MultiPlan Reports First Quarter 2023 Results
– Q1 2023 Revenues of
– Identified potential medical cost savings of approximately
– Repurchased an additional
“We are making meaningful progress improving the position of the Company, advancing our core business, and adding new avenues of growth,” said Dale White, CEO of MultiPlan. “During the first quarter, we delivered results consistent with our expectations, renewed yet another multi-year contract with one of our larger customers, and continued to reduce our debt. As healthcare utilization continues to stabilize, our first quarter volumes solidified, helping to establish a foundation for growth in the second half of the year.”
“Moreover, we remained firmly focused on the execution of our Growth Plan,” continued Mr. White. “We are on track to launch several new products and product enhancements for our core service lines in 2023, starting as early as June. I am also pleased with the significant progress we have made on the formation of our new Data & Decision Science service line, which is a critical part of our planned expansion beyond out-of-network claim processing and into larger and growing markets like in-network commercial and Medicare Advantage.”
Mr. White concluded, “With the progress we are making across so many fronts, I am increasingly confident that we are landing on solid footing with greater visibility, and that the Company is positioned to accelerate growth in 2024 and beyond.”
Business and Financial Highlights
-
Revenues of
$236.6 million 20.6% , compared to revenues of$298.0 million
-
Net income of
$0.2 million 99.5% , compared to net income of$44.0 million
-
Adjusted EBITDA of
$156.3 million 30.7% , compared to Adjusted EBITDA of$225.4 million
-
Net cash provided by operating activities of
$64.2 million $194.8 million
-
Free Cash Flow of
$41.1 million $170.4 million
-
In Q1 2023, the Company used
$100 million $137.8 million 5.750% Senior Unsecured Notes and used$5.7 million $265.7 million
-
The Company processed approximately
$39.7 billion $5.6 billion
2023 Financial Guidance1
The Company is reaffirming its Full Year 2023 guidance, as detailed in the table below:
Financial Metric |
|
FY 2023 Guidance |
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Revenues |
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|
|
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Adjusted EBITDA1 |
|
|
|
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Interest expense |
|
|
|
||
Cash flow from operations2 |
|
|
|
||
Capital expenditures |
|
|
|
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Depreciation |
|
|
|
||
Amortization of intangible assets |
|
|
|
||
Effective tax rate |
|
|
|
The Company anticipates Q2 2023 revenues between
Conference Call Information
The Company will host a conference call today, Thursday, May 4, 2023 at 8:00 a.m.
To pre-register, go to: https://www.netroadshow.com/events/login?show=0aac2e41&confld=48598.
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 718568.
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, 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
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
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) |
|||||||
|
March 31,
|
|
December 31,
|
||||
Assets |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
265,728 |
|
|
$ |
334,046 |
|
Restricted cash |
|
6,508 |
|
|
|
6,513 |
|
Trade accounts receivable, net |
|
67,032 |
|
|
|
78,907 |
|
Prepaid expenses |
|
21,444 |
|
|
|
22,244 |
|
Prepaid taxes |
|
5,917 |
|
|
|
1,351 |
|
Other current assets, net |
|
4,823 |
|
|
|
3,676 |
|
Total current assets |
|
371,452 |
|
|
|
446,737 |
|
Property and equipment, net |
|
238,879 |
|
|
|
232,835 |
|
Operating lease right-of-use assets |
|
22,953 |
|
|
|
24,237 |
|
Goodwill |
|
3,705,199 |
|
|
|
3,705,199 |
|
Other intangibles, net |
|
2,855,074 |
|
|
|
2,940,201 |
|
Other assets, net |
|
21,692 |
|
|
|
21,895 |
|
Total assets |
$ |
7,215,249 |
|
|
$ |
7,371,104 |
|
Liabilities and Shareholders’ Equity |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
14,137 |
|
|
$ |
13,295 |
|
Accrued interest |
|
76,877 |
|
|
|
57,982 |
|
Operating lease obligation, short-term |
|
5,850 |
|
|
|
6,363 |
|
Current portion of long-term debt |
|
13,250 |
|
|
|
13,250 |
|
Accrued compensation |
|
17,448 |
|
|
|
34,568 |
|
Accrued legal contingencies |
|
11,623 |
|
|
|
33,923 |
|
Other accrued expenses |
|
16,588 |
|
|
|
16,463 |
|
Total current liabilities |
|
155,773 |
|
|
|
175,844 |
|
Long-term debt |
|
4,604,402 |
|
|
|
4,741,856 |
|
Operating lease obligation, long-term |
|
19,789 |
|
|
|
20,894 |
|
Private Placement Warrants and Unvested Founder Shares |
|
4,073 |
|
|
|
2,442 |
|
Deferred income taxes |
|
642,936 |
|
|
|
639,498 |
|
Other liabilities |
|
— |
|
|
|
28 |
|
Total liabilities |
|
5,426,973 |
|
|
|
5,580,562 |
|
Commitments and contingencies (Note 5) |
|
|
|
||||
Shareholders’ equity: |
|
|
|
||||
Shareholder interests |
|
|
|
||||
Preferred stock, |
|
— |
|
|
|
— |
|
Common stock, |
|
67 |
|
|
|
67 |
|
Additional paid-in capital |
|
2,333,687 |
|
|
|
2,330,444 |
|
Retained deficit |
|
(347,591 |
) |
|
|
(347,800 |
) |
Treasury stock — 32,365,653 and 27,117,406 shares |
|
(197,887 |
) |
|
|
(192,169 |
) |
Total shareholders’ equity |
|
1,788,276 |
|
|
|
1,790,542 |
|
Total liabilities and shareholders’ equity |
$ |
7,215,249 |
|
|
$ |
7,371,104 |
|
MULTIPLAN CORPORATION Unaudited Condensed Consolidated Statements of Income and Comprehensive Income (in thousands, except share and per share data) |
|||||||
|
Three Months Ended March 31, |
||||||
|
|
2023 |
|
|
|
2022 |
|
Revenues |
$ |
236,594 |
|
|
$ |
298,046 |
|
Costs of services (exclusive of depreciation and amortization of intangible assets shown below) |
|
54,850 |
|
|
|
47,072 |
|
General and administrative expenses |
|
31,467 |
|
|
|
32,588 |
|
Depreciation |
|
18,206 |
|
|
|
16,596 |
|
Amortization of intangible assets |
|
85,127 |
|
|
|
85,154 |
|
Total expenses |
|
189,650 |
|
|
|
181,410 |
|
Operating income |
|
46,944 |
|
|
|
116,636 |
|
Interest expense |
|
83,428 |
|
|
|
71,445 |
|
Interest income |
|
(3,239 |
) |
|
|
(12 |
) |
Gain on extinguishment of debt |
|
(36,778 |
) |
|
|
— |
|
Gain on investments |
|
— |
|
|
|
(289 |
) |
Loss (gain) on change in fair value of Private Placement Warrants and Unvested Founder Shares |
|
1,631 |
|
|
|
(12,741 |
) |
Net income before taxes |
|
1,902 |
|
|
|
58,233 |
|
Provision for income taxes |
|
1,693 |
|
|
|
14,255 |
|
Net income |
$ |
209 |
|
|
$ |
43,978 |
|
|
|
|
|
||||
Weighted average shares outstanding – Basic |
|
638,721,991 |
|
|
|
638,497,587 |
|
Weighted average shares outstanding – Diluted |
|
640,901,289 |
|
|
|
639,015,094 |
|
|
|
|
|
||||
Net income per share – Basic |
$ |
0.00 |
|
|
$ |
0.07 |
|
Net income per share – Diluted |
$ |
0.00 |
|
|
$ |
0.07 |
|
|
|
|
|
||||
Comprehensive income |
$ |
209 |
|
|
$ |
43,978 |
|
MULTIPLAN CORPORATION Unaudited Condensed Consolidated Statements of Cash Flows (in thousands) |
|||||||
|
Three Months Ended March 31, |
||||||
|
|
2023 |
|
|
|
2022 |
|
Operating activities: |
|
|
|
||||
Net income |
$ |
209 |
|
|
$ |
43,978 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
||||
Depreciation |
|
18,206 |
|
|
|
16,596 |
|
Amortization of intangible assets |
|
85,127 |
|
|
|
85,154 |
|
Amortization of the right-of-use asset |
|
1,403 |
|
|
|
1,683 |
|
Stock-based compensation |
|
3,695 |
|
|
|
3,130 |
|
Deferred income taxes |
|
3,438 |
|
|
|
(35,343 |
) |
Non-cash interest costs |
|
2,603 |
|
|
|
2,577 |
|
Gain on extinguishment of debt |
|
(36,778 |
) |
|
|
— |
|
Gain on equity investments |
|
— |
|
|
|
(289 |
) |
Loss on disposal of property and equipment |
|
172 |
|
|
|
49 |
|
Loss (gain) on change in fair value of Private Placement Warrants and Unvested Founder Shares |
|
1,631 |
|
|
|
(12,741 |
) |
Changes in assets and liabilities: |
|
|
|
||||
Accounts receivable, net |
|
11,875 |
|
|
|
21,699 |
|
Prepaid expenses and other assets |
|
(144 |
) |
|
|
3,602 |
|
Prepaid taxes |
|
(4,566 |
) |
|
|
5,064 |
|
Operating lease obligation |
|
(1,737 |
) |
|
|
(1,646 |
) |
Accounts payable, accrued expenses, legal contingencies and other |
|
(20,919 |
) |
|
|
61,331 |
|
Net cash provided by operating activities |
|
64,215 |
|
|
|
194,844 |
|
Investing activities: |
|
|
|
||||
Purchases of property and equipment |
|
(23,101 |
) |
|
|
(24,454 |
) |
Proceeds from sale of investment |
|
— |
|
|
|
289 |
|
Net cash used in investing activities |
|
(23,101 |
) |
|
|
(24,165 |
) |
Financing activities: |
|
|
|
||||
Repurchase of |
|
(99,954 |
) |
|
|
— |
|
Repayments of Term Loan B |
|
(3,313 |
) |
|
|
(3,313 |
) |
Taxes paid on settlement of vested share awards |
|
(452 |
) |
|
|
(1,957 |
) |
Purchase of treasury stock |
|
(5,718 |
) |
|
|
— |
|
Net cash used in financing activities |
|
(109,437 |
) |
|
|
(5,270 |
) |
Net increase in cash, cash equivalents and restricted cash |
|
(68,323 |
) |
|
|
165,409 |
|
Cash, cash equivalents and restricted cash at beginning of period |
|
340,559 |
|
|
|
188,379 |
|
Cash, cash equivalents and restricted cash at end of period |
$ |
272,236 |
|
|
$ |
353,788 |
|
|
|
|
|
||||
Cash and cash equivalents |
$ |
265,728 |
|
|
$ |
350,830 |
|
Restricted cash |
|
6,508 |
|
|
|
2,958 |
|
Cash, cash equivalents and restricted cash at end of period |
$ |
272,236 |
|
|
$ |
353,788 |
|
|
|
|
|
||||
Noncash investing and financing activities: |
|
|
|
||||
Purchases of property and equipment not yet paid |
$ |
6,105 |
|
|
$ |
4,918 |
|
Operating lease right-of-use assets obtained in exchange for operating lease liabilities |
$ |
— |
|
|
$ |
40 |
|
Supplemental disclosure of cash flow information: |
|
|
|
||||
Cash paid during the period for: |
|
|
|
||||
Interest |
$ |
(61,717 |
) |
|
$ |
(46,197 |
) |
Income taxes, net of refunds |
$ |
(3,133 |
) |
|
$ |
(2,833 |
) |
MULTIPLAN CORPORATION Calculation of EBITDA and Adjusted EBITDA (in thousands) |
|||||||
|
Three Months Ended March 31, |
||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
||||
Net income |
$ |
209 |
|
|
$ |
43,978 |
|
Adjustments: |
|
|
|
||||
Interest expense |
|
83,428 |
|
|
|
71,445 |
|
Interest income |
|
(3,239 |
) |
|
|
(12 |
) |
Provision for income taxes |
|
1,693 |
|
|
|
14,255 |
|
Depreciation |
|
18,206 |
|
|
|
16,596 |
|
Amortization of intangible assets |
|
85,127 |
|
|
|
85,154 |
|
Non-income taxes |
|
341 |
|
|
|
553 |
|
EBITDA |
$ |
185,765 |
|
|
$ |
231,969 |
|
Adjustments: |
|
|
|
||||
Other income, net(1) |
|
(115 |
) |
|
|
(890 |
) |
Integration expenses |
|
1,043 |
|
|
|
1,672 |
|
Change in fair value of Private Placement Warrants and unvested founder shares |
|
1,631 |
|
|
|
(12,741 |
) |
Transaction-related expenses |
|
1,018 |
|
|
|
2,555 |
|
Gain on extinguishment of debt |
|
(36,778 |
) |
|
|
— |
|
Gain on investments |
|
— |
|
|
|
(289 |
) |
Stock-based compensation |
|
3,695 |
|
|
|
3,130 |
|
Adjusted EBITDA |
$ |
156,259 |
|
|
$ |
225,406 |
|
(1)"Other income, 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 March 31, |
||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
||||
Net cash provided by operating activities |
$ |
64,215 |
|
|
$ |
194,844 |
|
Purchases of property and equipment |
|
(23,101 |
) |
|
|
(24,454 |
) |
Free Cash Flow |
|
41,114 |
|
|
|
170,390 |
|
Interest paid |
|
61,717 |
|
|
|
46,197 |
|
Unlevered Free Cash Flow |
$ |
102,831 |
|
|
$ |
216,587 |
|
|
|
|
|
||||
Adjusted EBITDA |
$ |
156,259 |
|
|
$ |
225,406 |
|
Adjusted Cash Conversion Ratio |
|
66 |
% |
|
|
96 |
% |
|
|
|
|
||||
Net cash used in investing activities |
$ |
(23,101 |
) |
|
$ |
(24,165 |
) |
Net cash used in financing activities |
$ |
(109,437 |
) |
|
$ |
(5,270 |
) |
___________________________________
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 (including expenses relating to the business combination), 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
View source version on businesswire.com: https://www.businesswire.com/news/home/20230504005279/en/
Investor Relations Contact
Luke
SVP, Finance & Investor Relations
MultiPlan
866-909-7427
investor@multiplan.com
Shawna Gasik
AVP, Investor Relations
MultiPlan
866-909-7427
investor@multiplan.com
Source: MultiPlan Corporation
