Claritev Corp (MPLN) 2024 Q1 法說會逐字稿

Good morning, everyone, and welcome to the MultiPlan Corporation first quarter 2024 earnings call.

My name is Angela, and I'll be coordinating your call today.

(Operator Instructions) I would now like to hand the conference over to Shawna Gasik, AVP of Investor Relations.

Thank you.

Please go ahead.

Thank you, Angela.

Good morning, and welcome to Multiplan's first quarter 2024 earnings call.

Our speakers today are Travis Dalton, Chief Executive Officer; and Jim Head, Chief Financial Officer.

The call is being webcast and can be accessed through the Investor Relations section of our website at multiplan.com.

During our call, we will refer to the supplemental slide deck that is available on the Investor Relations portion of our website, along with the first 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 those 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 in 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 Multiplan's underlining operating results and explanation of these non-GAAP measures and reconciliations to the comparable GAAP measure can be found in the earnings press release and in the supplemental slides.

With that, I would now like to turn the call over to our Chief Executive Officer, Travis Dalton, Travis?

Thank you, Shawna.

Good morning, everyone, and welcome.

I'd like to begin my first earnings call by expressing how excited I am to be leading the MultiPlan team, now inspired I am by the opportunity to work with great clients, passionate associates and certainly the mission that really matters, which is to bend the cost curve in healthcare.

I would like to share with you some of my thoughts about my first two months, which have been quite eventful at the helm of Multiplan.

As you heard me say, during our last earnings call, I chose to join MultiPlan because I saw the critically important and valuable role we play in reducing the cost of healthcare.

We combine data analytics and technology with expertise to make health care more transparent and affordable for all, I believe we have a unique opportunity to take this value proposition and serve constituents across the entire health care ecosystem.

Leveraging data and insights to better serve our core clients and create value across the broader ecosystem is fundamental to how we will complete our journey to becoming a world-class public company that deliver sustainable growth.

In my first two months on the job, I've engaged with our associates, our clients, strategic industry partners and many provider health systems.

These engagements have demonstrated the incredible integrity and professionalism of the MultiPlan team reinforced my confidence in the potential of the company and validated my commitment to helping this company carry out its critical mission in the health care market.

Positioning, multi plan for accelerated and sustainable growth begins with the devotion to business fundamentals that drive performance excellence.

Business success will come as we serve clients understand the problems the market is trying to solve and create mechanisms to deliver value.

I've taken two important initial steps that reinforce accountability and build upon our long-standing record of service excellence.

First, I've established a core operational framework centered upon the principles of clarity, alignment and focus.

Clarity of mission and purpose, alignment of accountability and leadership focus on operational metrics that matter.

To that end, we have established over 30 corporate key performance indicators to measure and manage the business proactively.

You are what your record says you are, and we will keep score and be accountable.

Second, I'm also focused on alignment of our talent.

MultiPlan has an exceptional leadership and management team with deep domain experience and dedication to our important mission.

Combining that talent with new leadership and perspective will be an accelerant for us going forward.

To ensure rigor, discipline and operating cadence as we proceed, have established a new Chief Operating Officer position that will report directly to me, and I've already onboarded a new leader to fill this important role.

Jerry Harvey joined multi-plant on March 11 and has already begun a structured assessment of the organization and will lead the team that designed and defined the new multi-plant operating model to enable and support our growth.

Another key addition to my executive leadership team as my Chief of Staff, Jacqui Kwon, who along with our Chief Operating Officer, will drive our key performance indicators and deliver timely management reporting that will enable real time course adjustments as we manage the business.

This will enable us to drive top line growth while proactively managing bottom line performance with predictability.

Jerry and Jackie, both have extensive experience in publicly run product focused growth companies.

This will be invaluable to us as we proceed.

In addition, given the revenue growth potential of our existing product portfolio, we added three new senior sales leaders to our team, each of whom have deep experience and relationships in key adjacent markets.

The expansion of our sales team demonstrates our commitment to investing in growth and our intent to compete more aggressively in all of our market segments.

Furthermore, we are also focused on what we call Fit for Growth, which includes initiatives like product lifecycle management, data science, data platform development and process automation.

These initiatives will support accelerated growth that we will achieve with strategic enhancements to existing products for our core business and by introducing new innovative products, expand the value we provide to adjacent and new vertical markets.

This framework of clarity, alignment, focus, talent and Fit for Growth will enable us to sharpen our focus on our horizons for growth which include the following.

Horizon one what are what I call the now delivering on our 2023 and 2024 product roadmap, attacking competition in target markets and driving value into our core client base.

As you see on page 9, we are progressing on schedule with our product development roadmap, and I'm encouraged with our focus on achieving our milestones.

Horizon 2, are what I call near is accelerating the evolution organic product development while bringing to market new data and decision science products with insights to serve clients across the healthcare continuum.

We are doing market and partner research now.

I'm excited to continue to update you on that as we progress with more to come.

For Horizon 3, are what I call next, a world-class product company is strategically positioned to take advantage of licensed software, cross-platform products, and data assets across multiple market segments as healthcare evolves.

We will do all of this while continuing to manage our financial position, repay our debt and prudently allocate our capital.

This will be a multiyear journey, but I believe we are well-positioned for the future and will complete our transformation to a company that has diverse product set, strong organic revenue growth and fortified business and financial models.

Turning to the quarter, we had several notable successes.

First we received a positive 73 net promoter score across all of our clients, which is 25% higher than the prior year.

And in the top quartile of the global benchmark, demonstrating our value proposition to our clients and our dedication to service and operational excellence.

We will continue to earn that reputation in our clients' trust every day.

Second, we increased our sales pipeline and closed 73 opportunities, representing a 36% year over year increase in new sales.

Third, we signed four new logos with HST's value-driven health plans, and we made progress going to market through our HST platform to sell our new balance build protection product.

Fourth, we closed our first plan optics sale in the first quarter and our pipeline of planned optics business is gaining momentum.

Platform transparency, products and predictive analytics will be an important part of our future, and we are beginning to see our efforts converting in the market.

Fifth, we close our sale for AutoPay in our supplemental carrier products.

And finally, with regard to strategic partnerships, we are expanding and deepening our conversations with potential partners about how we can work together on promising new growth opportunities, which I plan to tell you more about in the coming quarters.

From a financial point of view our quarter was impacted by a cybersecurity incident at a major medical claims clearinghouse, which disrupted claims flow across health care and ultimately downstream to our platform.

Despite this disruption, first quarter revenues were $234.5 million and first quarter adjusted EBITDA was $146.8 million, both slightly below the low end of our guidance range.

Excluding the disruption in claims flow, which we estimate to be $5 million to $6 million of revenue in the quarter, our first quarter results would have been in line with our guidance.

During the quarter, we generated free cash flow and reduced the face value of our debt by over $24 million.

Despite dealing with several exogenous events was a solid quarter and we made material progress on key priorities.

Looking forward, we expect our second quarter results to show improvement over our first quarter and based on what we know today, we are affirming our FY 2024 guidance at this time, as Jim will discuss in a moment.

Before I turn it over to Jim to review the financial results for the quarter in more detail, I want to make a few additional comments.

I am pleased with the performance of the team as we navigated several notable external events in the health care market.

Every challenge presents an opportunity and we were able to pull together quickly as a management team and respond as a unit.

The team and company remain focused on delivering value and service to our clients.

We will not be distracted by extraneous noise or uncontrollable events from this important mission in health care.

That's been exciting and rewarding two months on the job, I want to reiterate that one of the most important reasons I came to MultiPlan as my belief in the mission of the company and the integrity and dedication of our associates to that mission, MultiPlan has been bringing affordability, efficiency and fairness to US health care for over 40 years.

This includes over 1.4 million providers that we contract with directly through our network today, and we work with those providers and many others daily to ensure that they are compensated for their critical services with accurate and swift reimbursements using our solutions to minimize friction.

I had the pleasure of serving providers for 22 years, and I still do, I wouldn't have come to MultiPlan if I didn't believe we provide an important service for all the constituents of healthcare.

We will continue to serve our mission by bringing data analytics and innovation in an objective manner to the health care industry to reduce costs and administrative burden for all eliminate balance bills and lower out of pocket expenses for millions of health care patients.

It is my firm belief that there's enormous potential value yet to be realized as we expand our clients, our product option offerings and bend the cost curve in health care.

I will now turn it over to Jim.

Thanks, Travis, and good morning, everyone.

I would like to begin by echoing Travis comments.

We're excited about carrying our strategy forward and then with the new members of our management team, the executive transition has been smooth.

We've made several pragmatic changes to our operating model that will accelerate our progress.

We successfully navigated a difficult industry-wide challenge, and the company is energized.

Today I will walk through the financial results for the first quarter of 2024.

I'll then turn to our outlook for Q2, and I'll close with a review of our balance sheet and update on our capital allocation activities, as shown on page 4 of the supplemental deck.

First quarter revenue was $234.5 million, a decrease of 0.9% from Q1 '23 and a decrease of 3.9% sequentially.

Our revenues fell just shy of the low end of our guidance range for the quarter, despite the disruption to our claims volumes caused by the clearinghouse cyber outage that Travis mentioned previously.

While it's difficult to quantify precisely, we estimate this disruption impacted our first quarter revenues by roughly $5 million to $6 million.

And excluding this impact, our revenues would have been within our guidance range for the quarter.

Turning to revenues by service line as shown on page 5 of the supplemental deck.

Relative to Q4 '23, network base revenues declined 11.6% sequentially or $6 million, driven largely by the impact of the aforementioned claims volume disruption to our complementary network, fee for service and property casualty businesses.

Also impacting the service line were a non-recurring customer credit and some client attrition.

Our analytics-based revenues fell 2.1% sequentially, largely due to the claims volume disruption.

Our payment and revenue integrity revenues declined 0.6% sequentially, also reflecting the impact of the clearing house outage on claims volumes for our prepaid solutions, offset by strength in our Discovery Health Post pay solutions.

Versus the prior year quarter, network base revenues declined 19.3%.

Analytics-based revenues grew 5.0% and payment and revenue integrity revenues grew 4.8%, excluding a $3.8 million contribution to revenues from BST, which is reported in our analytics based revenues.

First quarter consolidated revenues were $230.7 million, down 3.9% sequentially and down 2.4% from the prior year quarter.

Our first quarter results reflected volatility in claims volumes with The clearinghouse cyber outage impacting our claims flows, particularly in March.

Given our typical claim lag relative to dates of medical service.

As shown on page 7 of the supplemental deck, total first quarter billed charges decreased 4% sequentially to $41.5 billion in identified potential savings decreased 3% sequentially to $5.7 billion.

In our core commercial health plans segment, bill charges decreased 6% sequentially to $18.3 billion in identified potential savings decreased 3% sequentially to $5.4 billion.

The sequential decreases were more acute in physicians' claims compared to facilities based claims.

We believe the larger hospital systems were able to quickly switch to alternative clearinghouses or find other workarounds to route claims to payers.

Although the clearinghouse outage continued to affect our April volumes and we haven't digested the full impact given our claims lag, we continue to believe this is largely a timing issue.

As our cost containment solutions are still required for claims coming through the payers.

In terms of the utilization environment, we note the relatively strong first quarter facility volume data reported by the public operators, who were able to work around the clearinghouse disruption by the end of the first quarter.

For largely exogenous weakness in our volumes was exacerbated by a decline in revenues as a percentage of identified savings on what we call revenue yield.

As shown on page 8 of the supplemental deck, our revenue yield declined about 4 basis points sequentially for the overall business, which includes both PSAV and PEPM.

In our core percentage of savings revenue model, which is approximately 90% of our revenues.

Our revenue yield fell about 10 basis points in the quarter, which had an impact of about $4.4 million to our revenues.

That included about 5 basis points of decline from idiosyncratic yield shifts, most of which are temporary and likely to abate and about 5 basis points of decline from a customer credit that we expect to runoff in Q2.

Importantly, none of the decline in our PC revenue yield was related to any contract changes with our customers.

Turning to expenses.

First quarter adjusted EBITDA expenses were $87.7 million, increasing $7.4 million from the prior year quarter, but up only $0.4 million sequentially.

The increase of $7.4 million over Q1 '23 was driven by the combination of the acquisition of BST.

Structural cost increases and investments in the business year over year.

For the sequential comparison, the modest increase in adjusted EBITDA expenses reflected tight expense controls as we held the line on expenses amid the external pressures on our revenue.

Adjusted EBITDA was $146.8 million in Q1 '24, down 6.1% from $156.3 million in the prior year quarter and down 6.4% from $156.8 million in Q4 '23.

Our Q1 adjusted EBITDA was 2% below the lower end of our guidance due to the external pressures on our revenue.

Adjusted EBITDA margin declined to 62.6% in Q1 '24 down 180 basis points from 64.2% in the prior quarter and down from 66% from the prior year quarter.

Our first quarter margin was driven largely by the combination of lower revenues against our largely fixed expense base.

As the volume environment normalizes, we expect our margins tracked back to a 63% to 64% range in line with our prior commentary.

Turning to our second quarter guidance, as outlined on page 11 of the supplemental deck, we anticipate revenues of $235 million to $250 million and adjusted EBITDA of $145 million to $160 million.

Our second quarter projections reflect slightly lower visibility related to the ongoing and uncertain impact of the clearing house outage on our claims volumes.

Our view is that the claims volumes disruption is largely a timing issue, and we began to see signs of that.

Our volumes were normalizing in the back half of April.

So despite the shortfall in our Q1 results and our lower visibility for Q2, our expectation is that revenue growth will accelerate in the second half, and we are maintaining our guidance for fiscal year 2024.

As you are aware from our press release, based on the recent performance of our stock price.

We conducted an impairment test in the first quarter of 2024, which incorporates current financial market conditions, including our share price market discount rates and other factors.

Based on this test, the estimated fair value of our goodwill and indefinite-lived assets were less than their carrying values.

As a result, we recorded non-cash impairment charges of $516.4 million for goodwill and $2.7 million for intangibles and recognize the charge in our GAAP earnings results.

To clarify, the impairment charge was not driven by changes in our outlook for the business or cash flow projections, but instead by our stock price and implied cost of capital.

Turning to the balance sheet and capital allocation.

Our operating cash flow was $49.7 million in the first quarter, and levered free cash flow was $19.2 million.

As a reminder, the first and third quarters are typically our higher quarters for cash flow, given the timing of our interest and tax payments.

As shown on page 14 of the supplemental deck, we ended the quarter with $59 million of unrestricted cash.

Net of cash, our total and operating leverage ratios were 7.4 times and 5.4 times, respectively.

We continue to be disciplined in allocating our capital with a near-term focus on debt reduction.

On shelf as shown on page 12 of the supplemental deck, during the first quarter, we used $18.2 million of our cash to repurchase or repay $24.4 million face value of our debt, including $21.1 million face value of our 6% senior convertible notes.

We also allocated $10.5 million of our cash toward the repurchase of 11 million shares in the quarter.

Our long-term capital priorities remain the same.

Our highest priority remains investing in the business to drive growth and long-term value.

You should expect us to continue making a series of small but critical organic investments to support our platform, including our new core products and our data and decision science service line.

With our remaining cash flow, we will primarily focus on debt reduction.

Our long-term priorities have not changed following the acquisition of BST.

In the near term, we will emphasize organic investments in debt reduction and deemphasize M&A.

Finally, as I mentioned, we spent $10.5 million on share repurchases in the first quarter.

Additional share repurchases will not be a priority for the remainder of the year as we will focus on debt retirement.

Before I hand it, I want to reinforce traverses comments regarding the value of MultiPlan provides to the entire health care ecosystem.

We serve a critical role as a long-standing data enabled intermediary between providers, payers, employers and consumers.

We provide widely accepted services that reduce healthcare costs, including for patients and make healthcare transactions more efficient, transparent and fair for all parties involved, including 1.4 million providers over 700 payers over 100,000 employer plan sponsors and tens of millions of consumers.

In 2023, we identified $23 billion in potential medical cost savings across all of our products and we reduced out-of-pocket costs and reduced or eliminated millions of balance bills.

Consider a few facts.

In 2023, we priced $15.4 million out of network claims through our platform, $15.4 million.

The service solves a significant problem for all parties involved because there is no contracted price between providers and payers for out of network services.

And there is often a wide gap between the providers list price and what employers are willing to pay for out of network services under their benefit plan designs.

Our platform sits between these parties and serves a valuable role in helping to determine a fair price, which in the case of MultiPlan and our services is accepted without appeal by providers, 98% of the time, that's 98%.

Further, it is widely known and transparent throughout the industry that out-of-network reimbursements are consistently priced at a premium to contracted in-network rates for the same service, even after cost containment tools like ours are applied by the way, our average revenue per claim across our out of network pricing services in 2023, $44 per claim, at $44.

Further, our services insulate millions of health care patients from balance billed annually.

In 2023, MultiPlan priced over $15 million out of network claims that were accepted without appeal or dispute, including over $10.5 million claims for which we contractually eliminated balance bills for patients through our provider network, negotiation and surprise bills services.

Nearly everyone agrees that the No Surprises Act was good for consumers.

And in 2023, the number of balanced bills we eliminated was approximately equivalent to the number eliminated by the No Surprises Act, according to a recent survey conducted by AHIP and the Blues Association.

And importantly, we didn't just start eliminating bounce bills on behalf of consumers in 2022, when the No Surprises Act went into effect, we have been solving this problem for decades.

That brings me to the end of my comments, I'll turn the call back over to Travis.

Thank you, Jim.

Let me say a few closing words before I open up the call to questions.

As I said earlier, it's been an exciting and interesting first two months on the job.

As I mentioned, the experience has strengthened my conviction about the value and potential of this company.

I will also note that it has not been without challenges.

I like to think of myself as realistic, but optimistic and every challenge creates opportunity as I've noted.

The reality is that it has been a difficult moment as we contended with a number of external pressures, including macro uncertainty in healthcare, as well some company-specific adversity that was largely out of our control.

I believe we should take the challenges head on and stay focused on our clients and the markets that we serve.

Optimistically, these challenges have posed an extraordinary opportunity for our management team and associates to band together sharpen our point of view and develop as a team.

I also see tremendous opportunity for the company to execute better and evolve over time across the healthcare continuum.

I'm confident that as we continue to enhance our foundation for quicken our execution velocity, we will realize our transformation to a world-class company.

Would you kindly open the call for questions.

Thank you.

(Operator Instructions) Joshua Raskin, Nephron Research LLC.

Thanks.

Good morning.

I just wanted to talk about the change outage and you gave guidance the last day of February, which was a couple of weeks into that outage.

So relative to guide -- results relative to guidance that was given at that time, did the outages last longer than expected or were more claims impacted than you expected?

And then how did you size that $5 million to $6 million impact, what I'm sort of a little surprised the 2Q guidance would reflect a little bit more of that pent-up claims processing.

I would have thought you would have seen a larger cohort in April.

Thanks Josh, it's Jim here.

I want to we kind of march through this.

So when we did put out guidance, we were clear that the outage, the clearinghouse outage was a days old and maybe a week ago.

And so we really didn't have a sense for how this was going to play out.

And I think at the conference in March, we kind of updated that a little bit, but we started to see the effects of this -- we actually saw a little bit at the tail end of February.

And then it kind of hit us much more squarely in March.

So when we sized it up, it was both kind of our claim average claim volume.

And from a static perspective, we looked at client activity and at what I'd say, Josh, it was pervasive every kind of every payer client.

We were seeing things slow down a little bit.

It was less so at some of the larger customers.

But as you get into the smaller customers and in some of our primary business, et cetera, it really started hitting.

As we march through April, it was persisting in the beginning, and it's starting to abate in the second half of April.

So here we are in May, we think this is going to persist for it's going to take a little while to work through the system.

And so we're you're seeing us be a little bit cautious is it doesn't feel like it's a complete snapback and, six to eight weeks' time period, particularly on the physician claims, which were more, I think hit more deeply by this outage.

And so we're just trying to make sure that we give ourselves a little room for this to work through the system.

But importantly, we those claims need to be repriced and our payer clients and the employers they serve them need those cost containment services for all the reasons that we've talked about.

So that's kind of how it's playing out right now.

We're trying to be as accurate and real-time as possible.

But it is the upstream flows are somewhat out of our control and we're working through it.

Got you.

That's perfect.

And then just switching topics to the NSA, I'm curious about demand for some of the NSA related products, especially the rules-based processing.

Are clients reticence at all to sort of lock something in now with the uncertainty that's still sort of exist or for the plan just moving ahead because they need a solution for the current situation?

This is Travis.

Yeah, actually, I think it's a represents a real opportunity for us over time.

Yeah, I think it's here to stay.

I think that's becoming more well, understood.

And I think the rules will continue to be defined.

And for us, we think we offer an incredible service in that space and there'll be continued demand for it.

I also think we have the ability to automate some of our process inside of that.

So my view is as we continue to look at the company, figure out how to grow top line but also create operating leverage.

That's actually an area where we can create some automation operating leverage over time.

So we view it as a as a real opportunity for us, on the business side.

But also an opportunity to serve important function market.

So I'd say we remain positive on that and positive on the demand.

Okay.

Thank you.

Daniel Grosslight, Citi.

Hey, this is Luis on for Daniel.

I'm going to ask if you're can you go to market go-to-market strategy at all, given our recent lawsuit that's been filed?

Yeah, we're having trouble hearing the question, so could you repeat, it changes -- are we changing our go-to-market strategy?

And I didn't hear the second part of it?

Given the recent lawsuit that was filed, I'm just wondering if that had any implication from and our go-to-market strategy.

No, not at all, we're going to continue to aggressively attack the market.

We're going to not only focus on core.

But as I mentioned, when I look at our adjacent markets, TPAs consultants, brokers, we're confident in the services we provide.

I said this, but we offer an array of solutions across providers, members, employers and health systems, we're aligned with the goals of NSA and otherwise, I'm just going to make this comment of my view.

I believe that there's a mutual interest out there that providers want fair payments.

And they also want to reduce friction.

And I think payers want to manage risk and do the same thing.

And we play an important function inside of that.

And but yeah, we're going to continue to do what we've done for 44 years, which is deliver quality and capability and products and services to the market.

So if anything were to continue to sell aggressively in those markets because we have real value to bring.

And if I can sneak another one and I wanted to ask if there's any change in demand in the self-employed and self-insured employer side for like for ESRD versus PEPM given the controversies raised in a recent article?

Yeah, I think the -- what you're alluding to is a 100,000 plan sponsors that oftentimes are services go to market through some of the big ASO platforms or TPAs?

I don't we haven't seen that behavior switch because it takes time.

I think there's always been and we've been talking about it very varying models that are fit for purpose here.

So we have ongoing discussions where we talk to and this is before any of this the press talking about creating more of a subscription or a PEPM type of model or per claim model versus a percentage of sales.

What you may see over time is a little bit of an evolution over that.

But in the end, I think the employer plan sponsors want us to be motivated.

And some element of that will probably remain in our model.

But as we talked about at Investor Day, we are trying to shift the overall model of the overall portfolio of the business.

Two more, call it subscription type business, but that's mostly through product introductions versus a shift in the core.

Thank you.

(Operator Instructions) Madison Aron, JPMorgan.

Hi.

Thanks for taking my questions.

On drilling.

First on you mentioned that, debt retirement is going to be a focus going forward on post the quarter, have you repurchased any debt?

We don't disclose that, Rishi, but we I guess the right way to say it is we're in a realm in which we are kind of pay as you go.

We as I noted, our second quarter cash flow is typically lower because we've got tax payments and a lot of interest payments.

And so we're just being very flexible and opportunistic as we March through the year.

And also note that pricing is changing a lot on our bonds.

You saw that, particularly post April 25.

And so all of it looks a little bit more enticing across the entire capital stack.

So we're just going to be flexible as we go along Rishi.

And I think I think you'll measure our progress now, quarter to quarter.

Yeah.

So you're reaffirming your guidance and I realize that the revenue performance is usually split pretty evenly across the quarters and this time around is probably going to be heavily weighted towards the second half.

But given all the performance indicators that we're hearing out there, all the increase utilizations I know in the past you guys have been somewhat conservative on the utilization views.

But what are you not seeing or what are you seeing on the utilization front going into through the year.

And I would have thought that at least the revenue guide would have been higher or is there something are you seeing that utilization benefit?

And if you are is there an offset that we're just not thinking about?

I would just love to get your thoughts on why reaffirm the guidance if the performance indicators out there are pretty positive.

Yeah, Rishi, I think there's no doubt that back end loaded.

We just again, we're starting out, but we start off at a little bit of a deficit here and so we're just we're going to we're going to see how this plays out, particularly in the second quarter and see how we see how the outline of the clearinghouse outage works its way through the system.

So you're right in the sense that the facilities based claims have been stronger than physician claims, but our book is kind of half position, half facilities, if you will.

So we did see some strength year over year, clearly on the facility side, sequentially, though, is a little bit soft.

And we think that because of the average.

And on the physician side, it was relatively flat year over year.

And so what you saw is the you're continuing to see the supply side on the facilities recover.

And so we're definitely going to be seeing the benefit of that over the year.

But we also have a mix of both position and facility.

So it mutes it needs some of that upside, but it also creates a little bit more steadiness.

Okay.

During -- and Travis, I appreciate your comments from the beginning of the call.

And I look forward to hearing your thoughts on the long-term trends over time.

But during the Investor Day, you guys highlighted a number of initiatives and growth plans include your new acquisitions and you also put out some leverage targets as well.

So when you were talking about reassessing the business or just evaluating all these performance indicators.

Has something changed in the long-term view on the business or just the view on these acquisitions?

And then when you talk about these reassessments, there's a component of your business.

I get that you just can't control, but given this is all about top line.

When you talk about these 30 performance indicators, what does that mean to us?

Yeah.

There's a couple of questions in the question.

So let me just start talking?

Yeah, we will absolutely are committed to the '23, '24 growth plan a roadmap.

So some were tracking on that.

We're executing on it.

If anything, we're working hard to trying to drive more velocity with that and move more quickly on those products, which is why we're implementing product lifecycle management, product processes and interlock inside the company, I won't bore you with all that, that's operational stuff that helps us produce more faster for the market.

So we're absolutely committed to that.

And beyond that, we'll be moving, we'll be looking aggressively at those adjacent markets and products we have and we'll build out from the core.

That's how I look at it.

So the core of the business is healthy.

We have good products and services that we offer, and we'll look at new market segments, which I've talked about in the past.

And then ultimately, I think we have data assets that we can utilize both internally to build better stuff with data science, but also potentially externally.

And so that's how I view the businesses kind of that inside-out view as we go forward.

And but we're fully committed to the work that we've done and we'll build and grow from that because it's really a healthy, sustainable way to grow and build the business over time.

And so that's a focal point for us for sure.

And what was the second half of the question, I probably I missed it.

Just the new

--

So there's -- so we've we basically identified kind of by five pillars that we think we needed to execute on to run a great public company and serving our clients being attacking and fit for new growth, new products and new ideas and development, operational excellence through the use of our tools like Salesforce and ERP, which we're implementing so we can get better insights into the business and predictive models around our revenue growth and otherwise.

Talent and people and then innovation.

And we sit down as a group, but we did a bottoms up and a top down and we identified metrics and performance indicators.

I'm happy to share those.

There won't be a secret and we're going to track benchmarks and performance against that.

And I think by looking at those five vectors all together, that will gain momentum and understanding as a company and we'll be able to predict the business will also build salary growth.

And so that's kind of the operating model that we're seeking to drive through.

But I don't I would not call this a revolution it's more of an evolution.

And I think what we're finding is the demand side is strong.

We've got a lot of opportunities.

And what we're trying to do is sharpen our focus on our operating model.

So we can stay really aligned on what's going to be the best and highest use of our energy.

Yeah.

And I've said to the team and we'll go as we -- there's no shiny lower here right now.

We're doing and we've got a good business.

It's fundamental and we're going to build great stuff for our core clients.

We continue to enhance our products.

We've got 20 product enhancements in the pipeline as part of our process.

And then we're going to look for new market insights and opportunities in other segments and across the continuum of health care, I think we have some assets to build on and we'll see.

But I that's what I believe.

And I think the market will bear that out.

If I could just squeeze in two more questions.

One, can you just give us an idea as to you talked about facilities, but how behavioral health and recovery volumes have been trending over the course of the last few quarters.

And then second, there's been a lot of negative headlines over the last several weeks, and I guess you guys are just going to continue focusing on what you need to do most of the headlines and articles that we saw, arguably nothing new for those who have covered this credit for a long time.

But there's a domino effect.

And you have the Clover letter now to the FDA and love to just get your thoughts as to how you guys are viewing this, how deep this go?

And how are you managing this process?

Thank you.

Rishi, I'll take the behavioral health.

I mean, I think the trend you I think you rightly noticed that the trends are growing in behavioral on and there.

It's interesting there's a lot of out of network activity around that because that just because it is these companies are sprouting up and rapidly growing.

There is not a deep level of network activity.

And so we're seeing we're seeing some trends up there, but it's still not a giant piece of our business, Rishi, um, but it's clearly an area of growth, so more to come on that.

But I think it's some of the payers are very focused on this as well and making sure that that were that we're staying on top of this arena.

And I think I think the trends will be pretty strong going forward.

And on the second part of the question, yes, I think we spent, yes, good part of our call today, kind of answering what we believe is the value proposition of the company come with facts and information, I think, yeah, we're going to continue to do that.

In my view, I kind of look at this as it just to me, it really illustrates that we need to explain what we do.

So I think we have an opportunity actually to talk about the value we bring our brand from I view it as us having a bigger voice than we probably ever at.

We're now we're out there.

So that's not a bad thing will go out and educate.

I expect for us to go talk to stakeholders, policymakers those in the industry and really have an open honest dialogue.

And as I said earlier, I truly believe this I spent 20 years on the provider side that there's a mutual interest in healthcare.

I just truly believe that and I don't impute motive.

I believe that everyone wants us to work well, and we play an important role in rationalizing that market.

And I think that's important thing to do from is it well-understood?

Not really, but the opaqueness of health care is a problem across lots of different vectors, not just in this space.

And but we're going to continue to do that.

We'll manage through it.

We'll engage proactively and we'll continue to, express the virtues of our brand as we see it, and that's what I that's but most importantly, we're staying focused, as you noted and not getting distracted.

We have a lot of work to do.

Thank you.

(Operator Instructions) We currently have no further questions that we'll be concluding today's call.

Thank you, everyone, for joining.

You may now disconnect your lines.