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MultiPlan Corp (MPLN)·Q1 2024 Earnings Summary

Executive Summary

  • Q1 2024 revenue was $234.5M and Adjusted EBITDA $146.8M; both landed just below the low end of company guidance due to a major clearinghouse cyber outage that delayed claims flow, with an estimated $5–6M revenue impact. The quarter included a non-cash impairment charge of $519.1M driving GAAP net loss of $539.7M. Management reaffirmed FY 2024 guidance and introduced Q2 guidance.
  • Company guidance maintained: FY 2024 revenues $1,000–$1,030M and Adjusted EBITDA $630–$650M; Q2 2024 guidance set at revenues $235–$250M and Adjusted EBITDA $145–$160M.
  • Operationally, MPLN identified $5.7B in potential medical cost savings on $41.5B of claims processed; sequential softness reflected outage timing and lower revenue yield (-4 bps overall; -10 bps PSAV), which reduced revenue by ~$4.4M.
  • Capital allocation: repurchased/retired $24.4M face value of debt (including $21.1M of 6% Senior Convertible PIK Notes) and bought $10.4M of stock; ended Q1 with $58.7M in unrestricted cash.
  • Street estimates via S&P Global were unavailable for MPLN; comparison vs consensus cannot be shown. Use company guidance and prior quarters for context pending data resolution. (S&P Global consensus unavailable)

What Went Well and What Went Wrong

What Went Well

  • Maintained FY 2024 guidance and signaled sequential improvement in Q2 despite the clearinghouse disruption; management expects volumes to normalize as timing effects abate.
  • Product and commercial momentum: closed first PlanOptix sale; 73 closed opportunities (+36% YoY); four new HST logos for value-driven health plans; launched AutoPay in supplemental carrier products.
  • Strong client satisfaction and pipeline health: Net Promoter Score of 73 (top quartile benchmark), expanded senior sales team, and added Chief Operating Officer to sharpen operating cadence.

What Went Wrong

  • Claims clearinghouse cyber outage reduced revenue by ~$5–6M and contributed to sequential volume declines (particularly in physician claims); revenue yield fell ~10 bps in core PSAV, lowering revenue by ~$4.4M.
  • GAAP optics: non-cash impairment ($516.4M goodwill; $2.7M indefinite-lived intangibles) drove net loss of $539.7M and diluted EPS of -$0.83.
  • Free cash flow fell to $19.2M versus $41.1M in Q1 2023; cash from operations decreased to $49.7M from $64.2M YoY.

Financial Results

MetricQ3 2023Q4 2023Q1 2024
Revenue ($USD Millions)$242.8 $244.1 $234.5
Net Income ($USD Millions)$(24.1) $(31.4) $(539.7)
Diluted EPS ($USD)$(0.04) N/A$(0.83)
Adjusted EBITDA ($USD Millions)$152.3 $156.8 $146.8
Adjusted EBITDA Margin (%)62.7% 64.2% 62.6%
Cash from Operations ($USD Millions)$72.1 $27.7 $49.7
Free Cash Flow ($USD Millions)$49.7 $(3.6) (levered FCF) $19.2

Segment/service line performance (Q1 2024):

Service LineSequential Rev Change vs Q4 2023YoY Rev Change vs Q1 2023
Network-based-11.6% -19.3%
Analytics-based-2.1% +5.0%
Payment & Revenue Integrity-0.6% +4.8%

Key operating KPIs:

KPIQ3 2023Q4 2023Q1 2024
Billed Charges Processed ($USD Billions)$42.5 $43.4 $41.5
Identified Potential Savings ($USD Billions)$5.8 $5.9 $5.7
Revenue Yield – Overall (Seq change, bps)-1 -7 -4
Revenue Yield – PSAV (Seq change, bps)-1 -15 -10
Revenue impact from yield shift ($USD Millions)N/AN/A~$4.4

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenues ($USD Millions)FY 2024$1,000–$1,030 $1,000–$1,030 Maintained
Adjusted EBITDA ($USD Millions)FY 2024$630–$650 $630–$650 Maintained
Interest Expense ($USD Millions)FY 2024$320–$330 $320–$330 Maintained
Cash Flow from Operations ($USD Millions)FY 2024$170–$200 $170–$200 Maintained
Capital Expenditures ($USD Millions)FY 2024$120–$130 $120–$130 Maintained
Depreciation ($USD Millions)FY 2024$80–$90 $80–$90 Maintained
Amortization of Intangibles ($USD Millions)FY 2024$345–$350 $345–$350 Maintained
Effective Tax Rate (%)FY 202425–28% 25–28% Maintained
Revenues ($USD Millions)Q2 2024N/A$235–$250 New
Adjusted EBITDA ($USD Millions)Q2 2024N/A$145–$160 New
Revenues ($USD Millions)Q1 2024$235–$250 N/A (actual reported)N/A
Adjusted EBITDA ($USD Millions)Q1 2024$150–$160 N/A (actual reported)N/A

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2023)Previous Mentions (Q4 2023)Current Period (Q1 2024)Trend
AI/technology initiatives (Pro Pricer, ML)Launched Pro Pricer (ML-based routing), onboarding; set 2024 enhancements plan Pro Pricer enhancements, bundling with Balance Bill Protection; operational savings expected Progressing on product roadmap; sales momentum noted Advancing features and bundling
NSA regulatory execution (QPA, IDR)Rules-based processing and NSA Insights portal; monitoring QPA rule changes Building NSA leadership; rules-based processing and portal; preparing for state surprise bill needs Positive demand outlook; opportunity to automate and drive operating leverage Growing complexity and opportunity
Clearinghouse cyber outage impactN/ANoted as emerging industry issue in Q1 guidance context ~$5–6M revenue impact; claims timing; recovery signs late April Transitory timing headwind
HST value-driven health plansBalance Bill Protection ramp; doubled lives by Jan 1, 2024 Expect ~$6M 2024 revenue contribution from Balance Bill Protection Added 4 new HST logos; continued go-to-market via HST Building revenue base
Data & Decision Science (PlanOptix)Launched PlanOptix Search and Intelligence; building pipeline First PlanOptix intelligence version live; strong pipeline; first sale expected Closed first PlanOptix sale; pipeline gaining momentum Early commercialization
Capital allocation/deleveragingRepurchased $46.1M notes; reduced debt face value by $333M over 4 quarters Reduced debt; ended 2023 with $72M cash; prioritize organic investment and debt reduction Retired $24.4M face value debt; $10.4M share repurchases; $58.7M cash Continued deleveraging focus

Management Commentary

  • CEO Travis Dalton on transformation and execution: “We recently added our Chief Operating Officer, Jerry Hogge, who is focused on enhancing our operating and product development capabilities and intensifying our sales engagement… go to market more efficiently and maximize our potential.”
  • On outage impact and guidance: “Our first quarter was affected by a cybersecurity incident… Excluding an estimated $5 to 6 million revenue impact… results would have landed within our guidance ranges… we are affirming our FY 2024 guidance.”
  • CFO Jim Head on revenue yield: “Our revenue yield fell about 10 basis points in the quarter… had an impact of about $4.4 million to our revenues… most [idiosyncratic shifts] are temporary and likely to abate; customer credit expected to run off in Q2.”
  • On impairment: “Recorded noncash impairment charges of $516.4M for goodwill and $2.7M for intangibles… driven by stock price and implied cost of capital; not changes in operating outlook.”

Q&A Highlights

  • Clearinghouse outage cadence and sizing: Management sized ~$5–6M Q1 revenue impact; noted broad payer impact, more acute in physician claims; normalization signs in late April but not a “complete snapback” in 6–8 weeks.
  • NSA demand and automation: Management views NSA-related services as a durable opportunity with potential for process automation and operating leverage.
  • Go-to-market despite legal noise: No change to GTM strategy; will continue to “aggressively attack the market” across core and adjacent segments (TPAs, consultants, brokers).
  • Capital allocation: Emphasis on debt retirement; flexible and opportunistic posture given bond pricing; share repurchases deprioritized for remainder of year.
  • Utilization and guidance reaffirmation: Facilities volumes stronger than physician; FY guidance reaffirmed but back-half weighted given Q1 shortfall and Q2 visibility constraints.

Estimates Context

  • S&P Global Wall Street consensus estimates for MPLN were unavailable via our feed, so we cannot provide exact consensus EPS or revenue comparisons for Q1 2024 or FY 2024. Pending data resolution, use company guidance and prior-period trends for context. (S&P Global consensus unavailable)
  • Implications: With Q1 slightly below company guidance due to transitory outage and revenue yield headwinds, Street models may temper Q2 near-term expectations, while FY assumptions align with maintained guidance ranges.

Key Takeaways for Investors

  • Transitory headwind: The clearinghouse outage is a timing issue; volumes showed signs of normalization late April. Expect sequential improvement in Q2 and reaffirmed FY guidance suggests back-half acceleration.
  • Quality of revenue: Yield compression (-10 bps PSAV) reduced Q1 revenue by ~$4.4M but is largely idiosyncratic and expected to abate with customer credits rolling off.
  • GAAP optics vs cash: Impairment-driven GAAP loss masks stable OCF ($49.7M) and ongoing deleveraging ($24.4M face value debt reduced) alongside continued product investments.
  • Product-led growth: Pro Pricer (ML), Balance Bill Protection (HST), NSA rules engine, and PlanOptix are gaining commercial traction; expect incremental contributions through 2024–2025.
  • Segment mix: Network-based softness (outage, credit, attrition) offset by growth in analytics and Payment & Revenue Integrity; watch for normalization and PSAV yield recovery in Q2.
  • Capital priorities: Organic investment and debt reduction prioritized over M&A and buybacks; improved leverage as platform scales remains core to thesis.
  • Trading lens: Near-term prints may be choppy on claims timing and yield; set expectations against company guidance bands and monitor April/May volume normalization and Q2 yield cadence.