Hello all, and welcome to today's Claritev Corporation Fourth Quarter 2024 Earnings Call. My name is Drew, and I will be the operator on today's call. After today's prepared remarks, we will have a Q&A session. [Operator Instructions] I would now like to hand the call over to Shawna Gasik, Assistant Vice President, Investor Relations. Thank you. Please go ahead.

Thank you, Drew. Good morning, and welcome to Claritev's fourth quarter 2024 earnings call. Joining me today is Travis Dalton, Chief Executive Officer; and Doug Garis, Chief Financial Officer. The call is being webcast and can be accessed through the Investor Relations section of our website at Claritev.com. During the call, we will refer to the supplemental slide deck that is available on the Investor Relations portion of our website, along with the fourth quarter 2024 earnings press release issued earlier this morning. Before we begin, a couple of reminders. Our remarks and responses to questions today may include forward-looking statements. These forward-looking statements represent management's beliefs and expectations only as of the date of this call. Actual results may differ materially from these forward-looking statements due to a number of risks. A summary of these risks can be found on the second page of the supplemental slide deck and a more complete description on our annual report on Form 10-K and other documents we file with the SEC. We will also be referring to several non-GAAP measures, which we believe provide investors with a more complete understanding of Claritev's underlying operating results. An explanation of these non-GAAP measures and reconciliations to their most comparable GAAP measures can be found in the earnings press release and in the supplemental slide deck. With that, I would now like to turn the call over to Travis. Travis?

Thank you, Shawna. Good morning to all of you on the call. Welcome to our first call as Claritev. I've told the team repeatedly that we would not chase a rebrand as a shiny lure. We needed to earn the right to brand as a health technology company. I believe we've done just that, and we will explain why today. I'm nearing my first year anniversary with the company, and it's been exciting and eventful. I came here believing we had great clients, products that serve healthcare, incredible associates and deep core values of character and integrity. I was right. I also believe we could transform the company, building on those core assets to better serve our long-term clients and create new innovative products that serve a broader set of constituents across the healthcare continuum. I've never been more excited or committed in my career. We have an incredible opportunity here to serve the mutual interest of affordability, transparency for all and quality care across a broad set of the continuum. I'm gratified and humbled by the talented and experienced leadership team that we have assembled here in the way the company has rallied around Claritev and our collective 2030 vision. I'm also very pleased by our progress, which is marked by real milestones. I'm even more excited and optimistic for what's to come. To set the context for my optimism about Claritev's future, I will begin by sharing our view of the state of healthcare and how Claritev's vision and mission address what we believe are some of the most important issues confronting healthcare. I will then talk about specific actions we have taken and successes we have achieved. We have been busy. We are operating with urgency, and we are getting things done. I will then summarize our…

Thank you, Travis, and good morning, everybody. It has been a rather quick onboarding process for me here at Claritev. I'm excited to see our new vision take shape, and I'm happy to share the pace of progress has picked up notably since we last reported. I wanted to start off my remarks with commentary on the pivotal transformation program we announced yesterday. It is a culmination of the foundation year that Travis spoke to and defines our multiyear initiative to modernize operations, deliver meaningful cost efficiencies and position the company for future growth as part of our Vision 2030 plan. We briefly hinted at this plan on our last earnings call, and I'm happy to outline the three key components of the transformation program. First, digital transformation and technology enablement. We plan to leverage Oracle Cloud Infrastructure, or OCI, to modernize our technology platform and applications with modern and advanced tooling, which will allow us to take full advantage of AI and will enable us to deliver our products to market much faster and with significant operating leverage and cost efficiencies. Second, business realignment. We are refreshing our go-to-market strategy and updating our commercial agreements to optimize market positioning. We are also improving pricing and packaging and enhancing deal management. This realignment will also bring a general manager leadership focus across our lines of business. This focus will help our agility in decision-making and provide better discipline with respect to capital allocation priorities as we seek to profitably grow. Third, business process optimization. We are streamlining internal processes across the enterprise using advanced technologies. We are deploying scaled shared services by leveraging modern enterprise resource planning application and global best practices for automation where appropriate. We will improve operational speed, ensuring disciplined fixed cost leverage to support our long-term…

Thanks, Doug. As we move into the future as Claritev, we are proud of the heritage of character and integrity built over the last 45 years as MultiPlan, and we will carry that forward. We have operated with clarity, alignment and focus as a company, and our new name starts to embody that. Like the aperture featured in our new logo, our new branding symbolizes our way forward, opening the aperture on affordability, transparency and quality, and facilitating the mutual interest in improving healthcare across payers, providers, employers and patients to deliver optimal health plan performance across the industry. We will build on our deep industry expertise to more thoroughly serve the healthcare ecosystem, and we will invest even more in our clients and their needs. We exist to serve them. Operator, would you kindly open the call for questions for Doug and me? Thanks.

Thank you. [Operator Instructions] Our first question today comes from Joshua Raskin from Nephron Research. Your line is now open. Please go ahead.

Hi, thanks. Good morning. I wanted to follow up on a couple of comments that you made. I think, Travis, I heard you say you renewed one of your largest clients at the current value or sort of the same value for the next three years. Is that the same economics you're earning on that specific contract? And then, that 97% core retention, is that a net number that includes some core growth, or is that just sort of a count of clients that you renewed?

Yeah. As I said on the call, we're very happy with that. We were able to get a large renewal done with one of our largest clients inside the quarter -- inside the year. We're also, I would say, much more actively engaged with all of our clients, including the one that's been declining over time. We actually think that we can add more value for them. And so, we continue to work closely with them. I'll let Doug comment on the 97% as we go forward.

Yeah. Hi, Josh, and good morning. Thanks for the question. So, the 97% is a net number. And when you think about our total contract base, we have -- with the recent renewal, our top several customers are about half of our revenue. And I would say the weighted average renewal for our top customer base with the renewal is approximately two years. And that's why -- one of the reasons why we feel like a revenue retention metric is much more helpful, but that 97% number is a net number.

Okay. That's helpful. And then, can you speak to the underlying volume you're seeing with the commercial health plans, maybe even into 2025? Maybe remind us which areas of claims are most valuable to you or ones where you can create the most savings opportunity? And I'm assuming a strong flu season doesn't really present a lot of savings opportunities.

Yeah. So, in our model for 2025, we did model no material mix changes versus 2024, but modest growth assumptions across all areas. And so, the approach we took this year in our commercial health plan was to look at kind of the entire environment and model modest growth against our claims volume. But I don't think we've materially addressed or changed our mix assumptions year-over-year from '25 to '24.

Okay. All right. We can follow-up. Thank you.

Our next question today comes from Daniel Grosslight from Citigroup. Your line is now open. Please proceed.

Hi. Thanks for taking the question. I was curious if you could provide revenue growth and net revenue retention stats in 2025, excluding the large client attrition? And then, as we think about this turn and going into '26, do you think you'll be able to accelerate overall revenue growth back up to kind of a mid-single-digit, even getting up to high-single-digit in '26, or is it going to take longer to see that growth really come through? Thank you.

Yeah. Thanks, Daniel. So, on the first point, if you strip out the impact of the one large client, we're expecting our business to grow roughly mid-single-digits. And that pace of growth is accentuated by some of the ACV or new bookings like recurring revenue businesses we have within our growth areas. We actually expect bookings growth roughly around 20% in our HST and D&DS business and about half of that to convert to revenue. And our comments around the sequential improvement of revenues and EBITDA, we would expect that to roughly continue into 2026. We were very cautious and tempered about providing guidance beyond '25 with the exception of being very optimistic about our pipeline, especially as some of our new products get to market and we learn more. But part of the reason why we provided the Rule of 70 is we're also going to focus on margin and profitable growth as we go forward and we modernize our tech. And so, I think it's fair to say that the target for us is to get to mid- to high single-digit growth in our long-term outlook in Vision 2030, but the first objective is to get the cash flow of the business pumping to that Rule of 70, so we can use excess cash to pay down debt and to continue to invest in the business.

Yeah. And as we think about 2026, understanding you're not providing guidance for '26, but 2023 was a big year for contract renewals. You mentioned that most renewals are kind of two years, maybe going out to three years. So, that would put '26 as potentially another big year for renewals. I was just hoping you can provide a little more detail on what we should expect in terms of renewals, pricing in 2026 as we potentially head for another big renewal year.

Yeah. Maybe I'll start off and Travis, if you have any comments. So, the recent renewal was a pretty big one for us and extends us three years, which is a big win at equal value. The next two that we have coming up are coming up within, call it, the next 12 to 24 months, where we've already started conversations on the early renewal front. We're actually trying to demonstrate and prove out the value of increasing our relationship. And so, part of the -- some of the things that we're working on are pricing and packaging. And so, most of our large clients buy most of our stuff, and we think that there's immense value in packaging our products to share more value with our customers for more volume growth. But the next two big contracts are coming due within, I would say, the next 12 to 24 months, but the weighted average renewal is roughly two years on our largest clients, which does give us some confidence and security around the core business and the cash flow generating abilities of our core business while we focus on our growth areas.

Yes. And I would just add, this is Travis, we're engaging earlier, as Doug said, in those renewal conversations. I think in some cases, we're seeking to look at or potentially change the business model where it makes sense. But even to the extent we don't, we're looking for multiyear renewals, which allow for predictability, both for us and for our clients. I'm also pretty excited about -- we had a $34 million booking in the end of last year on a five-year term. And so, we now have 12 opportunities behind that, that are, I'd say, subscription-based type of revenue models that will give us a much more predictability in the business, a recurring revenue basis that we can count and plan against. And I think that we can really in that kind of mid-health plan market, use that model in a really valuable way. And those are longer terms, you can rely on that. You have predictability of your revenue. It's a basis you can work and plan from in capital allocation against. And so, I see some of the nature of the business changing over time, but we're confident in our renewal activity.

Got it. Thank you.

[Operator Instructions] Our next question comes from Jessica Tassan from Piper Sandler. Your line is now open. Please go ahead.

Hi, guys. Thanks for the question, and congratulations on the rebranding. I wanted to start with just on the top three customer renewal, can you maybe qualitatively describe like what was the value proposition and the key reasons this customer renewed? We know you've seen some business loss to internal operations at payers, but not every payer necessarily has the capacity to bring their MultiPlan contract in-house. Just kind of what sealed the deal on the three-year term and the stable economics, if you could help us there?

Yeah. I'll start, and then Doug can jump in if he wants to. Yeah, I think we -- it's a good relationship. It's a close partnership. I think we continue to drive real savings yield for them and value. I think that we've also leaned in, particularly as it relates to NSA. So, we continue to focus on the NSA business, and we're very supportive of NSA and transparency for the industry. And that's been an important thing for us. We've automated some of our processes internally as well as it relates to that business. So, our backlog is coming down, and we're operating with more efficiency. But really, that was a testament to the strength of the core business across our analytics network and NSA payment and integrity business. And it's a continuation of what's been a great relationship and I think mutually beneficial, and we plan to continue to do that.

Yeah. Good morning, Jessica. Thanks for the question. I mean I would add, too, as we look at approaching some of our larger and more historic customers in a more strategic lens, we also have new stuff to sell them or stuff that they haven't bought before. And I think part of the white space for us going forward is including some of our newer products in the discussion. So, we mentioned PlanOptix, risk analytics, payer advisory services that we provide through our data and decision science business. These, we think, are incredible products that will yield immense value for our existing customer base. Part of the emphasis on the rebranding, the relaunch and the investment in our go-to-market is to more deeply penetrate our existing and core markets because they're pretty substantial in size, right? Our core markets are an addressable market volume are roughly, call it, $13 billion to $15 billion. And so, there is a lot of white space there left. And so, the conversations we're having with our large and strategic customers are here's how we can continue to add value so that you guys can focus on your OpEx, your MedEx and affordability because you have large P&Ls to manage as well.

That's really helpful. Thank you. Just to clarify, does that mean that you guys are providing a more comprehensive product suite at the same economics? And then, just secondarily, can you remind us how does the core out-of-network claims repricing product interact with the No Surprises Act, both in your experience and over time? As payers converge on TPA schedules, kind of does the savings opportunity for Claritev change? Thanks, again.

Thanks, Jessica. So maybe I'll take the first one and then -- so, the value economics of doing pricing and packaging are something we haven't focused on specifically here at Claritev. We actually hired our first pricing leader, and we're building out our pricing, packaging and deal management function, which we announced in the prepared remarks. But I think the benefit of the complete offering that we have in our core business as well as our growth areas is we service multiple areas of the healthcare continuum and specifically in the provider space as well. I mentioned most of our clients buy most of our stuff. And so, I think there is immense value in, call it, bundling our offering so that as we deepen our relationships with our clients, I'm not looking at the stand-alone selling price of one product by itself. I'm looking at the complete value of packaging things together. And then, I think the second question was on out-of-network claims and NSA and how those interact.

Yeah. Just on NSA, the general comment that I would make is -- we're very focused on that business. We continue to invest in it. As I mentioned, we did quite a bit of internal automation around it this year. And what we're seeing, generally speaking, I would say, is that we think there's growth opportunity for us with our existing clients, some of whom we're taking it on themselves, and we see some of that possibly starting to come our way as volume increases, but we also see state-level opportunities. And we just think that we're -- we've got some scale advantage potentially based on the product set that we have. And then, to Doug's earlier comment, I absolutely see that for us, an advantage to some of that renewal activity or the ability to renew is we have got more dry powder to bring to the table. As I mentioned earlier, when we start -- when I started in March of last year, it feels like it's been more than a year, we had -- we didn't have a CompleteVue product at that time and PlanOptix was nascent with no clients. We've now got eight clients and 47 opportunities in our pipeline amongst those solutions alone and 39 more in BenInsights. Those 39 opportunities are spread across new, but they're also inside of our large accounts that we've served for a long time, and we're starting to get, I'd say, more focus as it relates to those products and at least more interaction with some of those big clients. So, I expect that to be potential for us over time in addition to the core, which we've done for many, many years in the out-of-network and NSA space.

Thank you.

We have no further questions in the queue at this time. So, that does conclude today's Q&A session, therefore, concluding today's call. Thank you all for your participation. You may now disconnect your lines.