– Q3 2023 Revenues of $242.8 million, Net Loss of $24.1 million,
and Adjusted EBITDA of $152.3 million
– Identified potential medical cost savings of approximately
$5.8 billion in Q3 2023, up 2% from Q2 2023 and up 7% from Q3
2022
– Repurchased an additional $46.1 million in face value of our
5.75% Senior Unsecured Notes in the open market in Q3 2023
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,
2023.
“The third quarter results continued to track to our plan for
the year and our expectation for growth in the second half of
2023,” said Dale White, CEO of MultiPlan. “We delivered sequential
growth in revenues, with flat Adjusted EBITDA reflecting
accelerated investments in new products for the core business and
in our new Data & Decision Science Services line. As a result,
we remain on track to deliver on our full-year 2023 guidance.”
“Moreover, we continued to make excellent progress on our Growth
Plan during the third quarter, with a number of new product
launches delivered on or ahead of schedule,” said Mr. White.
“Following the expansion of our HST platform with the launch of our
Balance Bill Protection™ product in the second quarter, during the
third quarter we launched our Pro Pricer™ product to enhance our
core out-of-network services, and we broadened our service
offerings with the launches of our PlanOptix™ price transparency
product and B2B healthcare payment service. Importantly, these 2023
product initiatives are already driving an expansion of our
pipeline of new business and positioning us to deliver growth in
2024 and beyond.”
“We also continued to make progress on our capital allocation
plan during the third quarter,” said Mr. White. “Specifically, we
continued to focus on debt retirement by repurchasing our 5.75%
Senior Unsecured Notes in the open market, contributing to the
reduction of the face value of our debt by $333 million over the
last four quarters.”
Mr. White concluded, “The progress we made in the third quarter
speaks to our unwavering focus on executing our longer-term plan,
outlined at our Investor Day in June, to transform our business and
unlock the value of our franchise, by leveraging the enormous
strength of our platform, expanding our products and services,
accelerating our growth, diversifying our revenues, and improving
our capital structure.”
Business and Financial Highlights
- Revenues of $242.8 million for Q3 2023, a decrease of 3.1%,
compared to revenues of $250.5 million for Q3 2022. Benefits
Science Technologies (BST) contributed $3.6 million to revenues in
Q3 2023.
- Net loss of $24.1 million for Q3 2023, compared to net income
of $19.7 million for Q3 2022.
- Adjusted EBITDA of $152.3 million for Q3 2023, compared to
Adjusted EBITDA of $172.2 million for Q3 2022.
- Net cash provided by operating activities of $72.1 million for
Q3 2023, compared to net cash provided by operating activities of
$109.0 million for Q3 2022.
- Free Cash Flow of $49.7 million for Q3 2023, compared to Free
Cash Flow of $88.2 million for Q3 2022.
- In Q3 2023, the Company used $35.0 million of cash to
repurchase $46.1 million face value of its 5.75% Senior Unsecured
Notes in the open market. The Company ended Q3 2023 with $101.3
million of unrestricted cash and cash equivalents on the balance
sheet.
- The Company processed approximately $42.5 billion in claim
charges during the third quarter of 2023, identifying potential
medical cost savings of approximately $5.8 billion.
2023 Financial Guidance
The Company is updating its Full Year 2023 guidance for revenues
and Adjusted EBITDA, as detailed in the table below. All other
guidance items remain unchanged.
Financial Metric
Prior FY 2023 Guidance
Revised FY 2023
Guidance
Revenues
$950 million to $980 million
$960 million to $970 million
Adjusted EBITDA1
$615 million to $635 million
$615 million to $625 million
Interest expense
$325 million to $335 million
Cash flow from operations2
$160 million to $190 million
Capital expenditures
$110 million to $120 million
Depreciation
$70 million to $75 million
Amortization of intangible
assets
$340 million to $345 million
Effective tax rate
25% to 28%
The Company anticipates Q4 2023 revenues between $240 million
and $250 million and Adjusted EBITDA1 between $155 million and $165
million.
Conference Call Information
The Company will host a conference call today, Tuesday, November
7, 2023 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=c7ea7a97&confId=55851
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 a 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 475386.
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 customers
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 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 2023 outlook and guidance, plans to expand or enhance the
Company’s products and service lines, capital allocation
strategies, and the long-term prospects of the Company. Such
forward-looking statements are based on available current market
information and management’s 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 ongoing
COVID-19 pandemic and its related effects on our results of
operations, financial performance, liquidity or other financial
metrics; loss of our customers, particularly our largest customers;
trends in the U.S. healthcare system, including recent trends of
unknown duration of reduced healthcare utilization and increased
patient financial responsibility for services; inability to
preserve or increase our existing market share or the size of our
preferred provider 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 or inability to maintain sufficient qualified
personnel; 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 enter new lines
of business and broaden the scope of our services; our ability to
identify, complete and successfully integrate acquisitions; our
ability to obtain additional financing; changes in our industry and
in industry standards and technology; interruptions or security
breaches of our information technology systems and other
cybersecurity attacks; our ability to protect proprietary
information, processes and applications; our ability to maintain
the licenses or rights of use for the software we use; our
inability to expand our network infrastructure; changes in
accounting principles or the incurrence of impairment charges; our
ability to remediate any material weaknesses or 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;
lowering or withdrawal of our credit ratings; the possibility that
we may be adversely affected by other political, economic,
business, and/or competitive factors; adverse outcomes related to
litigation or governmental proceedings; 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,
2022 and our Quarterly Report for the quarter and the six months
ended June 30, 2023; 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.
MULTIPLAN CORPORATION Unaudited
Condensed Consolidated Balance Sheets (in thousands, except
share and per share data)
September 30,
2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents
$
101,320
$
334,046
Restricted cash
6,294
6,513
Trade accounts receivable, net
69,339
78,907
Prepaid expenses
16,270
22,244
Prepaid taxes
6,575
1,351
Other current assets, net
11,867
3,676
Total current assets
211,665
446,737
Property and equipment, net
255,786
232,835
Operating lease right-of-use assets
21,120
24,237
Goodwill
3,829,002
3,705,199
Other intangibles, net
2,719,177
2,940,201
Other assets, net
21,069
21,895
Total assets
$
7,057,819
$
7,371,104
Liabilities and Shareholders’
Equity
Current liabilities:
Accounts payable
$
14,402
$
13,295
Accrued interest
76,488
57,982
Operating lease obligation, short-term
4,935
6,363
Current portion of long-term debt
13,250
13,250
Accrued compensation
33,260
34,568
Accrued legal contingencies
12,423
33,923
Other accrued expenses
16,929
16,463
Total current liabilities
171,687
175,844
Long-term debt
4,557,978
4,741,856
Operating lease obligation, long-term
18,541
20,894
Private Placement Warrants and Unvested
Founder Shares
2,709
2,442
Deferred income taxes
552,220
639,498
Other liabilities
5,096
28
Total liabilities
5,308,231
5,580,562
Commitments and contingencies (Note 7)
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; 667,386,715 and 666,290,344
issued; 649,486,255 and 639,172,938 shares outstanding
67
67
Additional paid-in capital
2,343,340
2,330,444
Accumulated other comprehensive income
382
—
Retained deficit
(467,916
)
(347,800
)
Treasury stock — 17,900,460 and 27,117,406
shares
(126,285
)
(192,169
)
Total shareholders’ equity
1,749,588
1,790,542
Total liabilities and shareholders’
equity
$
7,057,819
$
7,371,104
MULTIPLAN CORPORATION Unaudited
Condensed Consolidated Statements of (Loss) Income and
Comprehensive (Loss) Income (in thousands, except share and per
share data)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Revenues
$
242,804
$
250,453
$
717,389
$
838,627
Costs of services (exclusive of
depreciation and amortization of intangible assets shown below)
60,949
53,012
174,806
150,061
General and administrative expenses
36,779
58,434
107,996
131,107
Depreciation
19,586
17,481
56,693
51,248
Amortization of intangible assets
85,971
85,127
256,724
255,408
Total expenses
203,285
214,054
596,219
587,824
Operating income
39,519
36,399
121,170
250,803
Interest expense
84,300
77,087
250,203
221,228
Interest income
(1,505
)
(886
)
(7,110
)
(944
)
Gain on extinguishment of debt
(10,129
)
—
(46,907
)
—
Gain on investments
—
—
—
(289
)
(Gain) loss on change in fair value of
Private Placement Warrants and Unvested Founder Shares
(2,127
)
(48,851
)
267
(56,443
)
Net (loss) income before taxes
(31,020
)
9,049
(75,283
)
87,251
(Benefit) provision for income taxes
(6,875
)
(10,687
)
(14,977
)
10,025
Net (loss) income
$
(24,145
)
$
19,736
$
(60,306
)
$
77,226
Weighted average shares outstanding –
Basic
646,443,806
639,073,949
643,855,782
638,859,792
Weighted average shares outstanding –
Diluted
646,443,806
639,850,455
643,855,782
639,590,184
Net (loss) income per share – Basic
$
(0.04
)
$
0.03
$
(0.09
)
$
0.12
Net (loss) income per share – Diluted
$
(0.04
)
$
0.03
$
(0.09
)
$
0.12
Net (loss) income
(24,145
)
19,736
(60,306
)
77,226
Other comprehensive income:
Unrealized gain on interest rate swap, net
of tax
382
—
382
—
Comprehensive (loss) income
$
(23,763
)
$
19,736
$
(59,924
)
$
77,226
MULTIPLAN CORPORATION Unaudited
Condensed Consolidated Statements of Cash Flows (in
thousands)
Nine Months Ended September
30,
2023
2022
Operating activities:
Net (loss) income
$
(60,306
)
$
77,226
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation
56,693
51,248
Amortization of intangible assets
256,724
255,408
Amortization of the right-of-use asset
4,329
4,924
Stock-based compensation
13,357
11,298
Deferred income taxes
(87,278
)
(138,873
)
Amortization of debt issuance costs and
discounts
7,967
7,841
Gain on extinguishment of debt
(46,907
)
—
Gain on equity investments
—
(289
)
Loss on disposal of property and
equipment
452
1,110
Loss (gain) on change in fair value of
Private Placement Warrants and Unvested Founder Shares
267
(56,443
)
Changes in assets and liabilities:
Accounts receivable, net
11,621
27,588
Prepaid expenses and other assets
(759
)
13,764
Prepaid taxes
(5,224
)
5,064
Operating lease obligation
(5,041
)
(4,844
)
Accounts payable, accrued expenses, legal
contingencies and other
(1,877
)
89,653
Net cash provided by operating
activities
144,018
344,675
Investing activities:
Purchases of property and equipment
(77,509
)
(64,209
)
Proceeds from sale of investment
—
289
Purchase of equity investments
—
(15,000
)
BST Acquisition, net of cash acquired
(140,940
)
—
Net cash used in investing activities
(218,449
)
(78,920
)
Financing activities:
Repurchase of 5.750% Notes
(134,975
)
—
Repayments of Term Loan B
(9,938
)
(9,938
)
Taxes paid on settlement of vested share
awards
(461
)
(2,376
)
Purchase of treasury stock
(13,140
)
—
Net cash used in financing activities
(158,514
)
(12,314
)
Net (decrease) increase in cash, cash
equivalents and restricted cash
(232,945
)
253,441
Cash, cash equivalents and restricted cash
at beginning of period
340,559
188,379
Cash, cash equivalents and restricted cash
at end of period
$
107,614
$
441,820
Cash and cash equivalents
$
101,320
$
439,123
Restricted cash
6,294
2,697
Cash, cash equivalents and restricted cash
at end of period
$
107,614
$
441,820
Noncash investing and financing
activities:
Purchases of property and equipment not
yet paid
$
7,319
$
6,315
Operating lease right-of-use assets
obtained in exchange for operating lease liabilities
$
—
$
2,258
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest
$
(223,640
)
$
(187,834
)
Income taxes, net of refunds
$
(78,582
)
$
(104,693
)
MULTIPLAN CORPORATION Calculation of
EBITDA and Adjusted EBITDA (in thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net income (loss)
$
(24,145
)
$
19,736
$
(60,306
)
$
77,226
Adjustments:
Interest expense
84,300
77,087
250,203
221,228
Interest income
(1,505
)
(886
)
(7,110
)
(944
)
(Benefit) provision for income taxes
(6,875
)
(10,687
)
(14,977
)
10,025
Depreciation
19,586
17,481
56,693
51,248
Amortization of intangible assets
85,971
85,127
256,724
255,408
Non-income taxes
669
76
1,672
1,069
EBITDA
$
158,001
$
187,934
$
482,899
$
615,260
Adjustments:
Other expenses, net(1)
521
553
759
2,206
Integration expenses
891
1,066
2,722
3,762
Change in fair value of Private Placement
Warrants and unvested founder shares
(2,127
)
(48,851
)
267
(56,443
)
Transaction-related expenses
269
27,408
8,105
31,420
Gain on extinguishment of debt
(10,129
)
—
(46,907
)
—
Gain on investments
—
—
—
(289
)
Stock-based compensation
4,835
4,064
13,357
11,298
Adjusted EBITDA
$
152,261
$
172,174
$
461,202
$
607,214
(1) "Other expenses, net" represent miscellaneous non-recurring
income, miscellaneous non-recurring expense, gain or loss on
disposal of assets, impairment of other assets, gain or loss on
disposal of leases, tax penalties, and non-integration related
severance costs.
Calculation of Unlevered Free Cash Flow and
Adjusted Cash Conversion Ratio (in thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net cash provided by operating
activities
$
72,118
$
109,036
$
144,018
$
344,675
Purchases of property and equipment
(22,414
)
(20,810
)
(77,509
)
(64,209
)
Free Cash Flow
49,704
88,226
66,509
280,466
Interest paid
62,156
48,821
223,640
187,834
Unlevered Free Cash Flow
$
111,860
$
137,047
$
290,149
$
468,300
Adjusted EBITDA
$
152,261
$
172,174
$
461,202
$
607,214
Adjusted Cash Conversion Ratio
73
%
80
%
63
%
77
%
Net cash used in investing activities
$
(22,060
)
(20,810
)
$
(218,449
)
$
(78,920
)
Net cash used in financing activities
$
(38,338
)
(3,493
)
$
(158,514
)
$
(12,314
)
1 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,
and certain fair value measurements, 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. 2 Cash
flow from operations guidance includes the impact of approximately
$22 million that MultiPlan paid in Q1 2023 in connection with the
settlement of our previously disclosed Delaware stockholder
litigation.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231107989339/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
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Churchill Capital Corp III (NYSE:MPLN)
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From May 2023 to May 2024