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Claritev Corp (CTEV)·Q2 2025 Earnings Summary

Executive Summary

  • Beat-and-raise quarter: revenue $241.6M (+3.5% y/y; +4.4% q/q) vs S&P consensus $231.1M, EPS ($3.81) vs ($3.83) consensus, and Adjusted EBITDA $154.0M vs $142.9M consensus; full-year revenue guidance raised to flat to +2% and free cash flow range improved to ($20)M to $20M * *.
  • Operating momentum: Adjusted EBITDA margin 63.8% (Q1: 61.4%); payment and revenue integrity strength and ~$5M nonrecurring P&C revenue aided results; pipeline up 77% since January with mid‑double-digit sequential growth .
  • Strategic wins: largest-ever Ben Insights subscription (10-year, $81M minimum TCV with ~$20M upside), nine new logos, top-5 client renewed for 5 years; international entry via MENA partnership; athena Marketplace integration .
  • Catalysts: “One Big Beautiful Bill Act” reinstatement of IRC §174 yields $60–$90M 2025 free cash flow benefit and ~$30M annually thereafter; Russell 2000 re-entry improves visibility; guidance conservatism provides room to outperform .

What Went Well and What Went Wrong

What Went Well

  • Revenue, EPS, and Adjusted EBITDA all beat consensus; revenue $241.6M vs $231.1M consensus; EPS ($3.81) vs ($3.83); Adj. EBITDA $154.0M vs $142.9M; full-year revenue and FCF guidance raised, margins maintained *.
  • Payment & Revenue Integrity strength and $5M nonrecurring P&C revenue; analytics service line grew sequentially; ACE (AI code editing) posted strong double-digit growth .
  • Major commercial wins: 10-year Ben Insights enterprise deal ($81M minimum TCV, ~$20M upside), top-5 and top-20 client renewals (5-year terms), nine new logos across segments; CompleteView integrated into athena Marketplace .

What Went Wrong

  • Still loss-making: GAAP net loss ($62.6M); interest expense elevated ($99.7M); year-to-date levered FCF usage in H1 before Q2 inflection .
  • Ongoing headwinds from client insourcing of NSA at one large customer and mix pressures; guidance framed conservatively, implying limited sequential revenue acceleration despite momentum .
  • Transformation/investment costs (talent, cloud migration, pricing packaging build-out) keep OpEx elevated near term; Adjusted Cash Conversion ratio down ytd (29%) despite better Q2 (47%) .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)$233.5 $231.3 $241.6
Diluted EPS ($USD)($35.78) ($4.38) ($3.81)
Adjusted EBITDA ($USD Millions)$146.7 $142.1 $154.0
Adjusted EBITDA Margin (%)62.8% 61.4% 63.8%

KPIs and Cash Flow

KPI / Cash MetricQ2 2024Q1 2025Q2 2025
Claims Processed ($USD Billions)N/A$42.9 $43.8
Potential Savings Identified ($USD Billions)N/A$6.2 $6.3
Cash from Operations ($USD Millions)$18.5 ($30.1) $61.2
Free Cash Flow ($USD Millions)($7.0) ($68.9) $36.6
Unlevered Free Cash Flow ($USD Millions)$90.7 $13.1 $72.1
Adjusted Cash Conversion Ratio (%)62% 9% 47%
Cash & Equivalents ($USD Millions)N/A$23.1 $56.4

Estimate Comparison (S&P Global)

MetricConsensus (Q2 2025)Actual (Q2 2025)Beat/Miss
Revenue ($USD Millions)$231.1*$241.6 Beat
Primary EPS ($USD)($3.83)*($3.81) Beat
EBITDA ($USD Millions)$142.9*$128.3 (EBITDA) / $154.0 (Adj. EBITDA) Mixed vs EBITDA; Beat vs Adj. EBITDA

Values marked with an asterisk are retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenuesFY 2025(2)% to flat vs FY 2024 Flat to +2% vs FY 2024 Raised
Adjusted EBITDA MarginFY 202562.5% to 63.5% 62.5% to 63.5% Maintained
Capital ExpendituresFY 2025$155M to $165M $170M to $180M Raised
Effective Tax RateFY 202525% to 28% 25% to 28% Maintained
Free Cash FlowFY 2025($75)M to ($65)M ($20)M to $20M Raised (improved)

Earnings Call Themes & Trends

TopicQ4 2024 (Prev-2)Q1 2025 (Prev-1)Q2 2025 (Current)Trend
AI/Technology initiativesAnnounced Oracle OCI migration, hiring Chief AI Officer; vision to use AI across products OCI dev environment showing 4–7x gains; ERP go‑live; accelerating product roadmaps OCI migration on schedule; 12 predictive AI initiatives; CHAI membership; ACE growth; CompleteView in athena Marketplace Strengthening execution
Core product performanceNSA/PSAVE headwinds but stabilizing; 97% net retention target; rule-of-70 framework Payment & Revenue Integrity “on fire”; highest since Q2’22; core volumes stable; savings per claim up Core grew y/y & q/q; nonrecurring P&C revenue ~$5M; analytics sequential growth Improving
Pipeline & bookings$34M TCV subscription; 12 enterprise opportunities Pipeline +127% q/q; 179 opportunities closed; 5 new logos Pipeline +77% since Jan; $130M+ new pipeline; VDHP & D&DS ~$90M of pipeline; record Ben Insights deal Expanding
InternationalMapping MENA strategy; MoU foundations Burjeel partnership thesis and initial roadmap First MENA contract via Burjeel/ClaimsCare RCM; OCI supports scale Entering new markets
Regulatory/MacroDebt refinancing (99.75% participation); NSA exception headwind noted NSA insourcing at one client; core retention ~98% assumption HR1 (One Big Beautiful Bill) boosts FCF $60–$90M in 2025 and ~$30M annually; Medicaid monitoring Positive FCF tailwind
PartnershipsJ2; Oracle Marketplace; pet wellness upcoming Lantern channel announced; Echo payments; Oracle/Athena channels Lantern early; Echo wins; Oracle HCM Marketplace with BEN Insights (7 active efforts) Building channel scale

Management Commentary

  • “Claritev is truly delivering in the year of The Turn… signing record-sized enterprise subscription deals… our full-year financial guidance is moving in the right direction.” — Travis Dalton, CEO .
  • “Adjusted EBITDA margins were 63.8% in Q2 and 62.6% year to date… core offerings allow us to confidently invest… nonrecurring ~$5M P&C revenue this quarter.” — Doug Garis, CFO .
  • “OCI has already shown 13%–17% improvement in client response time… we are on schedule for completion before year end.” — CEO .
  • “HR1 reinstatement of IRC §174 will reduce our 2025 cash tax burden substantially—$60–$90M FCF benefit this year and ~$30M per year going forward.” — CFO .

Q&A Highlights

  • Revenue/EBITDA outperformance drivers: improved savings and revenue per claim; internal optimization in analytics and payment integrity; ~$5M nonrecurring P&C revenue; disciplined cost control (headcount down 3% y/y) .
  • Guidance conservatism: first “beat and raise”; internally planning near top-end of the range to maintain high “say/do” ratio .
  • IDR performance: CMS ranks Claritev as top performer with >22% win rate; outcomes up ~30% and gross receipts up ~25%; automation and AI targeted for IDR .
  • Partnerships: Lantern early ramp; Echo competitive wins; focus on channel scale to avoid heavy sales hiring .
  • 2026 framework: mid-single-digit growth from core plus conversion of ACV wins; cautious until 1–2 more quarters of core stabilization; packaging/pricing initiatives underway .

Estimates Context

  • Q2 2025 actuals vs S&P Global consensus: revenue $241.6M beat ($231.1M*), EPS ($3.81) beat (($3.83)), Adjusted EBITDA $154.0M above EBITDA consensus ($142.9M); # of revenue/EPS estimates: 2* *.
  • FY 2025 consensus revenue $959.4M* and EPS ($16.08)* embed modest growth and rebuilding; target price consensus $85* (2 estimates)* [functions.GetEstimates]*.

Values marked with an asterisk are retrieved from S&P Global.

Key Takeaways for Investors

  • Beat-and-raise print with stronger execution in payment integrity and analytics; Adj. EBITDA margin tracking midpoint of 62.5–63.5% guidance .
  • Structural FCF tailwind from HR1 materially de-risks liquidity and accelerates deleveraging; FCF range improved to ($20)M–$20M for FY25 .
  • Commercial traction: largest-ever Ben Insights subscription (~$81M TCV), multi-year top-5/top-20 renewals, nine new logos; 2026 revenue visibility improving via ACV conversion .
  • International/MENA entry and channel partnerships (Oracle/Athena/Lantern/Echo) expand TAM and distribution efficiency—key for medium-term recurring revenue mix shift .
  • Watch near-term: NSA insourcing at one client, nonrecurring P&C contributions (~$15M in 2025) cadence, and transformation OpEx; sequential top-line growth likely but guided conservatively .
  • Trading lens: narrative pivot to FCF inflection, margins resilience, and pipeline momentum; index re-entry and debt fair value recovery add technical support .
  • Medium-term thesis: rule-of-70 focus (growth + margin), recurring subscription models, and AI-enabled productivity underpin sustainable growth and deleveraging .