability to maintain effective internal controls over financial
reporting; our ability to continue to attract, motivate and retain
a large number of skilled employees, and adapt to the effects of
inflationary pressure on wages; changes in our regulatory
environment, including healthcare law and regulations; the
expansion of privacy and security laws; heightened enforcement
activity by government agencies; our ability to pay interest and
principal on our notes and other indebtedness; the possibility that
we may be adversely affected by other political, economic,
business, and/or competitive factors; changes in healthcare
utilization patterns of plan members; other factors disclosed in
our Securities and Exchange Commission (“SEC”) filings from time to
time, including, without limitation, those factors described in our
Annual Report on Form 10-K for the fiscal year ended December 31,
2021 and our Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 2022; and other factors beyond our control. Should
one or more of these risks or uncertainties materialize, or should
any of the assumptions prove incorrect, actual results may vary in
material respects from those projected in these forward-looking
statements.
There can be no assurance that future developments affecting our
business will be those that we have anticipated. Forward-looking
statements speak only as of the date made. We do not undertake any
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as may be required under applicable securities laws.
Non-GAAP Financial Measures
In addition to the financial measures prepared in accordance
with generally accepted accounting principles in the United States
(“GAAP”), this press release contains certain non-GAAP financial
measures, including EBITDA, Adjusted EBITDA, Free Cash Flow,
Unlevered Free Cash Flow and Adjusted cash conversion ratio. A
non-GAAP financial measure is generally defined as a numerical
measure of a company’s financial or operating performance that
excludes or includes amounts so as to be different than the most
directly comparable measure calculated and presented in accordance
with GAAP.
EBITDA, Adjusted EBITDA, Free Cash Flow, Unlevered Free Cash
Flow and Adjusted cash conversion ratio are supplemental measures
of MultiPlan’s performance that are not required by or presented in
accordance with GAAP. These measures are not measurements of our
financial or operating performance under GAAP, have limitations as
analytical tools and should not be considered in isolation or as an
alternative to net income, cash flows or any other measures of
performance prepared in accordance with GAAP.
EBITDA represents net income before interest expense, interest
income, income tax provision, depreciation, amortization of
intangible assets, and non-income taxes. Adjusted EBITDA is EBITDA
as further adjusted by certain items as described in the table
below.
In addition, in evaluating EBITDA and Adjusted EBITDA you should
be aware that in the future, we may incur expenses similar to the
adjustments in the presentation of EBITDA and Adjusted EBITDA. The
presentation of EBITDA and Adjusted EBITDA should not be construed
as an inference that our future results will be unaffected by
unusual or non-recurring items. The calculations of EBITDA and
Adjusted EBITDA may not be comparable to similarly titled measures
reported by other companies. Based on our industry and debt
financing experience, we believe that EBITDA and Adjusted EBITDA
are customarily used by investors, analysts and other interested
parties to provide useful information regarding a company’s ability
to service and/or incur indebtedness.
We also believe that Adjusted EBITDA is useful to investors and
analysts in assessing our operating performance during the periods
these charges were incurred on a consistent basis with the periods
during which these charges were not incurred. Both EBITDA and
Adjusted EBITDA have limitations as analytical tools, and you
should not consider either in isolation, or as a substitute for
analysis of our results as reported under GAAP. Some of the
limitations are:
- EBITDA and Adjusted EBITDA do not reflect changes in, or cash
requirements for, our working capital needs;
- EBITDA and Adjusted EBITDA do not reflect interest expense, or
the cash requirements necessary to service interest or principal
payments on our debt;
- EBITDA and Adjusted EBITDA do not reflect our tax expense or
the cash requirements to pay our taxes; and
- Although depreciation and amortization are non-cash charges,
the tangible assets being depreciated will often have to be
replaced in the future, and EBITDA and Adjusted EBITDA do not
reflect any cash requirements for such replacements.
MultiPlan’s presentation of Adjusted EBITDA should not be
construed as an inference that our future results and financial
position will be unaffected by unusual items.
Free Cash Flow is defined as net cash provided by operating
activities less capital expenditures, all as disclosed in the
Statements of Cash Flows. Unlevered Free Cash Flow is defined as
net cash provided by operating activities less capital
expenditures, plus cash interest paid, all as disclosed in the
Statements of Cash Flows. Free Cash Flow and Unlevered Free Cash
Flow are measures of our operational performance used by management
to evaluate our business after purchases of property and equipment
and, in the case of Unlevered Free Cash Flow, prior to the impact
of our capital structure. Free Cash Flow and Unlevered Free Cash
Flow should be considered in addition to, rather than as a
substitute for, consolidated net income as a measure of our
performance and net cash provided by operating activities as a
measure of our liquidity. Additionally, MultiPlan’s definitions of
Free Cash Flow and Unlevered Free Cash Flow are limited, in that
they do not represent residual cash flows available for
discretionary expenditures, due to the fact that the measures do
not deduct the payments required for debt service, in the case of
Unlevered Free Cash Flow, and other contractual obligations or
payments made for business acquisitions.
Adjusted cash conversion ratio is defined as Unlevered Free Cash
Flow divided by Adjusted EBITDA. MultiPlan believes that the
presentation of the Adjusted cash conversion ratio provides useful
information to investors because it is a financial performance
measure that shows how much of its Adjusted EBITDA MultiPlan
converts into Unlevered Free Cash Flow.
We have not reconciled the forward-looking Adjusted EBITDA
guidance included above to the most directly comparable GAAP
measure because this cannot be done without unreasonable effort due
to the variability and low visibility with respect to certain
costs, the most significant of which are incentive compensation
(including stock-based compensation), transaction-related expenses
(including expenses relating to the business combination through
which we became a public company and litigation related thereto, as
well as those related to any acquisitions, whether consummated or
not), certain fair value measurements and costs related to the
uncertainties caused by the global COVID-19 pandemic, which are
potential adjustments to future earnings. We expect the variability
of these items to have a potentially unpredictable, and a
potentially significant, impact on our future GAAP financial
results.
MULTIPLAN CORPORATION
Unaudited Condensed Consolidated Balance Sheets (in
thousands, except share and per share data)
September 30,
2022
December 31,
2021
Assets
Current assets:
Cash and cash equivalents
$
439,123
$
185,328
Restricted cash
2,697
3,051
Trade accounts receivable, net
72,317
99,905
Prepaid expenses
12,830
24,910
Prepaid taxes
—
5,064
Other current assets, net
1,889
999
Total current assets
528,856
319,257
Property and equipment, net
224,869
213,238
Operating lease right-of-use assets
23,837
30,104
Goodwill
4,363,121
4,363,070
Other intangibles, net
3,029,629
3,285,037
Other assets, net
22,127
9,701
Total assets
$
8,192,439
$
8,220,407
Liabilities and Shareholders’
Equity
Current liabilities:
Accounts payable
$
13,559
$
13,005
Accrued interest
80,622
55,685
Accrued taxes
39,782
—
Operating lease obligation, short-term
6,827
6,883
Current portion of long-term debt
13,250
13,250
Accrued compensation
28,898
25,419
Other accrued expenses
47,027
27,666
Total current liabilities
229,965
141,908
Long-term debt
4,877,011
4,879,144
Operating lease obligation, long-term
20,374
26,725
Private Placement Warrants and Unvested
Founder Shares
13,049
74,000
Deferred income taxes
615,003
753,825
Other liabilities
55
135
Total liabilities
5,755,457
5,875,737
Commitments and contingencies (Note 6)
Shareholders’ equity:
Shareholder interests
Preferred stock, $0.0001 par value —
10,000,000 shares authorized; no shares issued
—
—
Common stock, $0.0001 par value —
1,500,000,000 shares authorized; 666,226,067 and 665,456,180
issued; 639,108,661 and 638,338,774 shares outstanding
67
67
Additional paid-in capital
2,326,746
2,311,660
Retained earnings
302,338
225,112
Treasury stock — 27,117,406 and 27,117,406
shares
(192,169
)
(192,169
)
Total shareholders’ equity
2,436,982
2,344,670
Total liabilities and shareholders’
equity
$
8,192,439
$
8,220,407
MULTIPLAN CORPORATION
Unaudited Condensed Consolidated Statements of Income and
Comprehensive Income (in thousands, except share and per share
data)
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
Revenues
$
250,453
$
288,212
$
838,627
$
819,348
Costs of services (exclusive of
depreciation and amortization of intangible assets shown below)
53,012
44,588
150,061
128,686
General and administrative expenses
58,434
38,221
131,107
110,144
Depreciation
17,481
15,783
51,248
48,956
Amortization of intangible assets
85,127
85,167
255,408
255,042
Total expenses
214,054
183,759
587,824
542,828
Operating income
36,399
104,453
250,803
276,520
Interest expense
77,087
67,512
221,228
195,233
Interest income
(886
)
(8
)
(944
)
(19
)
Loss on extinguishment of debt
—
15,823
—
15,823
Gain on investments
—
—
(289
)
(25
)
Gain on change in fair value of Private
Placement Warrants and Unvested Founder Shares
(48,851
)
(76,636
)
(56,443
)
(35,451
)
Net income before taxes
9,049
97,762
87,251
100,959
(Benefit) provision for income taxes
(10,687
)
19,565
10,025
23,817
Net income
$
19,736
$
78,197
$
77,226
$
77,142
Weighted average shares outstanding –
Basic
639,073,949
652,520,691
638,859,792
654,414,644
Weighted average shares outstanding –
Diluted
639,850,455
652,882,405
639,590,184
654,816,495
Net income per share – Basic
$
0.03
$
0.12
$
0.12
$
0.12
Net income per share – Diluted
$
0.03
$
0.12
$
0.12
$
0.12
Comprehensive income
$
19,736
$
78,197
$
77,226
$
77,142
MULTIPLAN CORPORATION
Unaudited Condensed Consolidated Statements of Cash
Flows
(in thousands)
Nine Months Ended September
30,
2022
2021
Operating activities:
Net income
$
77,226
$
77,142
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation
51,248
48,956
Amortization of intangible assets
255,408
255,042
Amortization of the right-of-use asset
4,924
5,306
Stock-based compensation
11,298
13,194
Deferred income taxes
(138,873
)
(66,930
)
Non-cash interest costs
7,841
9,500
Loss on extinguishment of debt
—
15,823
Gain on equity investments
(289
)
—
Loss on disposal of property and
equipment
1,110
2,366
Gain on change in fair value of Private
Placement Warrants and Unvested Founder Shares
(56,443
)
(35,451
)
Changes in assets and liabilities, net of
assets acquired and liabilities assumed from acquisitions:
Accounts receivable, net
27,588
(480
)
Prepaid expenses and other assets
13,764
4,655
Prepaid taxes
5,064
(38
)
Operating lease obligation
(4,844
)
(4,962
)
Accounts payable and accrued expenses and
other
89,653
47,303
Net cash provided by operating
activities
344,675
371,426
Investing activities:
Purchases of property and equipment
(64,209
)
(57,198
)
Proceeds from sale of investment
289
5,641
Purchase of equity investments
(15,000
)
—
HST Acquisition, net of cash acquired
—
36
DHP Acquisition, net of cash acquired
—
(149,676
)
Net cash used in investing activities
(78,920
)
(201,197
)
Financing activities:
Repayments of Term Loan G
—
(2,341,000
)
Repayments of Term Loan B
(9,938
)
—
Issuance of Term Loan B
—
1,298,951
Issuance of 5.500% Senior Secured
Notes
—
1,034,597
Taxes paid on settlement of vested share
awards
(2,376
)
(3,312
)
Purchase of treasury stock
—
(61,080
)
Net cash used in financing activities
(12,314
)
(71,844
)
Net increase in cash, cash equivalents and
restricted cash
253,441
98,385
Cash, cash equivalents and restricted cash
at beginning of period
188,379
126,755
Cash, cash equivalents and restricted cash
at end of period
$
441,820
$
225,140
Cash and cash equivalents
$
439,123
$
225,140
Restricted cash
2,697
—
Cash, cash equivalents and restricted cash
at end of period
$
441,820
$
225,140
Noncash investing and financing
activities:
Purchases of property and equipment not
yet paid
$
6,315
$
6,160
Operating lease right-of-use assets
obtained in exchange for operating lease liabilities
$
2,258
$
795
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest
$
(187,834
)
$
(136,951
)
Income taxes, net of refunds
$
(104,693
)
$
(101,635
)
MULTIPLAN CORPORATION
Calculation of EBITDA and Adjusted EBITDA
Three Months Ended September
30,
Nine Months Ended September
30,
(in thousands)
2022
2021
2022
2021
Net income
$
19,736
$
78,197
$
77,226
$
77,142
Adjustments:
Interest expense
77,087
67,512
221,228
195,233
Interest income
(886
)
(8
)
(944
)
(19
)
(Benefit) provision for income taxes
(10,687
)
19,565
10,025
23,817
Depreciation
17,481
15,783
51,248
48,956
Amortization of intangible assets
85,127
85,167
255,408
255,042
Non-income taxes
76
105
1,069
1,107
EBITDA
$
187,934
$
266,321
$
615,260
$
601,278
Adjustments:
Other expenses, net
553
3,569
2,206
4,280
Integration expenses
1,066
2,991
3,762
7,679
Gain on change in fair value of Private
Placement Warrants and Unvested Founder Shares
(48,851
)
(76,636
)
(56,443
)
(35,451
)
Transaction-related expenses
27,408
1,541
31,420
7,972
Gain on investments
—
—
(289
)
(25
)
Loss on extinguishment of debt
—
15,823
—
15,823
Stock-based compensation
4,064
4,752
11,298
13,194
Adjusted EBITDA
$
172,174
$
218,361
$
607,214
$
614,750
Calculation of Unlevered Free
Cash Flow and Adjusted Cash Conversion Ratio
Three Months Ended September
30,
Nine Months Ended September
30,
(in thousands)
2022
2021
2022
2021
Net cash provided by operating
activities
$
109,036
$
167,037
$
344,675
$
371,426
Purchases of property and equipment
(20,810
)
(20,411
)
(64,209
)
(57,198
)
Free Cash Flow
88,226
146,626
280,466
314,228
Interest paid
48,821
13,836
187,834
136,951
Unlevered Free Cash Flow
$
137,047
$
160,462
$
468,300
$
451,179
Adjusted EBITDA
$
172,174
$
218,361
$
607,214
$
614,750
Adjusted Cash Conversion Ratio
80
%
73
%
77
%
73
%
Net cash used in investing activities
$
(20,810
)
$
(20,347
)
$
(78,920
)
$
(201,197
)
Net cash used in financing activities
$
(3,493
)
$
(69,521
)
$
(12,314
)
$
(71,844
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221108005378/en/
Investor Relations Luke Montgomery, CFA SVP, Finance
& Investor Relations MultiPlan 866-909-7427
investor@multiplan.com Shawna Gasik AVP, Investor Relations
MultiPlan 866-909-7427 investor@multiplan.com Media
Relations Pamela Walker AVP, Marketing & Communications
MultiPlan 781-895-3118 press@multiplan.com
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