Executive Summary

Q3 revenue grew 6.7% YoY to $245.96M and beat S&P Global consensus ($236.71M) as core service lines expanded; GAAP diluted EPS of $(4.23) missed the EPS consensus (−$3.55) as interest expense and amortization remained elevated . Revenue consensus and EPS consensus from S&P Global; see Estimates Context for details.*
Adjusted EBITDA rose 9.5% YoY to $155.13M with a 63.1% margin; management tightened FY25 margin guidance to 62.5–63.0% and raised revenue growth to +2.8–3.2% vs +0–2% prior .
Execution highlights: renewal of top 10 clients, network YoY growth ~15%, strong ACE code editing growth, first international revenue, and unlevered FCF conversion of 73% with net leverage under 8x .
Near‑term catalysts/risks: one‑time ~$5M P&C benefit repeats in Q4 but not 2026; NSA/IDR remains structurally tilted to providers (~80% provider win rate); selling shareholders priced 1.5M shares at $51.50—no proceeds to Claritev .

What Went Well and What Went Wrong

What Went Well
- Renewed top 10 clients on multi‑year terms, improving stability and visibility; “the turn has happened” and focus shifts to “The Way Up” in 2026 .
- Broad‑based growth: network revenue up nearly 15% YoY; analytics up 4.2%; payment & revenue integrity up >7%; ACE posted strong double‑digit growth; first international revenue recognized .
- Cash conversion/De‑risking: Unlevered FCF $113.2M with 73% conversion; net leverage moved back under 8x .
What Went Wrong
- GAAP loss persists (net loss $(69.8)M; EPS $(4.23)); interest expense remained heavy at $101.2M; free cash flow negative in Q3 on capex/investment timing .
- EBITDA estimate optics: S&P “EBITDA” actual tracked below consensus while company-reported Adjusted EBITDA grew; methodology differences may obscure perceived beat/miss vs street . EBITDA consensus and actual from S&P Global; see Estimates Context.*
- Structural headwind in NSA/IDR: providers win ~80% of disputes; one large customer insourced NSA earlier in 2025, creating product‑level pressure despite operational improvements .

Financial Results

Headline financials (oldest → newest)

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($USD Millions)	$231.33	$241.57	$245.96
GAAP Diluted EPS ($)	$(4.38)	$(3.81)	$(4.23)
Operating Income ($USD Millions)	$9.74	$16.58	$10.07
Adjusted EBITDA ($USD Millions)	$142.07	$154.03	$155.13
Adjusted EBITDA Margin (%)	61.4%	63.8%	63.1%
Cash from Operations ($USD Millions)	$(30.06)	$61.24	$19.86
Free Cash Flow ($USD Millions)	$(68.92)	$36.61	$(16.35)

KPIs and balance (oldest → newest)

Metric	Q1 2025	Q2 2025	Q3 2025
Claim Charges Processed ($USD Billions)	$42.9	$43.8	$45.9
Potential Medical Cost Savings Identified ($USD Billions)	$6.2	$6.3	$6.1
Unlevered Free Cash Flow ($USD Millions)	$13.08	$72.12	$113.20
Adjusted Cash Conversion Ratio (%)	9%	47%	73%
Cash & Equivalents (period-end, $USD Millions)	$23.13	$56.39	$39.15

Segment snapshot (Q3 2025 YoY)

Service Line / Product	YoY Growth
Network-based services	~15%
Analytics-based services	4.2%
Payment & Revenue Integrity	>7%
ACE (advanced code editing)	Strong double‑digit growth

Estimate comparison (S&P Global) vs actuals

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue Consensus ($USD Millions)	$222.68*	$231.06*	$236.71*
Revenue Actual ($USD Millions)	$231.33	$241.57	$245.96
Surprise	Beat	Beat	Beat
Primary EPS Consensus (USD)	$(3.09)*	$(3.83)*	$(3.55)*
GAAP Diluted EPS Actual (USD)	$(4.38)	$(3.81)	$(4.23)
Surprise	Miss	Inline/Beat	Miss
EBITDA Consensus ($USD Millions)	$139.10*	$142.91*	$148.09*
Company Adjusted EBITDA ($USD Millions)	$142.07	$154.03	$155.13

Note: EBITDA definitions differ between S&P and company non‑GAAP; comparison shown for context only. Values with asterisks are retrieved from S&P Global.*

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue Growth vs FY24	FY 2025	Flat to +2%	+2.8% to +3.2%	Raised
Adjusted EBITDA Margin	FY 2025	62.5%–63.5%	62.5%–63.0%	Narrowed (lower high end)
Capital Expenditures	FY 2025	$170–$180M	$165–$175M	Lowered
Effective Tax Rate	FY 2025	25%–28%	25%–28%	Maintained
Free Cash Flow	FY 2025	$(20)M to $20M	$(20)M to $20M	Maintained

Management also indicated Q4 implied revenue growth of ~2–6% and EBITDA up ~3–9% YoY on a quarterly basis .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 ’25)	Previous Mentions (Q2 ’25)	Current Period (Q3 ’25)	Trend
Client renewals/retention	Renewed top 20 client; largest client renewed; NRR ~98.6%	Renewed top 5 and top 20 clients (5‑yr)	Top 10 clients renewed in 2025; multi‑year visibility	Improving
AI/Technology & OCI migration	OCI migration underway; 4–7x dev perf gains	OCI showing 13–17% response/time improvements	Ongoing AI initiatives; ACE growth; partnerships with Oracle	Improving
International expansion	MENA partnership announced; targeting $1 of 2025 revenue	Burjeel/ACE deployment path	First international revenue recognized; CEO travel in MENA	Improving
Product momentum (ACE, BEN Insights, VDHP)	Pipeline up 127% QoQ; BDHP/Ben Insights traction	Record BEN Insights enterprise deal; VDHP pipeline ~40%	ACE double‑digit growth; VDHP broker push; Oracle HCM pilots	Improving
NSA/IDR and regulatory	NSA headwinds at one client; 120‑day period not material	Noted insourcing at one large client	Providers win ~80% disputes; unit cost per IDR down ~70% YoY	Mixed
Non‑recurring revenue	—	~$5M P&C 1x in Q2; ~$15–18M FY25 total	~$5M again in Q3; similar in Q4; not in 2026	Transitory
Leverage/Liquidity	Net leverage 8.1x; cash $23.1M	Cash $56.4M; revolver activity; re‑indexed to Russell 2000	Under 8x net leverage; UFCF conversion 73%	Improving

Management Commentary

“We declared 2025 would be the Year of the Turn… we have made the Turn and are now focused on… The Way Up.” – Travis Dalton, CEO .
“We renewed our top ten clients during the current year, with our largest clients agreeing to multi‑year renewals.” – Travis Dalton .
“Similar to last quarter, a new commercial arrangement in the P&C business resulted in approximately $5 million of nonrecurring revenue… We expect a similar benefit in Q4 that will not repeat in 2026.” – Doug Garis, CFO .
“Unlevered free cash flow of $113M and adjusted cash conversion of 73% are the strongest we posted in nine quarters… moved back under 8x net leverage.” – Doug Garis .

Q&A Highlights

FY25 guide shape: Q4 implies +2–6% revenue and +3–9% EBITDA YoY; management balancing performance with selective investment pull‑forwards .
2026 setup: ~$60M of 2025 ACV expected; ~60–65% to convert into 2026 revenue; inflation/pricing dynamics remain a variable .
NSA/IDR economics: providers still win ~80% of disputes; Claritev reduced unit cost ~70% YoY; model captures a share of savings on wins; revenue reported in analytics .
Renewals: terms broadly stable; viewed as a tailwind via whitespace expansion with existing clients .
Partnerships/channels: Echo payments pipeline building; Oracle HCM pilot underway; Lantern partnership revenue early but strategic for navigation/quality .

Estimates Context

S&P Global consensus: Q3 revenue $236.71M vs actual $245.96M (beat); Primary EPS −$3.55 vs GAAP EPS −$4.23 (miss). Q1–Q2 also posted revenue beats vs consensus; EPS was mixed across quarters (see table above). Values retrieved from S&P Global.*
S&P Global EBITDA consensus for Q3 was $148.09M vs company Adjusted EBITDA of $155.13M; differing definitions (S&P vs company non‑GAAP) limit direct comparability . EBITDA consensus value retrieved from S&P Global.*
Target price consensus remained ~$85 with two estimates during 1H–Q3 2025. Values retrieved from S&P Global.*

Guidance Changes – Why

Revenue raised on broad‑based core growth (network, PRI, analytics), whitespace wins, and pipeline conversion; non‑recurring P&C boosts FY25 but will not persist in 2026 .
Margin band narrowed as management signals willingness to pull forward OpEx/capex to accelerate growth amid transformation while holding 62.5–63.0% on FY25 .
Capex trimmed to $165–175M as OCI migration and transformation projects advance on schedule .

Other Q3‑period Press Releases

Selling stockholders launched and then priced a secondary offering of 1.5M Class A shares at $51.50; Claritev did not sell shares and will receive no proceeds .

Key Takeaways for Investors

Core momentum is real: two consecutive beat‑and‑raise quarters, multi‑year renewals of top 10 clients, and improving cash conversion support multiple expansion if sustained .
Watch the quality of growth: non‑recurring P&C revenue inflates FY25 but rolls off in 2026; underlying network/PRI/analytics trends and ACV conversion pace matter more .
Profitability vs reinvestment: narrowed margin guide suggests continued spend to cement growth—monitor OCI migration milestones, AI/ACE deployment, and opex discipline .
NSA/IDR structural risk persists (provider‑friendly outcomes), but Claritev is driving unit cost down and leveraging broader platform (analytics + PRI) to offset .
Balance sheet improving (sub‑8x net leverage); sustained UCF conversion and delevering remain medium‑term equity catalysts .
2026 setup constructive: ~$60M ACV signed in 2025 with majority converting next year; whitespace within renewed top accounts is an embedded growth lever .

Footnote: Asterisk‑marked values are retrieved from S&P Global.

Claritev Corp (CTEV)·Q3 2025 Earnings Summary