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Claritev Corp (CTEV)·Q1 2025 Earnings Summary

Executive Summary

  • Revenue beat vs S&P Global consensus; EPS missed. Q1 2025 revenue was $231.3M vs consensus $222.7M*, while Primary EPS was -$3.89 vs consensus -$3.09*; GAAP diluted EPS was -$4.38. Management reaffirmed full-year guidance. *
  • Operational momentum included strong Payment & Revenue Integrity growth and stabilization in core business; Adjusted EBITDA was $142.1M with a 61.4% margin.
  • Free cash flow usage reflected interest/tax timing and refinancing costs; Unlevered FCF was $13.1M with 9% cash conversion.
  • Strategic progress: Oracle OCI migration underway, rebranding to Claritev, partnerships (Lantern, Burjeel), and early international entry; pipeline and renewals strengthened visibility.

What Went Well and What Went Wrong

What Went Well

  • Payment & Revenue Integrity revenue up 9.7% YoY and 11.5% QoQ; highest quarterly revenue since Q2 2022.
  • Core business stabilization and yield improvements; savings per claim rose to $894 in Q1 2025 from $676 in Q1 2023 (+32%), revenue per claim to $41 from $35 (+20%).
  • Reaffirmed FY25 guidance and strong client renewals; CEO: “We remain resolute… and are affirming our full-year guidance.”

What Went Wrong

  • EPS missed consensus; GAAP net loss was $71.3M, driven by interest expense and refinancing costs, while revenue yield fell 5 bps QoQ and 18 bps YoY (≈$5M and $8M revenue impact).
  • Free cash flow negative (-$68.9M) amid operating cash use and elevated capex ($38.9M).
  • NSA product pressure at one large client insourcing; management expects normalization by Q3.

Financial Results

Revenue, EPS, Adjusted EBITDA vs prior periods and estimates

MetricQ1 2024Q4 2024Q1 2025Q1 2025 Consensus
Revenue ($M)234.5 232.1 231.3 222.7*
GAAP Diluted EPS ($)-33.40 n/a-4.38 -3.09*
Adjusted EBITDA ($M)146.8 141.6 142.1 n/a
Adjusted EBITDA Margin (%)62.6 n/a61.4 n/a

Values marked with * retrieved from S&P Global.

Segment Performance (Q1 2025 vs Q1 2024 and vs Q4 2024)

SegmentYoY ChangeQoQ Change
Analytics-based revenue-4.2% -2.3%
Network-based revenue+1.6% -0.8%
Payment & Revenue Integrity+9.7% +11.5%

KPIs

KPIQ1 2025Sequential Change vs Q4 2024YoY Change vs Q1 2024
Claim charges processed ($B)42.9 -7% —
Identified potential savings ($B)6.2 -2% —
Core PSAVE identified savings ($B)4.3 -2% ~flat YoY
Revenue yield change (bps)—-5 bps (≈$5M impact) -18 bps (≈$8M impact)

Guidance Changes

Q1 2025 reiterated full-year guidance; shown against initial FY25 guide (Q4 2024).

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenuesFY 2025(2)% to flat vs FY 2024 (2)% to flat vs FY 2024 Maintained
Adjusted EBITDA MarginFY 202562.5% – 63.5% 62.5% – 63.5% Maintained
Capital ExpendituresFY 2025$155M – $165M $155M – $165M Maintained
Effective Tax RateFY 202525% – 28% 25% – 28% Maintained
Free Cash FlowFY 2025$(65)M – $(75)M $(65)M – $(75)M Maintained

Reference: Subsequent Q2 update raised revenue guide to flat to +2%, widened FCF to $(20)M to $20M, and raised capex to $170M–$180M.

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Current Period (Q1 2025)Trend
Transformation & OCI migrationLaunch of multi-year program; Oracle partnership and debt refinancing; target 10–15% net cost reduction. Engineers building on OCI; 4–7x performance gains in dev; ERP go-live; reiterating 10–15% cost base reduction. Accelerating execution
Core business retention & renewalsTop large client renewed 3 years at current value; core retention metric introduced. 98% core revenue retention in Q1; top-20 client renewed $13M ACV for 5 years; progressing early renewals. Improving stability
Growth products (VDHP, D&DS, BEN Insights)Provider CompleteView launch; PlanOptics wins; expanding addressable market. VDHP as flagship; Lantern partnership; BEN Insights pipeline and channel strategy; five new logos; 179 Q1 opportunities. Building pipeline and channels
International expansionEarly strategy commentary; evaluating global applicability. MOU with Burjeel; mapping GCC go-to-market; aim for first international revenue in 2H25. Initiation underway
NSA/IDR dynamics120-day CMS IDR exception headwind; one large client decline. One client insourcing NSA; broader NSA growth elsewhere; IDR performance strong and automation planned. Mixed: client-specific pressure; process improvements
Debt & capital structure$4.56B refinancing; ~99.75% participation. Q1 operating cash use linked to refinancing fees; leverage ~8.1x net. Foundation set; cash timing impacts easing

Management Commentary

  • CEO on guidance and momentum: “We remain resolute in improving our say/do ratio and are affirming our full-year guidance.”
  • CFO on core stabilization: “Revenue came in above our internal expectations… excluding the one client, revenue was up 3.2% vs last year.”
  • CFO on yield: “Revenue yield was down 5 bps sequentially and down 18 bps vs last year, resulting impact of about $5M and $8M respectively.”
  • CEO on international: “We intend to expand Claritev’s footprint globally… expect to see real results in the second half of the year.”
  • CEO on provider push: “Complete View… helps providers optimize operations; we’re seeing 100+ pipeline leads.”

Q&A Highlights

  • Utilization and claims: Slight contraction in claim volumes but higher savings/revenue per claim; no unusual flu impact; core volume assumptions mid-single-digit up excluding one client.
  • International timeline/products: Focus on payment & revenue integrity, network optimization, advanced analytics; targeting at least $1 of international revenue by year-end as proof point.
  • Pipeline composition and revenue models: ~127% QoQ pipeline expansion; VDHP ~40% of funnel; exploring subscription/PEPM/licensing with value-sharing; largest subscription TCV deal closed.
  • NSA/IDR: One client insourcing NSA; elsewhere NSA is a growth area; CMS 120-day exception not materially impacting broader base; IDR performance and automation efforts progressing.
  • Partnerships: Lantern as channel to align care navigation with cost/quality; broker incentive program coming; Oracle/Athena marketplaces drive inbound demand.

Estimates Context

  • Q1 2025 revenue beat S&P Global consensus; EPS missed. Primary EPS Consensus Mean: -3.09394 vs actual -3.88793*. Revenue Consensus Mean: $222.68M vs actual $231.33M*. GAAP diluted EPS in press release was -$4.38, reflecting different basis vs S&P “Primary EPS.” Bold indicates beat/miss.
    • Revenue: $231.33M vs $222.68M consensus — bold beat*. *
    • EPS: -$3.89 vs -$3.09 consensus — bold miss*.*

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue beat and Adjusted EBITDA margin resilience (61.4%) signal core stabilization; Payment & Revenue Integrity strength offsets client-specific NSA headwinds.
  • EPS miss driven by interest burden and refinancing costs; watch leverage and cash interest timing—Unlevered FCF positive but levered FCF negative in Q1.
  • FY25 guide reaffirmed in Q1 (later raised in Q2); trajectory to YoY growth beginning Q3 per management, supported by renewals and pipeline.
  • Strategic catalysts: OCI migration and AI initiatives to drive product speed and operating leverage; partnerships (Oracle, Athena, Lantern) to scale distribution.
  • Monitor revenue yield trends (bps compression impacts) and mix; management is tracking rate/volume/mix with new metrics and sees improving savings/revenue per claim.
  • NSA exposure concentrated at one client; broader IDR/NSA opportunity remains, with automation a margin lever.
  • Medium-term thesis: Subscription/recurring models (VDHP/D&DS/BEN Insights) and international expansion enhance durability and growth; watch capex pacing and debt service as free cash flow improves through the year. 
Notes:
- S&P Global consensus and “Primary EPS” values denoted with *; Values retrieved from S&P Global.

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