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What changed in Claritev Corp's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Claritev Corp's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+632 added−548 removedSource: 10-K (2024-02-29) vs 10-K (2023-03-01)

Top changes in Claritev Corp's 2023 10-K

632 paragraphs added · 548 removed · 390 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

103 edited+113 added−68 removed65 unchanged
Biggest changeOther notable acquisitions, in addition to the acquisitions of HST and Discovery Health Partners in 2020 and 2021, respectively, were BCE Emergis Corporation, in 2004, which extended network access nationally and added a negotiation services platform; Private Healthcare Systems, Inc., in 2006, which added a National Committee for Quality Assurance (NCQA)-accredited, national primary PPO network; Viant Holdings, Inc., in 2010, which added analytics-based services and additional network access including for MA and Medicaid plans; National Care Network, LLC, in 2011, which added the Data iSight pricing service; and Medical Audit and Review Solutions, Inc., in 2014, which added pre-payment integrity services. 23 Table of Contents Churchill Capital Corp III (formerly known as Butler Acquisition Corp), was incorporated in Delaware on October 30, 2019 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.
Biggest change("HST"), in 2023, 2021 and 2020, respectively, other notable acquisitions were BCE Emergis Corporation, in 2004, which extended network access nationally and added a negotiation services platform; Private Healthcare Systems, Inc., in 2006, which added a National Committee for Quality Assurance (NCQA)-accredited, national primary PPO network; Viant Holdings, Inc., in 2010, which added analytics-based services and additional network access including for MA and Medicaid plans; National Care Network, LLC, in 2011, which added the Data iSight pricing service; and Medical Audit and Review Solutions, Inc., in 2014, which added pre-payment integrity services.
Introduced in 2021, our surprise billing services help Payors comply, or help their employer/plan sponsor customers comply, with the federal No Surprises Act ("NSA"), which became effective on January 1, 2022.
Surprise Billing Services. Introduced in 2021, our surprise billing services help Payors comply, or help their employer/plan sponsor customers comply, with the federal No Surprises Act ("NSA"), which became effective on January 1, 2022.
Commercial health plans are offered either as an insured program where the plan sponsor – typically an employer – and its members pay a monthly premium and the insurer pays the medical costs from those premium dollars, or as self-insured plans funded by the employer/plan sponsor and its members from a pool of funds earmarked for this purpose.
Commercial health plans are offered either as a insured program where the plan sponsor – typically an employer – and its members pay a monthly premium and the insurer pays the medical costs from those premium dollars, or as self-insured plans funded by the employer/plan sponsor and its members from a pool of funds earmarked for this purpose.
Larger Payors servicing self-insured plans also have extensive customized processing logic to support plan design variability as the labor market shifts, and one such customer has well over 100,000 such rules in place. The commercial health segment also includes individual health plans which are fully insured, and may or may not be sold through the Affordable Care Act exchanges.
Larger Payors servicing self-insured plans also have extensive customized processing logic to support plan design variability as the labor market shifts, and one such customer has well over 100,000 such rules in place. The commercial health segment also includes individual health plans which are fully-insured and which may or may not be sold through the Affordable Care Act exchanges.
However, through our customer relationships, we are subject either directly or indirectly to federal and state laws and regulations that govern privacy, security and breaches of patient information and the conduct of certain electronic healthcare transactions. These transactions, include, for example, HIPAA, which imposes rules protecting individually identifiable health information and setting national standards for the security of electronic PHI.
Through our customer relationships, we are subject either directly or indirectly to federal and state laws and regulations that govern privacy, security and breaches of patient information and the conduct of certain electronic healthcare transactions. These transactions, include, for example, HIPAA, which imposes rules protecting individually identifiable health information and setting national standards for the security of electronic PHI.
Our complementary networks provide Payor customers with access to our national network of healthcare providers that offer discounts under the health plan’s out-of-network benefits, or otherwise can be accessed secondary to another network. Payors use the network to expand provider choice for consumers, and to achieve contracted price reductions with member protections on more claims.
Our complementary networks provide customers with access to our national network of healthcare providers that offer discounts under the health plan’s out-of-network benefits, or otherwise can be accessed secondary to another network. Payors use the network to expand provider choice for consumers, and to achieve contracted price reductions with member protections on more claims.
We may directly or indirectly be subject to state and federal regulation regarding the payment of out-of-network claims, including regulations regarding the determination of payment amounts and what data and other factors are permitted to be used by commercial health Payors and other Payors in making such determinations, as well as regulations targeting surprise billing and requiring transparency.
We may also directly or indirectly be subject to state and federal regulation regarding the payment of out-of-network claims, including regulations regarding the determination of payment amounts and what data and other factors are permitted to be used by commercial health Payors and other Payors in making such determinations, as well as regulations targeting surprise billing and requiring transparency.
We may directly or indirectly be subject to regulation in some states governing the submission of true and accurate claims, or regarding the application of payment integrity edits to claims, including regulations impacting what data and other factors are permitted to be used by commercial health Payors and other Payors in making such determinations.
We may also be, directly or indirectly, subject to regulation in some states governing the submission of true and accurate claims, or regarding the application of payment integrity edits to claims, including regulations impacting what data and other factors are permitted to be used by commercial health Payors and other Payors in making such determinations.
MultiPlan supports individual plans through the insurance companies offering these plans, and does not sell to the individual directly. Government Programs This market segment includes Medicare, Medicaid, TRICARE, Federal Employees Health Benefits, Veterans Administration and other federal health programs (state and municipal government health plans typically are managed as commercial plans).
MultiPlan supports individual plans through the insurance companies offering these plans and does not sell to individuals directly. Government Programs This market segment includes Medicare, Medicaid, TRICARE, Federal Employees Health Benefits, Veterans Administration and other federal health programs (state and municipal government health plans typically are managed as commercial plans).
Both methodologies use data from readily-available public and private sources which feed our proprietary automated algorithms to deliver defensible, consistent pricing. RBP recommendations do not incorporate member protection from balance billing, so the service includes optional post-payment negotiation and patient advocacy services to negotiate settlements where needed to eliminate balance billing.
Both methodologies use data from readily available public and private sources which feed our proprietary automated algorithms to deliver defensible, consistent pricing. RBP recommendations do not incorporate member protection from balance billing, so the service includes optional post-payment negotiation and patient advocacy services to negotiate settlements where needed to reduce balance billing.
With the growth this segment has and continues to see, there is heightened competition among Payors, which also drives the need for assistance in building network access. Today, these Payors use MultiPlan’s payment and revenue integrity services. They may also outsource some portion of their provider network development to MultiPlan. Medicaid and Managed Medicaid.
With the growth this segment has and continues to see, there is heightened competition among Payors, which also drives the need for assistance in building network access. Today, these Payors use MultiPlan’s payment and revenue integrity services. They may also outsource some portion of their provider network development to MultiPlan.
Sales and Marketing Our largest customers are serviced by a team of national account managers and senior executives responsible for continued growth of the relationship. The account team partners strategically with our customers, leveraging our Healthcare Economics unit to mine the customer's data and proactively present opportunities to the customer to improve performance and competitive position.
Our largest customers are serviced by a team of national account managers and senior executives responsible for continued growth of the relationship. The account team partners strategically with our customers, leveraging our Healthcare Economics unit to mine the customer's data and proactively present opportunities to the customer to improve performance and competitive position.
Among others, these dynamic capabilities include new service and product development strategies, knowledge creation and retention strategies to turn new insights and learning into institutional knowledge, resource allocation strategies focused on the efficient distribution of our resources, and acquisition and alliance strategies that bring new resources and competencies into the Company from the external sources.
These dynamic capabilities include new service and product development strategies, knowledge creation and retention strategies to turn new insights and learning into institutional knowledge, resource allocation strategies focused on the efficient distribution of our resources, and acquisition and alliance strategies that bring new resources and competencies into the Company from external sources.
As an FDR, we are subject to affirmative legal obligations, as well as contractual requirements with our customers, to check the exclusion status of the individuals and entities we employ against lists of excluded individuals and entities prior to entering into employment or contractual relationships with them, and to periodically re-check such lists thereafter, or run the risk of liability under civil monetary penalties laws or a breach of our contractual obligations.
Further, we are subject to affirmative legal obligations, as well as contractual requirements with our customers, to check the exclusion status of the individuals and entities we employ against lists of excluded individuals and entities prior to entering into employment or contractual relationships with them, and to periodically re-check such lists thereafter, or run the risk of liability under civil monetary penalties laws or a breach of our contractual obligations.
Our services may directly or indirectly be subject to state regulations specifically covering certain categories of customers, such as workers compensation insurers and auto medical insurers. We regularly monitor legislative and regulatory activity in all states and at the federal level that could impact any of the products we offer in all relevant market segments.
Our services Tabl e of Contents may directly or indirectly be subject to state regulations specifically covering certain categories of customers, such as workers compensation insurers and auto medical insurers. We regularly monitor legislative and regulatory activity in all states and at the federal level that could impact any of the products we offer in all relevant market segments.
In addition, the MultiPlan Scholarship program is offered to children of MultiPlan employees who wish to continue their education after high school to achieve their educational goals. The total amount of new scholarship awards granted in 2022 was $100,000.
In addition, the MultiPlan Scholarship program is offered to children of MultiPlan employees who wish to continue their education after high school to achieve their educational goals. The total amount of new scholarship awards granted in 2023 was $100,000.
The service is priced based on a percentage of savings identified. Customers most commonly include large commercial insurers, property and casualty carriers via their bill review vendors, Taft-Hartley plans, provider-sponsored and independent health plans, and some TPAs. 14 Table of Contents Other Network Services. We also offer network build and network management services.
The service is priced based on a percentage of savings identified. Customers most commonly include large commercial insurers, property and casualty carriers via their bill review vendors, Taft-Hartley plans, provider-sponsored and independent health plans, and some TPAs. Other Network Services. We also offer network build and network management services.
In addition, employees were invited to publicly pledge support to MultiPlan’s efforts to positively impact its employees and local communities, and to foster a culture of mutual respect for individuals from all backgrounds, perspectives, and abilities.
In addition, employees are invited to publicly pledge support to MultiPlan’s efforts to positively impact its employees and local communities, and to foster a culture of mutual respect for individuals from all backgrounds, perspectives, and abilities.
For services for which balance billing is prohibited, the NSA establishes an independent dispute resolution ("IDR") process for providers and Payors to handle payment disputes that cannot be resolved through direct negotiation. The law is being implemented through the IFRs and Final Rules, as well as other guidance issued by the U.S.
For services for which balance billing is prohibited, the NSA establishes an independent dispute resolution ("IDR") process for providers and Payors to handle payment disputes that cannot be resolved through direct negotiation. The law is being implemented through several Interim Final Rules and Final Rules, as well as other guidance issued by the U.S.
Failure to comply with such laws can result in civil or criminal liability such as penalties, fines, and/or exclusion from federal healthcare programs. Furthermore, we may be subject to some 20 Table of Contents state laws regulating the ability of PPOs to allow broad access to their provider networks.
Failure to comply with such laws can result in civil or criminal liability such as penalties, fines, and/or exclusion from federal healthcare programs. Furthermore, we may be subject to some state laws regulating the ability of PPOs to allow broad access to their provider networks.
Economic losses for bodily injury liability claims increased 10% annually from 2012 – 2017, well above the 3% annual medical inflation rate, with medical expenses accounting for 79% of claimed losses. With ongoing medical cost inflation, this trend is expected to continue into the 17 Table of Contents future.
Economic losses for bodily injury liability claims increased 10% annually from 2012 – 2017, well above the 3% annual medical inflation rate, with medical expenses accounting for 79% of claimed losses. With ongoing medical cost inflation, this trend is expected to continue into the future.
The market-focused account managers are responsible for relationship management as well as for growing revenue through expanded use of services. They are compensated with a base salary plus a bonus and commission based on customer retention and revenue from upselling new products.
The market-focused account managers are responsible for relationship management as well as for growing revenue through expanded use of services. They are compensated with a base salary plus a bonus and commission based on customer retention and revenue from upselling new products. The sales professionals are compensated with a base salary plus commission based on revenue from new customers.
These services are used by commercial, MA, managed Medicaid and state Medicaid Payors and are priced based on a percentage of savings identified and/or recovered. Revenue Integrity Services .
These services are used by commercial, MA, managed Medicaid and state Medicaid Payors and are priced based on a percentage of savings identified and/or recovered. Revenue Integrity Services (post-payment).
Further, each year a number of proposals related to data privacy or security are considered before federal and state legislative and regulatory bodies, including in a number of states considering consumer protection laws similar to those in California, Colorado, Connecticut, Utah and Virginia.
Further, each year a number of proposals related to data privacy or security are considered before federal and state legislative and regulatory bodies, including in a number of states considering consumer protection laws similar to those that currently exist in California, Colorado, Connecticut, Utah and Virginia.
Network build services comprise custom development of and/or access to primary network contracts, leveraging our extensive network development team and analytic tools, including a tool combining internal provider data with public sources to enable strategic targeting of providers to be contracted.
Network build services comprise custom development of and/or access to primary network contracts, leveraging our extensive network development team and Tabl e of Contents analytic tools, including a tool combining internal provider data with public sources to enable strategic targeting of providers to be contracted.
These services often are used in a solution hierarchy after MultiPlan's network services to reduce claims with no available network contract, but are also used standalone. Value-Driven Health Plan services bundle network and reference-based pricing to enable a blended benefit plan design.
These services can be used standalone but often are used in a solution hierarchy after MultiPlan's network services to reduce claims with no available network contract. Value-Driven Health Plan services bundle network and reference-based pricing to enable a blended benefit plan design.
Employees are granted five hours each year dedicated to DIB education including a baseline course provided by the Company to establish a foundation of expectations. The remaining time is self-directed and self-reported determined by individual educational needs and interests. DIB educational resources are also curated by a diverse team of MultiPlan employees and peer recommendations are promoted routinely.
Employees are expected to dedicate five hours each year to DIB education, including a baseline course provided by the Company to establish a foundation of expectations. The remaining time is self-directed, self-reported, and determined by individual educational needs and interests. DIB educational resources are also curated by a diverse team of MultiPlan employees and peer recommendations are promoted routinely.
Recent trends in medical cost inflation have become a major driver in the overall cost growth for workers' compensation insurers. As of 2020, medical services accounted for about 60% of workers' compensation claims costs compared to 40% in the early 1980s. Rising medical costs have increased focus on cost management measures for the medical portion of workers' compensation insurance claims.
Recent trends in medical cost inflation have become a major driver in the overall cost growth for workers' compensation insurers. As of 2022, medical services accounted for about 50% of workers' compensation claims costs compared to 40% in the early 1980s. Rising medical costs have increased focus on cost management measures for the medical portion of workers' compensation insurance claims.
Item 1. Business Our Company MultiPlan is a leading provider of data analytics and technology-enabled solutions designed to bring affordability, efficiency and fairness to the U.S. healthcare industry.
Item 1. Business Our Business and Market Opportunity MultiPlan is a market leading provider of data analytics and technology-enabled solutions designed to bring affordability, efficiency and fairness to the U.S. healthcare industry.
Our VDHP service offerings enable a range of VDHP configurations, including a "standard" 13 Table of Contents form of VDHP which integrates our PPO network for professional and select facility services; a "full" VDHP which has no network; and a community-based VDHP which features an agreement with a marquee health system in the area to accept the reference-based price in exchange for preferred steerage of the health plan’s members.
Our VDHP service offerings enable a range of VDHP configurations, including a "standard" form of VDHP which integrates our PPO network for professional and select ancillary services; a "full" VDHP which has no network; and a community-based VDHP which features an agreement with a marquee health system in the area to accept the reference-based price in exchange for preferred steerage of the health plan’s members.
In offering these new services, we leverage existing technology and expertise in data science, claim pricing, and negotiation. The services are used by all types of Payors that must comply with the NSA, and are priced either as a percentage of savings for the end-to-end service, or on a per-claim basis for individual components.
In offering these new services, we leverage existing technology and expertise in data science, claim pricing, and negotiation. The services are used by all types of Payors that must comply with the NSA and are priced either as a percentage of savings for the end-to-end service, or on a per-claim basis for individual components. Value-Driven Health Plan Services ("VDHP") .
These laws are contributing to increased enforcement activity and may also be subject to interpretation by various courts and other governmental authorities. In addition, we are subject to certain state licensure and/or certification laws and other state and federal laws and regulations governing our operations and our products.
These laws are Tabl e of Contents contributing to increased enforcement activity and may also be subject to interpretation by various courts and other governmental authorities. In addition, we are subject to certain state licensure and/or certification laws and other state and federal laws and regulations governing our operations and our products.
We offer competitive pay, and a robust benefits package, including healthcare benefits, flexible spending accounts, life insurance, short-term and long-term disability plans, a generous Paid Time Off (PTO) policy, and a 401(k) Plan with employer match.
We offer competitive pay and a robust benefits package, including, among other benefits, healthcare benefits, flexible spending accounts, health savings accounts, life insurance, short-term and long-term disability plans, a generous paid time off ("PTO") policy, and a 401(k) Plan with employer match.
Kaiser Family Foundation reports that enrollment in MA plans more than doubled over the last decade. As of 2022, an estimated 28.4 million people were enrolled in MA plans compared to 26.0 million in 2021. MA Payors have a greater need for billing and payment accuracy than they do for cost management, because healthcare prices largely are set.
Kaiser Family Foundation reports that enrollment in MA plans more than doubled over the last decade. As of 2023, an estimated 30.8 million people were enrolled in MA plans compared to 28.4 million in 2022. MA Payors have a greater need for billing and payment accuracy than they do for cost management, because healthcare prices largely are set.
Massachusetts and New York, for example, have enacted regulations and statutes that require any entity that holds, transmits or collects certain personal information about their residents to adopt a written data security plan that meets the requirements set forth in the statute.
Massachusetts and New York, for example, have enacted regulations and statutes that require any entity that holds, transmits or collects certain personal information about their residents to adopt a written data security plan that meets the requirements set forth in the statute, and to timely report certain unauthorized access to, or disclosure of, that data.
Our customer relationships are further strengthened by high switching costs as MultiPlan is electronically integrated with its customers in their time-sensitive claims processing functions, and we support highly flexible benefits offerings to an extensive group of customers who often feature a MultiPlan logo on membership cards when our networks are used.
Our customer relationships are further strengthened by the fact that MultiPlan is electronically integrated with its customers in their time-sensitive claims processing functions, and we support highly flexible benefits offerings to an extensive group of customers who often feature a MultiPlan logo on membership cards when our networks are used.
To support our customers, MultiPlan has initiated an annual process to review the prior year and create comparative analyses for aspects of our services related to network participation, credentialing, and other processes to enable customers to complete their own analyses.
To support our customers, MultiPlan has initiated an annual process to review the prior year and create comparative analyses for aspects of our services related to network participation, credentialing, and other processes to assist customers in completing their own analyses.
MultiPlan offers services to our customers in three categories: • Analytics-Based Services : a suite of data-driven algorithms and insights that detect claims over-charges and either negotiate or recommend fair reimbursement for out-of-network medical costs using a variety of data sources and pricing algorithms.
MultiPlan offers solutions to our customers across four service categories from our platform: • Analytics-Based Services : a suite of data-driven algorithms and insights that detect claims over-charges and either negotiate or recommend fair reimbursement for out-of-network medical costs using a variety of data sources and pricing algorithms.
The Census Bureau reports that about 298 million people in the U.S. had health insurance coverage in 2020, of which 177 million were covered under employer-sponsored plans. CMS also cites that nearly 28 million people were enrolled in Medicare Advantage ("MA") plans in 2022, and another estimated 54 million were enrolled in managed Medicaid plans based on 2019 CMS figures.
The Census Bureau reports that about 304 million people in the U.S. had health insurance coverage in 2022, of which 179 million were covered under employer-sponsored plans. CMS also cites that nearly 31 million people were enrolled in Medicare Advantage ("MA") plans in 2023, and another estimated 57 million were enrolled in managed Medicaid plans based on 2020 CMS figures.
Also in 2022 we invested in data science, expanding the internal team. Our Competitors We compete with other companies in our markets on the basis of the effectiveness of our cost saving solutions, the quality of our customer service, and the prices of our services. We believe no single competitor currently offers the same breadth of services we provide.
Our Competitors We compete with other companies in our markets on the basis of the effectiveness of our cost-saving solutions, the quality of our customer service, and the prices of our services. We believe no single competitor currently offers the same breadth of services we provide.
In 2022, as part of the survey conducted as part of our designation as a Great Place to Work-Certified TM company, 94% of our employees said that MultiPlan is committed to diversity and inclusion and that people of all cultures, abilities, and backgrounds are respected and valued at MultiPlan. Learning and Development.
In 2023, in the survey conducted as part of our designation as a Great Place to Work company, 95% of our employees that responded to the survey said that MultiPlan is committed to diversity and inclusion and that people of all cultures, abilities, and backgrounds are respected and valued at MultiPlan.
Our team of approximately 100 network development professionals manages these network relationships across our Primary and Complementary PPO Networks. For existing providers, the goal of the network development team is to strengthen our existing provider relationships, help providers maintain participation across products and increase the discounts the providers extend to our customers that utilize our provider networks.
For existing providers, the goal of the network development team is to strengthen our existing provider relationships, help providers maintain participation across products and increase the discounts the providers extend to our customers that utilize our provider networks.
An estimated 83.5 million people were enrolled in Medicaid and 7.1 million were enrolled in CHIP (Children’s Health Insurance Program) plans as of August 2022. This reflects growth of approximately 8.0% and 1.1%, respectively, over August 2021 figures. As of 2020, 84% of Medicaid enrollees were in a managed Medicaid program.
An estimated 83.0 million people were enrolled in Medicaid and 7.0 million were enrolled in CHIP (Children’s Health Insurance Program) plans as of August 2023. This reflects a decrease of approximately 0.6% and 1.3%, respectively, over August 2022 figures. As of 2021, 85% of Medicaid enrollees were in a managed Medicaid program.
The updated Part D information improves compliance, efficiencies and member satisfaction. These services are priced based on a percentage of the CMS premiums restored to the MA Payor.
The updated Part D information improves compliance, efficiencies and member satisfaction. These services are priced based on a percentage of the CMS premiums restored to the MA Payor. Part D OHI is priced per validated member with other primary Part D coverage.
In those instances, we may be subject to certain federal and state law requirements associated with those programs as a First Tier, Downstream or Related entity (FDR).
In some instances, we provide services to Payors that contract directly with a federal or state agency. In those instances, we may be subject to certain federal and state law requirements associated with those programs as a First Tier, Downstream or Related entity (FDR).
We compete for these services on the basis of savings effectiveness, provider acceptance, and plan member satisfaction. Our workflow and claim processing technology, user interaction and data and analytic tools are key competitive advantages. MultiPlan's competitors for these services typically are reference-based pricing services.
We compete for these services on the basis of savings effectiveness, provider acceptance, and plan member satisfaction. Our workflow and claim processing technology, user interaction and data and analytic tools are key competitive advantages. MultiPlan's competitors for these services typically are reference-based pricing services. They include 6Degrees, AMPS, ELAP Services, Payer Compass, Zelis, ClearHealth Strategies and Naviguard. Network-Based Services.
Through a multi-tiered award system, employees can celebrate anniversaries, share thank you notes on a public or private feed as well as recommend monetary awards based on different levels of significant accomplishment. Performance Management Program. MultiPlan has established a set of core competencies for all employees to navigate a successful career at the Company.
MultiSTAR’s multi-tiered award system enables employees to celebrate cultural holidays, career milestones, post thank you notes on a public or private feed, and recommend monetary awards based on different levels of accomplishment. Performance Management Program . MultiPlan has established a set of core competencies for all employees to navigate a successful career at the Company.
Enrollment has been growing as a result of the Medicaid expansion allowed under the Affordable Care Act. To date, 40 states and the District of Columbia have expanded or have committed to expand their Medicaid programs.
Enrollment has been growing as a result of the Medicaid expansion allowed under the Affordable Care Act. As of December 2023, 41 states including the District of Columbia have expanded or have committed to expand their Medicaid Tabl e of Contents programs.
These are RFP driven, and MultiPlan partners with one or more Payors bidding on the business. Property and Casualty This market segment includes Payors of the medical services arising from work-related injuries and auto accidents, as well as other types of property and casualty insurance. There is little overlap between the commercial and government Payors and those in this segment.
Property and Casualty This market segment includes Payors of the medical services arising from work-related injuries and auto accidents, as well as other types of property and casualty insurance. There is little overlap between the commercial and government Payors and those in this segment.
Through our MultiPlan Helping Hands program, we are able to provide financial assistance for employees experiencing hardship; the program is funded 100% from employee donations and is administered by the Helping Hands Committee, comprised of MultiPlan employees.
Through our MultiPlan Helping Hands program, we are able to provide financial assistance for employees experiencing hardship; the program is funded 100% from employee donations and is administered by the Helping Hands Committee, comprised of MultiPlan employees. MultiPlan ACTS : Four Pillars of Success. Our core values are Accountability, Continuous Improvement, Teamwork, Service Excellence ("ACTS").
Corporate History and Background Our Company was founded in 1980 as a New York-based hospital network and has evolved both organically and through acquisitions from that regional network to a leading independent national PPO player, and then to a data- and technology-driven provider of cost management, payment and revenue integrity services company.
Please see the section entitled " Risk Factors — Risks Related to our Business and Operations ." Corporate History and Background Our Company was founded in 1980 as a New York-based hospital network and has evolved both organically and through acquisitions from that regional network to a leading independent national PPO player, and then to a data analytics and technology-enabled end-to-end cost management, payment and revenue integrity services company.
Although the end beneficiary of our services are employers and other plan sponsors and their health plan members, our direct customers are typically health plan administrators who go to market with our services.
Although the end beneficiaries of our services are employers and other plan sponsors and their health plan members, our direct customers are typically payors, including ASOs and third-party administrators ("TPAs"), who go to market with our wholesale services to those end customers.
Our website is located at www.multiplan.us, and our investor relations website is located at www.investors.multiplan.us. No information contained on these websites is intended to be included as part of, or incorporated by reference into, this Annual Report on Form 10-K.
No information contained on these websites is intended to be included as part of, or incorporated by reference into, this Annual Report on Form 10-K.
As with MA, MultiPlan’s services in this segment are primarily limited to payment integrity services with some custom network development of use to bidders winning state Medicaid business under a request for proposal ("RFP"). Other Programs. We have a history of developing custom networks for TRICARE and Veterans Administration programs.
As with MA, MultiPlan’s services in this segment have until recently been primarily limited to payment integrity services with some custom network development of use to bidders winning state Medicaid business under a request for proposal ("RFP").
The Texas Medical Association, an industry group for physicians, and LifeNet, an air ambulance provider, have each brought three lawsuits, and the Texas Medical Association has brought an additional fourth lawsuit, all challenging aspects of the regulations published to date.
Additionally, there remains a handful of lawsuits challenging portions of the NSA in federal courts. The Texas Medical Association, an industry group for physicians, and LifeNet, an air ambulance provider, have each brought three lawsuits, and the Texas Medical Association has brought an additional fourth lawsuit, all challenging aspects of the NSA's implementing regulations and technical guidance published to date.
They are most commonly priced at a percentage of savings identified. Value-Driven Health Plan Services ("VDHP") . VDHP is a form of reference-based pricing that bundles member and provider engagement tools to enable employers and other health plan sponsors to offer low-cost health plans.
VDHP is a form of reference-based pricing that bundles member and provider engagement tools to enable employers and other health plan sponsors to offer low-cost health plans.
Substantially all of MultiPlan's services are available in all 50 U.S. states and the District of Columbia. All services are available to all applicable customers regardless of geographic location, company type or size. Commercial Health Commercial healthcare accounted for about 28% of the total $4.3 trillion U.S. medical spend in 2021.
All services are available to all applicable customers regardless of geographic location, company type or size. Tabl e of Contents Commercial Health Commercial healthcare accounted for about 29% of the total $4.5 trillion U.S. medical spend in 2022.
Self-insured plans are typically administered by insurance companies or TPAs. Often, particularly for the national insurers, this "Administrative Services Only" ("ASO") business is larger than the at-risk insured business in terms of membership.
Self-insured plans are typically administered by insurance companies or TPAs. Often, particularly for the national insurers, this "Administrative Services Only" ("ASO") business is larger than the fully-insured business in terms of membership. Nationwide as of 2021, we estimate that membership in ASO plans is about 110 million, or 60% of total membership in commercial health plans.
The services leverage our extensive network development, credentialing and data management capabilities as well as a sophisticated transaction engine that matches rendering provider information on the claim to the applicable network contract so the discount can be applied.
These services generally are used first in a solution hierarchy with members actively steered to participating providers through online and other directories. The services leverage our extensive network development, credentialing and data management capabilities as well as a sophisticated transaction engine that matches rendering provider information on the claim to the applicable network contract so the discount can be applied.
MultiPlan’s services directly address the overcharges that accounts for about $400 billion of waste/abuse, including – excessive prices, clinical billing errors, suspect billing schemes and patterns, errors in enrollment data and, in some cases, services provided unnecessarily. We believe cost management and billing and payment accuracy will continue to be highly important to Payors across the markets we serve.
MultiPlan’s services directly address the overcharges that account for about $400 billion of waste/abuse, including – excessive prices, clinical billing errors, suspect billing schemes and patterns, errors in enrollment data and, in some cases, services provided unnecessarily.
These services are applied prior to the payment of the claim and are typically processed within a day of receipt; and, • Payment and Revenue Integrity Services : data, technology, and clinical expertise deployed to identify and remove improper and unnecessary charges before or after claims are paid, or to identify and help restore and preserve underpaid premium dollars.
These services are applied prior to the payment of the claim and are typically processed within a day of receipt; • Payment and Revenue Integrity Services : data, technology, and clinical expertise deployed to identify and remove improper and unnecessary charges before or after claims are paid, or to identify and help restore and preserve underpaid premium dollars; and • Data and Decision Science Services : a suite of solutions that apply modern methods of data science to produce descriptive, predictive and prescriptive analytics that drive optimized benefit plan design, support decision-making, improve clinical outcomes, and reduce the total cost of care.
Part D OHI is priced per validated member with other primary Part D coverage. 15 Table of Contents Growth Strategy In meeting its mission to drive fairness, efficiency and affordability for U.S. healthcare, MultiPlan has historically focused on helping Payors manage medical spend by lowering per-unit claim costs and improving billing and payment accuracy.
Our Competitive Advantages In support of our mission to drive fairness, efficiency and affordability for U.S. healthcare, MultiPlan has historically focused on helping Payors manage medical spend by lowering per-unit claim costs and improving billing and payment accuracy.
This leads to the need for Payors to offer variety in plan designs, and according to Kaiser Family Foundation, over two-thirds of large employers offer at least two benefit plan options to their employees.
In a tight employment market, particularly with large employers, choice of benefits and member satisfaction concerns may have equal or more weight than medical cost. This leads to the need for Payors to offer variety in plan designs, and according to Kaiser Family Foundation, over two-thirds of large employers offer at least two benefit plan options to their employees.
Certain providers also choose to set up an arrangement with MultiPlan for pre-determined levels of discount to be automatically deducted on claims that would otherwise be individually negotiated. For those claims that are not automatically negotiated, MultiPlan works directly with the provider's office through our negotiations staff, which is aided by extensive workflow and benchmarking tools.
These claims include those in which the proposed negotiated amount is generated by algorithms and automatically transmitted to the provider’s office, and/or that are electronically accepted and signed by the provider. Certain providers also choose to set up an arrangement with MultiPlan for pre-determined levels of discount to be automatically deducted on claims that would otherwise be individually negotiated.
Our Revenue Integrity services compete on the basis of identification of and assistance in restoration and preservation of underpaid premiums from CMS caused by member eligibility and status errors.
Our Revenue Integrity services compete on the basis of identification of and assistance in restoration and preservation of underpaid premiums from Tabl e of Contents CMS caused by member eligibility and status errors. Our competitors for these services typically include Optum, Conduent, Cotiviti, Inc., SCIO and The Rawlings Group. Data & Decision Science Services .
We estimate that in 2022 our Payor customers served over 100,000 employers/plan sponsors actively using our services through the ASO distribution channels, which generated over 85% of our combined Network and Analytics revenues in 2022. Through these plan sponsors, an estimated 60 million consumers have access to our services through their health plans.
We estimate that in 2023 our customers served over 100,000 self insured employers/ Tabl e of Contents plan sponsors actively using our services through the ASO distribution channels and direct relationships, which generated over 85% of our combined Network and Analytics revenues in 2023.
Customers MultiPlan works directly with over 700 Payors to manage medical cost and billing and payment accuracy for their Administrative Services Only ("ASO"), self-insured employers/plan sponsors and fully-insured health plans where applicable. We also indirectly service consumers accessing healthcare services through commercial and government health plans or property and casualty policies.
We work directly with over 700 Payors to manage medical cost and billing and payment accuracy for their ASO, self-insured employers/plan sponsors and fully-insured health plans where applicable.
In addition to the unique resources and dynamic capabilities on our platform, we enjoy economies of scale that allow us to produce valuable services for our customers at lower unit costs than our competitors and to make significant investments in these services on behalf of our customers.
These economies of scale allow us to produce valuable services for our customers at lower unit costs than our competitors and to make significant investments in these services on behalf of our customers. • Unique products and capabilities, including: ◦ Broad range of out-of-network solutions – We believe no single competitor currently offers the same breadth of out-of-network cost management services that we provide.
In the year ended December 31, 2022, consistent with MultiPlan’s revenue mix, the four largest publicly-held commercial health insurers reported that approximately 80% of their membership was in self-insured plans. MultiPlan services benefit both fully-insured and self-insured health plans. We work with fully-insured plans directly, including national insurers, Blue Cross and Blue Shield plans, provider-sponsored and independent health plans.
As of year-end 2022, and consistent with MultiPlan’s revenue mix, the four largest publicly-held commercial health insurers reported that approximately 80% of their commercial membership was in self-insured plans.
We see opportunity in countering the accelerating pace of medical cost inflation, leading to more savings for our customers and associated revenues for the Company. Of the $400 billion in estimated waste/abuse, we estimate the serviceable addressable market (“SAM”) for our out-of-network cost management and out of network payment integrity solutions is approximately $6 to 8 billion.
Of the $400 billion in estimated waste/abuse, we estimate the total addressable market ("TAM") for our out-of-network cost management and out-of-network payment integrity solutions is approximately $6 to 8 billion. We estimate the TAM for our in-network payment and revenue integrity solutions is approximately $4 to 5 billion.
Network-Based Services Our Network-Based Services reduce the per-unit cost of claims through contracts with providers and facilities that establish discounts with member protection from balance billing in exchange for patient steerage and other provider-friendly terms and conditions. These services generally are used first in a solution hierarchy with members actively steered to participating providers through online and other directories.
Today, they are most in demand in the small and mid-sized group market. They are most commonly priced per-employee/member-per-month ("PEPM"). Network-Based Services Our Network-Based Services reduce the per-unit cost of claims through contracts with providers and facilities that establish discounts with member protection from balance billing in exchange for patient steerage and other provider-friendly terms and conditions.
MultiPlan’s value in this segment is similar to the Workers’ Comp segment – network access and payment integrity services primarily, with some interest in analytics-based services where state fee schedules are not in place.
MultiPlan’s value in this segment is similar to the Workers’ Comp segment – providing network access and payment integrity services primarily, with some activity in analytics-based services where state fee schedules are not in place. Supplemental Insurance. The total annualized in-force premium for the employer-based supplemental health insurance industry was just over $11.3 billion at end of 2022.
Over the last 40+ years, we have developed a platform that offers these Payors a single interface to a comprehensive set of services, which are used in combination or individually to reduce the medical cost burden on their health plan customers and members while fostering independently developed fair and efficient reimbursements to healthcare providers.
Our platform offers these Payors a single interface to our services, which are used in combination or individually to reduce the medical cost burden on their health plan customers, by managing the utilization of medical services, lowering the per-unit cost of medical services incurred, and producing fair and efficient reimbursements.
Our set of dynamic capabilities enables us to modify our existing operational strategies and processes to be highly responsive to our evolving customer needs. We believe this flexibility is an essential feature of our customer value proposition and a durable source of competitive advantage.
We believe this flexibility is an essential feature of our customer value proposition and a durable source of competitive advantage.
In 2021, the Department of Labor reviewed over 100 plans, and determined that none of the comparative analyses were sufficient as initially submitted.
Plans are required to provide these comparative analyses to the Department of Labor upon request, and the Department of Labor is required to review at least 20 health plans for mental health parity each year. In 2021, the Department of Labor reviewed over 100 plans, and determined that none of the comparative analyses were sufficient as initially submitted.
We work with self-insured plans primarily through their plan administrators, which include the same types of companies as well as TPAs and sometimes the employers/plan sponsors themselves.
These plans favor MultiPlan’s Analytics-Based Services, and in particular RBP, over Network-Based Services. We work with self-insured plans primarily through their plan administrators, which include the same types of companies as well as TPAs and sometimes the employers/plan sponsors themselves. Over 85% of our 2023 revenues are attributed to self-insured plans that we service through their Payors or directly.
We expect growth in demand for these services will be driven by two major trends: (i) increasing costs per claim from medical inflation and treatment, modalities, and technology enhancements and (ii) increasing treatment volume from an aging population and growth of the insured population in the U.S.
We expect growth in demand for these services will be driven by three major trends: (i) increasing treatment and claims volumes from an aging population, the growth of the insured population in the U.S., and the advent of new treatments, modalities and technologies; (ii) increasing per unit costs related to medical inflation, driven in part by those same treatment, modalities, and technology enhancements; and, (iii) continued complexities of healthcare, including the prevalence of unintended billing complications and increased administrative burden of complying with new healthcare industry regulations.
Because these entities are responsible for paying for medical claims, they are typically focused primarily on cost management and billing and payment accuracy with member features given less emphasis. These plans favor MultiPlan’s Analytics-Based Services, and in particular RBP, over Network-Based Services.
We work with fully-insured plans directly, including national insurers, Blue Cross and Blue Shield plans, provider-sponsored and independent health plans. Because these entities are responsible for paying for medical claims, they are typically focused primarily on cost management and billing and payment accuracy with member features given less emphasis.
Financial negotiation services are used by all types of Payors, most notably Blue Cross and Blue Shield plans, provider-sponsored and independent health plans. They are priced at a percentage of savings identified. Surprise Billing Services.
For those claims that are not automatically negotiated, MultiPlan works directly with the provider's office through our negotiations staff, which is aided by extensive workflow and benchmarking tools. Financial negotiation services are used by all types of Payors, most notably Blue Cross and Blue Shield plans, provider-sponsored and independent health plans. They are priced at a percentage of savings identified.
In addition to enacting the NSA, the Consolidated Appropriations Act (“CAA”) also revised and clarified requirements of the Mental Health Parity and Addiction Act (“MHPAEA”). The MHPAEA, enacted in 2008, prohibits health plans from providing less favorable mental health and substance abuse disorder benefits than medical/surgical benefits, whether measured in terms of quantitative treatment limitations or non-quantitative limitations (“NQTLs”).
The MHPAEA, enacted in 2008, prohibits health plans from providing less favorable mental health and substance abuse disorder benefits than medical/surgical benefits, whether measured in terms of quantitative treatment limitations or non-quantitative limitations ("NQTLs"). Specifically, the MHPAEA prohibits imposing NQTLs on mental health or substance abuse disorder benefits without performing comparative analyses on what impact those NQTLs will have.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThis is not a complete list of the risks set out in this section and readers are encouraged to review this section in its entirety for a more fulsome understanding of the risks and uncertainties that may impact the Company. • Business and Operations Risks ◦ Our success is dependent on retaining, and the success of, our customers as we depend on a core group of customers for a significant portion of our revenues. ◦ The impact of trends in the U.S. healthcare system, including recent trends, which we believe are short-term, of reduced healthcare utilization and increased patient financial responsibility for services. 24 Table of Contents ◦ The long-term impact of the COVID-19 pandemic and related risks. ◦ Our ability to preserve or increase our market share or maintain our PPO networks. ◦ Our ability to maintain our competitive position in the market. ◦ An increase in competition or pricing pressures increases. ◦ The inability of our customers to pay for our services could decrease our revenue. ◦ Our PPO networks may experience decreases in discounts from providers. ◦ We depend on our providers to maintain the profitability of our business and expand our operations. ◦ If we do not continue to attract, motivate and retain members of our senior management team and qualified employees, or if we are unable to maintain sufficient qualified personnel, we may not be able to support our operations. ◦ Pressure from healthcare providers, and/or changes in state laws, regarding access to preferred provider networks. ◦ We may be unable to achieve some or all of the operational, growth and other benefits that we expect to realize through our strategic plans. ◦ We may not successfully enter new lines of business and broaden the scope of our services. ◦ We operate in a litigious environment which may adversely affect our financial results. • Risks Related to Information Technology Systems, Intellectual Property and Cybersecurity ◦ We depend on uninterrupted computer access for our customers and the reliable operation of our information technology systems; any prolonged delays due to data interruptions or revocation of software licenses could adversely affect our ability to operate our business and cause our customers to seek alternative providers. ◦ Computer systems like ours could suffer security and privacy breaches or incidents that could negatively impact our business and reputation, harm both us and our customers and create liability. • Other Business and Operations Risks ◦ Changes in accounting principles may negatively affect our results of operations. ◦ If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired. • Risks Related to the Healthcare Industry and Other Laws and Regulations ◦ We operate in an industry that is subject to extensive federal, state and local regulation.
Biggest changeThis is not a complete list of the risks set out in this section and readers are encouraged to review this section in its entirety for a more fulsome understanding of the risks and uncertainties that may impact the Company. • Business and Operations Risks ◦ Our ability to retain our key customers, as well as the success of those customers, as we depend on a core group of customers for a significant portion of our revenues. ◦ Our ability to achieve some or all of the operational, growth and other benefits that we expect to realize through our strategic plans, in particular our growth strategy. ◦ Our ability to successfully enter new lines of business, launch new products and broaden the scope of our services. ◦ Our ability to continue to attract, motivate and retain members of our senior management team and qualified employees and our ability to maintain sufficient qualified personnel. ◦ The impact of trends in the U.S. healthcare system, including reduced healthcare utilization and increased patient financial responsibility for services. ◦ Our ability to maintain our competitive position in the market. ◦ An increase in competition or pricing pressures. ◦ Changes in the healthcare industry. ◦ Evolving industry standards and rapid technological changes. ◦ The litigious environment in which we operate. • Risks Related to Information Technology Systems, Intellectual Property and Cybersecurity ◦ Information technology environments like ours could suffer security and privacy breaches or incidents, which can put at risk the confidential and restricted information we maintain, including personal health information. ◦ The reliable operation of, and continuous access by our customers to, our information technology systems. ◦ Failure to adequately protect the confidentiality of our trade secrets, know-how, proprietary applications, business processes and other proprietary information, including our proprietary data and technology platform. • Other Business and Operations Risks ◦ Failure to maintain an effective system of disclosure controls and internal control over financial reporting. • Risks Related to the Healthcare Industry and Other Laws and Regulations ◦ Changes in existing healthcare laws and regulatory interpretations on a state or federal level. ◦ New federal and state healthcare laws and regulations. ◦ Failure to comply with those laws and regulations applicable to individually identifiable information, including personal information and health information, or adequately secure such information.
Federal and state efforts to reduce healthcare spending may materially adversely affect our business, financial condition, and results of operations.
Federal and state efforts to reduce healthcare spending may materially and adversely affect our business, financial condition, and results of operations.
Our business is subject to evolving corporate governance and public disclosure regulations and expectations, including with respect to environmental, social and governance matters that could expose us to numerous risks. We are subject to changing rules and regulations promulgated by a number of governmental and self-regulatory organizations, including the SEC, the NYSE and the Financial Accounting Standards Board.
Our business is subject to evolving corporate governance and public disclosure regulations and expectations, including with respect to environmental, social and governance matters that could expose us to numerous risks. We are subject to changing laws, rules and regulations promulgated by a number of governmental and self-regulatory organizations, including the SEC, the NYSE and the Financial Accounting Standards Board.
Because we lack the protection of registered copyrights for our internally developed software applications, we may be vulnerable to misappropriation of our proprietary applications by third parties or competitors. Enforcing a claim that a third party illegally obtained and is using any of our proprietary information or technology is expensive and time consuming, and the outcome is unpredictable.
Further, because we lack the protection of registered copyrights for our internally developed software applications, we may be vulnerable to misappropriation of our proprietary applications by third parties or competitors. Enforcing a claim that a third party illegally obtained and is using any of our proprietary information or technology is expensive and time consuming, and the outcome is unpredictable.
Since the services we provide are not reimbursed by government healthcare programs, such fraud and abuse laws generally do not apply to our business, however, some laws may be applicable to us. The laws, regulations, and other requirements in this area are broad and complex and judicial and regulatory interpretations can be inconsistent.
Since the products and services we provide are not reimbursed by government healthcare programs, such fraud and abuse laws generally do not apply to our business, however, some laws may be applicable to us. The laws, regulations, and other requirements in this area are broad and complex and judicial and regulatory interpretations can be inconsistent.
Our substantial level of indebtedness increases the possibility that we may be unable to generate cash sufficient to pay, when due, the principal of, interest on or other amounts due in respect of our indebtedness. Our substantial indebtedness, combined with our other financial obligations and contractual commitments, may have a material adverse impact on us and our business.
Our substantial level of indebtedness increases the possibility that we may be unable to generate cash sufficient to pay, when due, the principal of, interest on or other amounts due in respect of our indebtedness. Further, our substantial indebtedness, combined with our other financial obligations and contractual commitments, may have a material adverse impact on us and our business.
Some states have considered or enacted legislation designed to regulate the manner in which certain insurers should pay for certain categories of out-of-network claims or aimed at addressing "surprise" billing by out-of-network providers, and it is uncertain how states may react to the recently enacted No Surprises Act.
Some states have considered or enacted legislation designed to regulate the manner in which certain insurers should pay for certain categories of out-of-network claims or aimed at addressing "surprise" billing by out-of-network providers, and it is uncertain how states may react to the No Surprises Act.
Our business is dependent on a variety of factors, including our ability to enter into contracts with Payors and providers on terms attractive to all parties and the absence of substantial changes in the healthcare industry that would diminish the need for the services we offer.
Our business is dependent on a variety of factors, including our ability to enter into contracts with Payors and providers on terms attractive to all parties and the absence of substantial changes in the healthcare industry that would diminish the need for the products and services we offer.
These covenants limit our and/or certain of our subsidiaries', ability to, among other things: • incur additional indebtedness or issue disqualified or preferred stock; • pay certain dividends or make certain distributions on capital stock or repurchase or redeem capital stock; • make certain loans, investments or other restricted payments; • transfer or sell certain assets; • incur certain liens; • place restrictions on the ability of its subsidiaries to pay dividends or make other payments to us; • guarantee indebtedness or incur other contingent obligations; • prepay junior debt and make certain investments; • consummate any merger, consolidation or amalgamation, or liquidate, wind up or dissolve ourself or itself (or suffer any liquidation or dissolution), or dispose of all or substantially all of our or such subsidiary's business units, assets or other properties; and • engage in transactions with our affiliates.
These covenants limit our and/or certain of our subsidiaries', ability to, among other things: • incur additional indebtedness or issue disqualified or preferred stock; • pay certain dividends or make certain distributions on capital stock or repurchase or redeem capital stock; • make certain loans, investments or other restricted payments; • transfer or sell certain assets; • incur certain liens; • place restrictions on the ability of its subsidiaries to pay dividends or make other payments to us; • guarantee indebtedness or incur other contingent obligations; • prepay junior debt and make certain investments; • consummate any change in control, merger, consolidation or amalgamation, or liquidate, wind up or dissolve ourself or itself (or suffer any liquidation or dissolution), or dispose of all or substantially all of our or such subsidiary's business units, assets or other properties; and • engage in transactions with our affiliates.
Natural disasters, adverse weather conditions, pandemics, and other business disruptions could seriously harm our revenue and financial condition and increase our costs and expenses by disrupting our operations, or those of our customers or vendors, as a result of potential office closures or damage from severe weather.
Natural disasters, adverse weather conditions, and other business disruptions could seriously harm our revenue and financial condition and increase our costs and expenses by disrupting our operations, or those of our customers or vendors, as a result of potential office closures or damage from severe weather.
Healthcare reform laws such as the Affordable Care Act have had a significant impact on the healthcare industry, including changing the manner in which providers and Payors contract for services. In addition, under the Affordable Care Act Payors are required to meet certain financial criteria.
Healthcare reform laws such as the Affordable Care Act have had a significant impact on the healthcare industry, including changing the manner in which providers and Payors contract for products and services. In addition, under the Affordable Care Act, Payors are required to meet certain financial criteria.
For example, MultiPlan may be made party to such lawsuits or litigation may be brought independently against MultiPlan under various legal bases, including, breach of contract, misrepresentation, unjust enrichment or violations of ERISA or RICO, and may be made under other legal bases or theories in the future.
For example, MultiPlan may be made party to such lawsuits or litigation may be brought independently against MultiPlan under various legal bases, including, breach of contract, misrepresentation, unjust enrichment, antitrust, or violations of ERISA or RICO, and may be made under other legal bases or theories in the future.
Any claims or litigation could cause us to incur significant expenses and, if successfully asserted against us, could require that we pay substantial damages or ongoing royalty payments, prevent us from offering our services, or require that we comply with other unfavorable terms.
Any claims or litigation could cause us to incur significant expenses and, if successfully asserted against us, could require that we pay substantial damages or ongoing royalty payments, prevent us from offering our products and services, or require that we comply with other unfavorable terms.
Risks and uncertainties presented or exacerbated by the long-term effects of the COVID-19 pandemic, or any future pandemics or epidemics, include the following: • impact on our results and financial position due to the significant uncertainty in relation to the duration and challenges that an ongoing pandemic may have on the healthcare industry and us, including deferral of elective medical procedures, increases in unemployment and reductions in participants covered by our customers' plans and related services; • long-term impacts on the healthcare system, including negative impacts on utilization of the healthcare system, decreased capacity of healthcare system and departure of skilled workers from the healthcare industry; • effects of pricing pressure and/or decreases in discounts from providers on related treatments; • effects of new laws, including vaccine-or-testing mandates, and pandemic relief and economic stimulus measures on our and our customers' business; the inability of our customers to pay for our services; • the loss of key members of our management team; • the inability to maintain sufficient qualified personnel due to employee illness, quarantine, willingness to return to work, vaccine and/or testing mandates, face-covering and other safety requirements, general scarcity of employees, or travel and other restrictions; • changes in our regulatory environment, including healthcare law and regulations; • the ability to implement or expand information technology systems or network infrastructure; • changes in our industry; • heightened enforcement activity by government agencies, in particular with respect to government subsidized or funded treatments; • interruptions or security breaches of our information technology systems (or those of our vendors and service providers), in particular while our and our customers' workforce are working remotely; 27 Table of Contents • the expansion of privacy and data security laws; • our ability to identify, complete and successfully integrate recent and future acquisitions; • our ability to pay interest and principal on our notes and other indebtedness; • our ability to safely and successfully re-open our offices, notwithstanding our shift to an increasingly distributed and remote workforce; and • long-term effects on the nature of the office environment and remote working, which may present new operational challenges.
Risks and uncertainties presented or exacerbated by the long-term effects of the COVID-19 pandemic, or any future pandemics or epidemics, include the following: • impact on our results and financial position due to the significant uncertainty in relation to the duration and challenges that an ongoing pandemic may have on the healthcare industry and us, including deferral of elective medical procedures, increases in unemployment and reductions in participants covered by our customers' plans and related services; • long-term impacts on the healthcare system, including negative impacts on utilization of the healthcare system, decreased capacity of healthcare system and departure of skilled workers from the healthcare industry; Tabl e of Contents • effects of pricing pressure and/or decreases in discounts from providers on related treatments; • effects of new laws, including vaccine-or-testing mandates, and pandemic relief and economic stimulus measures on our and our customers' business; • the inability of our customers to pay for our products and services; • the loss of key members of our management team; • the inability to maintain sufficient qualified personnel due to employee illness, quarantine, willingness to return to work, vaccine and/or testing mandates, face-covering and other safety requirements, general scarcity of employees, or travel and other restrictions; • changes in our regulatory environment, including healthcare law and regulations; • the ability to implement or expand information technology systems or network infrastructure; • changes in our industry; • heightened enforcement activity by government agencies, in particular with respect to government subsidized or funded treatments; • interruptions or security breaches of our information technology systems (or those of our vendors and service providers), in particular while our and our customers' workforce are working remotely; • the expansion of privacy and data security laws; • our ability to identify, complete and successfully integrate recent and future acquisitions; • our ability to pay interest and principal on our notes and other indebtedness; • our ability to safely and successfully re-open our offices, notwithstanding our shift to an increasingly distributed and remote workforce; and • long-term effects on the nature of the office environment and remote working, which may present new operational challenges.
These provisions provide for, among other things: • the division of our Board into three classes, as nearly equal in size as possible, with directors in each class serving three-year terms and with terms of the directors of only one class expiring in any given year; • that directors may only be removed for cause, and only by the affirmative vote of the holders of at least two-thirds in voting power of all the then-outstanding shares of stock entitled to vote thereon, voting together as a single class; • the ability of our Board to issue one or more series of preferred stock with voting or other rights or preferences that could have the effect of impeding the success of an attempt to acquire us or otherwise effect a change of control; • advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at stockholder meetings; • the right of H&F and Sponsor and certain of their respective affiliates to nominate a number of the members of our Board and the obligation of certain of our the other parties to the Investor Rights Agreement to support such nominees; • certain limitations on convening special stockholder meetings; and • that certain provisions of our second amended and restated certificate of incorporation and amended and restated bylaws may be amended only by the affirmative vote of the holders of at least two-thirds in voting power of all the then-outstanding shares of our stock entitled to vote thereon, voting together as a single class.
These provisions provide for, among other things: • the division of our Board into three classes, as nearly equal in size as possible, with directors in each class serving three-year terms and with terms of the directors of only one class expiring in any given year; • that directors may only be removed for cause, and only by the affirmative vote of the holders of at least two-thirds in voting power of all the then-outstanding shares of stock entitled to vote thereon, voting together as a single class; • the ability of our Board to issue one or more series of preferred stock with voting or other rights or preferences that could have the effect of impeding the success of an attempt to acquire us or otherwise effect a change of control; • advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at stockholder meetings; • the right of H&F and Sponsor and certain of their respective affiliates to nominate a number of the members of our Board and the obligation of certain of our the other parties to the Investor Rights Agreement to support such nominees; • certain limitations on convening special stockholder meetings; • that certain provisions of our second amended and restated certificate of incorporation and amended and restated bylaws may be amended only by the affirmative vote of the holders of at least two-thirds in voting power of all the then-outstanding shares of our stock entitled to vote thereon, voting together as a single class; and • an event of default or an acceleration of debt in the event of a change of control.
Under our charter, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum will be a state court within the State of Delaware for: • any derivative action or proceeding brought on our behalf; • any action asserting a claim of breach of a fiduciary duty owed by, or any wrongdoing by, any director, officer or employee of ours to us or our stockholders; • any action asserting a claim against us or any director or officer or other employee of ours arising pursuant to any provision of the DGCL or our charter or bylaws (as either may be amended, restated, modified, supplemented or waived from time to time); 44 Table of Contents • any action asserting a claim against us or any director or officer or other employee of ours governed by the internal affairs doctrine; or any action asserting an "internal corporate claim" as that term is defined in Section 115 of the DGCL, shall be a state court located within the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware).
Under our charter, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum will be a state court within the State of Delaware for: • any derivative action or proceeding brought on our behalf; • any action asserting a claim of breach of a fiduciary duty owed by, or any wrongdoing by, any director, officer or employee of ours to us or our stockholders; • any action asserting a claim against us or any director or officer or other employee of ours arising pursuant to any provision of the DGCL or our charter or bylaws (as either may be amended, restated, modified, supplemented or waived from time to time); • any action asserting a claim against us or any director or officer or other employee of ours governed by the internal affairs doctrine; or any action asserting an "internal corporate claim" as that term is defined in Section 115 of the DGCL, shall be a state court located within the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware).
As with HIPAA, these laws may apply directly to our business or indirectly by contract when we provide services to other companies.
As with HIPAA, these laws may apply directly to our business or indirectly by contract when we provide products or services to other companies.
If third parties gain unauthorized access to our information systems or if our proprietary information is misappropriated, it may have a material adverse effect on our business, financial condition and results of operations. Trade secrets laws offer limited protection against third party development of competitive products or services.
If third parties gain unauthorized access to our information systems or if our proprietary information is misappropriated, it may have a material adverse effect on our business, financial condition and results of operations. Trade secret laws offer limited protection against third party development of competitive products or services.
We cannot predict what impact, if any, U.S. federal and state health reforms or other government proposals and activities, which include efforts to change or reform the administration or interpretation of government healthcare programs, laws, regulations or policies, might have on us, but such changes could impose new and more stringent regulatory requirements on our activities, which could adversely affect our business, results of operations and financial condition.
We cannot predict what impact, if any, U.S. federal and Tabl e of Contents state health reforms or other government proposals and activities, which include efforts to change or reform the administration or interpretation of government healthcare programs, laws, regulations or policies, might have on us, but such changes could impose new and more stringent regulatory requirements on our activities, which could adversely affect our business, results of operations and financial condition.
Rapidly changing technology, evolving industry standards and the frequent introduction of new and enhanced services characterize the market for our services.
Rapidly changing technology, evolving industry standards and the frequent introduction of new and enhanced products and services characterize the market for our products and services.
We cannot assure you that we will be able to successfully execute our strategic plans in the short term, or at all, or realize the expected benefits of such plans. A variety of risks could cause us not to execute such plans or realize some or all of the expected benefits therefrom.
We cannot assure you that we will be able to successfully execute these strategic plans in the short term, or at all, or realize the expected benefits of such plans. A variety of risks could cause us not to execute such plans, or realize some or all of the expected benefits therefrom.
Federal and state regulators may investigate us or our customers with respect to the payment of out-of-network claims, including the determination of payment amounts and what data and other factors are permitted to be used by commercial health Payors and other Payors in making such determinations, or the calculation of required amounts under the No Surprises Act, as well as investigations related to regulations requiring transparency.
Federal and state regulators may investigate us or our customers with respect to the payment of out-of-network claims, including the determination of payment amounts and what Tabl e of Contents data and other factors are permitted to be used by commercial health Payors and other Payors in making such determinations, or the calculation of required amounts under the No Surprises Act, as well as investigations related to regulations requiring transparency.
Certain provisions of our second amended and restated certificate of incorporation, amended and restated bylaws and Investor Rights Agreement may have the effect of delaying or preventing a merger, acquisition, tender offer, takeover attempt or other change of control transaction that a stockholder might consider to be in its best interest, including attempts that might result in a premium over the market price of our common stock.
Certain provisions of our second amended and restated certificate of incorporation, amended and restated bylaws, Investor Rights Agreement and debt agreements and instruments may have the effect of delaying or preventing a merger, acquisition, tender offer, takeover attempt or other change of control transaction that a stockholder might consider to be in its best interest, including attempts that might result in a premium over the market price of our common stock.
As of December 31, 2022, we had Private Placement Warrants exercisable for an aggregate of 19,068,698 shares of our Class A common stock and Unvested Founder Shares contingently issuable for an aggregate of 12,404,080 shares of our Class A common stock outstanding. We account for the Private Placement Warrants and Unvested Founder Shares as liabilities.
As of December 31, 2023, we had Private Placement Warrants exercisable for an aggregate of 19,068,698 shares of our Class A common stock and Unvested Founder Shares contingently issuable for an aggregate of 12,404,080 shares of our Class A common stock outstanding. We account for the Private Placement Warrants and Unvested Founder Shares as liabilities.
Our charter designates a state court within the State of Delaware, to the fullest extent permitted by law, as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit the ability of our stockholders to obtain a favorable judicial forum for disputes with us or with our directors, officers or employees and may discourage stockholders from bringing such claims.
Our charter designates a state court within the State of Delaware, to the fullest extent permitted by law, as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit the Tabl e of Contents ability of our stockholders to obtain a favorable judicial forum for disputes with us or with our directors, officers or employees and may discourage stockholders from bringing such claims.
The price of our securities may fluctuate due to a variety of factors, including: 46 Table of Contents • actual or anticipated fluctuations in our quarterly and annual results and those of other public companies in our industry; • changes in the market's expectations about our operating results; • the public's reaction to our press releases, other public announcements and filings with the SEC; • speculation in the press or investment community; • short seller reports and negative public commentary; • actual or anticipated developments in our business, competitors' businesses or the competitive landscape generally; • our operating results failing to meet the expectation of securities analysts or investors in a particular period; • our ability to execute on our strategic plans and amount of costs we incur in connection therewith; • changes in financial estimates and recommendations by securities analysts concerning us or the market in general; • the failure of securities analysts to publish research about us, or shortfalls in our operating results compared to levels forecast by securities analysts; • operating and stock price performance of other companies that investors deem comparable to ours; • changes in laws and regulations affecting our business; • commencement of, or involvement in, litigation involving us; • changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; • any reduction in, or withdrawal of, our credit ratings; • the volume of our Class A common stock available for public sale; • any major change in our Board or management; • sales of substantial amounts of our common stock by our directors, officers or significant stockholders or the perception that such sales could occur; • mergers and strategic alliances in the industry in which we operate; • market prices and conditions in the industry in which we operate; • general economic and political conditions such as recessions, interest rates and "trade wars," inflation, pandemics (such as COVID-19), natural disasters, potential or actual military conflicts or acts of terrorism; • the general state of the securities markets; and • other risk factors listed under "Risk Factors." Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance.
The price of our securities may fluctuate due to a variety of factors, including: • actual or anticipated fluctuations in our quarterly and annual results and those of other public companies in our industry; • changes in the market's expectations about our operating results; • the public's reaction to our press releases, other public announcements and filings with the SEC; • speculation in the press or investment community; • short seller reports and negative public commentary; • actual or anticipated developments in our business, competitors' businesses or the competitive landscape generally; • our operating results failing to meet the expectation of securities analysts or investors in a particular period; • our ability to execute on our strategic plans and amount of costs we incur in connection therewith; • changes in financial estimates and recommendations by securities analysts concerning us or the market in general; • the failure of securities analysts to publish research about us, or shortfalls in our operating results compared to levels forecast by securities analysts; • operating and stock price performance of other companies that investors deem comparable to ours; • changes in laws and regulations affecting our business; • commencement of, or involvement in, litigation involving us; • changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; • any reduction in, or withdrawal of, our credit ratings; • the volume of our Class A common stock available for public sale; • any major change in our Board or management; • sales of substantial amounts of our common stock by our directors, officers or significant stockholders or the perception that such sales could occur; • mergers and strategic alliances in the industry in which we operate; • market prices and conditions in the industry in which we operate; • general economic and political conditions such as recessions, interest rates and "trade wars," inflation, pandemics (such as COVID-19), natural disasters, potential or actual military conflicts or acts of terrorism; • the general state of the securities markets; and • other risk factors listed in this "Risk Factors" section.
An increase in frequency or severity of natural events may result in greater disruption to our operations and increased cost for, or lack of availability of, property and liability insurance for our offices located in areas subject to such severe weather events.
An increase in frequency or severity of natural events may result in greater disruption to our operations and increased cost for, or lack of availability of, property and liability insurance for our offices and data centers located in areas subject to such severe weather events.
These alternative measures to general cash flow and capital resources outlined above may not be successful and may not permit us to meet our scheduled debt service obligations. Our debt agreements contain restrictions that limit our flexibility in operating our business.
These alternative measures to generate cash flow and capital resources outlined above may not be successful and may not permit us to meet our scheduled debt service obligations. Our debt agreements contain restrictions that limit our flexibility in operating our business.
Our ability to collect fees for our services may become impaired if our Payor customers are unable to pay for our services because they need to maintain cash reserves, if they fail to maintain required balance sheet ratios or if they become financially unstable or insolvent.
Our ability to collect fees for our products and services may become impaired if our Payor customers are unable to pay for our products and services because they need to maintain cash reserves, if they fail to maintain required balance sheet ratios or if they become financially unstable or insolvent.
We are unable to predict how these laws, regulations or other requirements will be interpreted or the full extent of their application, particularly to services that are not directly reimbursed by government healthcare programs.
We are unable to predict how these laws, regulations or other requirements will be interpreted or the full extent of their application, particularly to products and services that are not directly reimbursed by government healthcare programs.
Our acquisition strategy involves a number of risks, including: • our ability to find suitable businesses to acquire at affordable valuations or on other acceptable terms; • competition for acquisition targets may lead to substantial increases in purchase prices or one of our competitors acquiring one of our acquisition targets; • our continued dependence on access to the credit and capital markets to fund acquisitions; • prohibition of any of our proposed acquisitions under United States or foreign antitrust laws; • the diversion of management's attention from existing operations to the integration of acquired companies; • our inability to realize expected cost savings and synergies; • expenses, delays and difficulties of integrating acquired businesses into our existing business structure, which risks are heightened for large-scale acquisitions; and • difficulty in retaining key customers and management personnel.
Our acquisition strategy involves a number of risks, including: • our ability to find suitable businesses to acquire at affordable valuations or on other acceptable terms; • competition for acquisition targets may lead to substantial increases in purchase prices or one of our competitors acquiring one of our acquisition targets; • our continued dependence on access to the credit and capital markets to fund acquisitions; • prohibition of any of our proposed acquisitions under United States or foreign antitrust laws; • the diversion of management's attention from existing operations to the integration of acquired companies; • our inability to realize expected cost savings and synergies; • compliance with the regulatory environment applicable to an acquisition; • expenses, delays and difficulties of integrating acquired businesses into our existing business structure, which risks are heightened for large-scale acquisitions; and • difficulty in retaining key customers and management personnel.
While many of the immediate impacts of the COVID-19 pandemic have eased, its effect on the healthcare system and policies, global supply chains, inflation, labor shortages and wage increases continue to impact the healthcare industry.
While most of the immediate impacts of the COVID-19 pandemic have eased, its effect on the healthcare system and policies, global supply chains, inflation, labor shortages and wage increases continue to impact the healthcare industry.
Projecting such needs may be particularly difficult for new solutions and services or for the expansion of existing solutions and services into international or other markets in which we have limited or no prior experience.
Projecting such needs may be particularly difficult for new solutions, products and services or for the expansion of existing solutions, products and services into other markets in which we have limited or no prior experience.
If our stock price is volatile, we expect that we will recognize non-cash gains or losses on the outstanding Private Placement Warrants, Unvested Founder Shares or any other similar derivative instruments each reporting period and that the amount of such gains or losses could be material.
If our stock price is volatile, we expect that we will recognize non-cash Tabl e of Contents gains or losses on the outstanding Private Placement Warrants, Unvested Founder Shares or any other similar derivative instruments each reporting period and that the amount of such gains or losses could be material.
We are also continuing to improve our internal control over financial reporting. In order to develop, maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will 35 Table of Contents continue to expend, significant resources, including accounting-related and audit-related costs and significant management oversight.
We are also continuing to improve our internal control over financial reporting. In order to develop, maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related and audit-related costs and significant management oversight.
Any future lowering of our ratings likely would make it more difficult or more expensive for us to obtain additional debt financing and may reduce our profitability. Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.
Any future lowering of our ratings likely would make it more difficult or more expensive for us to obtain additional debt financing and may reduce our profitability. Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly notwithstanding our use of interest rate swaps.
While we maintain safeguards that we believe are reasonable and appropriate to protect the privacy and security of PHI and other personally identifiable information consistent with applicable law and our contractual obligations, we cannot provide assurance regarding how these laws, regulations, and contracts will be interpreted, enforced or applied to our operations; our systems may be vulnerable to physical break-ins, viruses, hackers, and other potential sources of security breaches or incidents and, on limited occasion in the past, we have experienced immaterial breaches.
While we maintain safeguards that we believe are reasonable and appropriate to protect the privacy and security of PHI Tabl e of Contents and other personally identifiable information consistent with applicable law and our contractual obligations, we cannot provide assurance regarding how these laws, regulations, and contracts will be interpreted, enforced or applied to our operations; our systems may be vulnerable to physical break-ins, viruses, hackers, and other potential sources of security breaches or incidents and, on limited occasions in the past, we have experienced immaterial breaches.
These provisions could make it more difficult for a third-party to acquire us, even if the third-party’s offer may be considered beneficial by many of our stockholders. As a result, our stockholders may be limited in their ability to obtain a premium for their shares.
Tabl e of Contents These provisions could make it more difficult for a third-party to acquire us, even if the third-party’s offer may be considered beneficial by many of our stockholders. As a result, our stockholders may be limited in their ability to obtain a premium for their shares.
Although laws such as the Affordable Care Act and the No Surprises Act have not caused us to significantly change our customer contracts or other aspects of our business, it is difficult to quantify the financial impact of such laws and there can be no assurances that we will not be adversely impacted in the future by any amendments to these or other healthcare laws or regulations.
Although laws such as the Affordable Care Act and the No Surprises Act have not caused us to significantly change our customer contracts or other aspects of our business, it is difficult to quantify the financial impact of such laws and there can be no assurances that we will not be adversely impacted in the future by any amendments to, interpretations of or rule-making regarding these or other healthcare laws or regulations.
We may not be able to identify, complete and successfully integrate acquisitions in the future and any failure to do so may limit our ability to grow our business.
We may not be able to identify, complete and successfully integrate acquisitions, including BST, in the future and any failure to do so may limit our ability to grow our business.
These laws generally prohibit the practice of medicine by lay entities or persons and are intended to prevent unlicensed persons or entities from interfering with or inappropriately influencing the physician's professional judgment. They 40 Table of Contents may also prevent the sharing of professional services income with non-professional or business interests.
These laws generally prohibit the practice of medicine by lay entities or persons and are intended to prevent unlicensed persons or entities from interfering with or inappropriately influencing the physician's professional judgment. They may also prevent the sharing of professional services income with non-professional or business interests.
We are continuing to refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers.
Tabl e of Contents We are continuing to refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers.
We are unable to predict the success of such initiatives, but, if passed, these and other efforts may adversely affect our business or operations, may create unexpected liabilities for us, may cause us or our customers to incur additional costs, and may restrict our operations or the operations of our customers.
We are unable to predict the Tabl e of Contents success of such initiatives, but, if passed, these and other efforts may adversely affect our business or operations, may create unexpected liabilities for us, may cause us or our customers to incur additional costs, and may restrict our operations or the operations of our customers.
We cannot assure you that we will successfully market our services to these insurance carriers and employers or that they will not resort to other means to achieve cost savings, including by in-sourcing or expanding their in-sourcing of such services.
We cannot assure you that we will successfully market our services to Tabl e of Contents these insurance carriers and employers or that they will not resort to other means to achieve cost savings, including by in-sourcing or expanding their in-sourcing of such services.
Changes in laws, regulations or rules, or a failure to comply with any laws, regulations or rules, may adversely affect our business, investments and results of operations. We are subject to laws, regulations and rules enacted by national, regional and local governments and the NYSE.
Tabl e of Contents Changes in laws, regulations or rules, or a failure to comply with any laws, regulations or rules, may adversely affect our business, investments and results of operations. We are subject to laws, regulations and rules enacted by national, regional and local governments and the NYSE.
We and our healthcare customers may also be subject to investigations and proceedings that seek recovery under laws such as 37 Table of Contents federal and state false claims acts, civil monetary penalties laws, and anti-kickback laws applicable to the business of our customers.
We and our healthcare customers may also be subject to investigations and proceedings that seek recovery under laws such as federal and state false claims acts, civil monetary penalties laws, and anti-kickback laws applicable to the business of our customers.
New federal and state laws and regulations could force us to change the conduct of our business or operations or affect our ability to expand our operations into other states or increase costs or delay or prevent the introduction of new or enhanced solutions or impair the function or value of our existing solutions, which could have a material adverse effect on our business, financial condition and results of operations.
New federal and state laws and regulations could: force us to change the conduct of our business or operations; affect our ability to expand our operations into other geographic markets; increase costs or delay or prevent the introduction of new or enhanced solutions and products; or impair the function or value of our existing solutions and products, which could have a material adverse effect on our business, financial condition and results of operations.
The expansion of our operations into new products and services may expose us to additional requirements and potential liabilities under additional statutes and legislative schemes that previously have not been relevant to our business, that may increase demands on our resources for compliance activities, and that may subject us to potential penalties for noncompliance with statutory and regulatory standards.
The expansion of our operations into new products and services or new geographic markets may expose us to additional requirements and potential liabilities under additional statutes, legislative schemes and licensure requirements that previously have not been relevant to our business, that may increase demands on our resources for compliance activities, and that may subject us to potential penalties for noncompliance with statutory and regulatory standards.
If any of the following risks or others not specified below materialize, our business, financial condition and results of operations could be materially and adversely affected. In that case, the trading price of our common stock could decline.
If any of Tabl e of Contents the following risks or others not specified below materialize, our business, financial condition and results of operations could be materially and adversely affected. In that case, the trading price of our common stock could decline.
Any sale of our Class A common stock and warrants by a significant stockholder, or the perception that such sales may occur, could cause the market price of our securities to drop significantly, even if our business is doing well.
Any sale of our Class A common stock by a significant stockholder, or the perception that such sale may occur, could cause the market price of our securities to drop significantly, even if our business is doing well.
For a more complete discussion of the material risks facing our business, see below. Business and Operations Risks Our success is dependent on retaining, and the success of, our customers as we depend on a core group of customers for a significant portion of our revenues.
For a more complete discussion of the material risks facing our business, see below. Business and Operations Risks Our success is dependent on retaining our key customers, as well as the success of those customers, as we depend on a core group of customers for a significant portion of our revenues.
In addition, substantial changes in the health-care industry, such as the enactment of laws and the adoption of regulations unfavorable to us or our relationships with Payors and providers, including the No Surprises Act and its implementing regulations, as well as other state laws and regulations aimed at addressing "surprise" billing (medical bills that arise when an insured patient receives care from an out-of-network provider, resulting in costs that were not expected by the patient), a substantial trend towards HMOs from PPOs, the adoption of a single Payor healthcare system in the United States or changes caused by, or that result from, the ongoing COVID-19 pandemic, could have a material adverse effect on our business, financial condition and results of operations and 31 Table of Contents could cause us to substantially alter our business strategy and methods of operation.
In addition, substantial changes in the health-care industry, such as the enactment of laws and the adoption of regulations unfavorable to us or our relationships with Payors and providers, including the No Surprises Act and its implementing regulations, as well as other state laws and regulations aimed at addressing "surprise" billing (medical bills that arise when an insured patient receives care from an out-of-network provider, resulting in costs that were not expected by the patient), a substantial trend towards HMOs from PPOs, the adoption of a single Payor healthcare system in one or more states, or in the United States or changes caused by, or that result from, pandemics and epidemics, including COVID-19, could have a material adverse effect on our business, financial condition and results of operations and could cause us to substantially alter our business strategy and methods of operation.
Further, the integration of certain operations and the differences in operational culture may require the dedication of significant management resources, which may distract management's attention from day-to-day business operations and from the evaluation of future acquisition targets.
Further, the integration of certain operations and the differences in operational culture or regulatory framework may require the dedication of significant management resources, which may distract management's attention from day-to-day business operations and from the evaluation of future acquisition targets.
A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future. 47 Table of Contents Item 1B. Unresolved Staff Comments None
A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future. Item 1B. Unresolved Staff Comments None
Risks Related to Information Technology Systems, Intellectual Property and Cybersecurity We depend on uninterrupted computer access for our customers and the reliable operation of our information technology systems; any prolonged delays due to data interruptions or revocation of our software licenses could adversely affect our ability to operate our business and cause our customers to seek alternative service providers.
We depend on uninterrupted computer access for our customers and the reliable operation of our information technology systems; any prolonged delays due to data interruptions or revocation of our software licenses could adversely affect our ability to operate our business and cause our customers to seek alternative service providers.
If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
Other Business and Operational Risks If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
These risks include, among others: higher than expected implementation expenses; delays in the anticipated timing of activities related to such initiatives, in particular with respect to the development and deployment of additional sales and marketing professionals and achievement of certain technology-related product development goals, which will require significant external resources; failure to achieve the benefits of our strategic plans or improvements initiatives; failure to realize estimated savings from our efficiency measures or, if realized, an inability to sustain such cost savings over time; subsequent regulatory requirements or rulemaking; and the risks and uncertainties inherent in pursuing acquisitions as a portion of our growth strategy in light of our limited acquisition and integration experience.
These risks include, among others: higher than expected implementation expenses; delays in the anticipated timing of activities related to such initiatives, in particular with respect to the development and deployment of additional sales and marketing professionals and achievement of certain technology-related product development goals, which will require significant external resources; failure to realize estimated savings from our efficiency measures or benefits from our improvement initiatives or, if realized, an inability to sustain such cost savings or improvements over time; subsequent regulatory requirements; and the risks and uncertainties inherent in pursuing acquisitions as a portion of our growth strategy.
The extent to which the COVID-19 pandemic or any future pandemic or epidemic impacts our business will depend on future developments, which are highly uncertain and cannot be predicted with confidence. For example, in the first half of 2020, there was a decrease in patient visits to hospitals and providers due to risk and fear of exposure to COVID-19.
Any future pandemic or epidemic, including future COVID-19 variants, impact on business will depend on future developments, which are highly uncertain and cannot be predicted with confidence. For example, in the first half of 2020, there was a decrease in patient visits to hospitals and providers due to risk and fear of exposure to COVID-19.
Based on the results of the annual impairment test in the fourth quarter of 2022, the estimated fair values of our goodwill and indefinite-lived assets were less than their carrying values and as a result impairment charges of $657.9 million for our goodwill and $4.3 million for our indefinite-lived intangibles were recorded.
For example, following our annual impairment test in the fourth quarter of 2022, the estimated fair values of our goodwill and indefinite-lived assets were less than their carrying values and as a result impairment charges of $657.9 million for our goodwill and $4.3 million for our indefinite-lived intangibles were recorded.
Our use and disclosure of individually identifiable information, including health information, is subject to federal and state privacy and security regulations, and our failure to comply with those regulations or adequately secure the information we hold could result in significant liability or reputational harm.
Our use and disclosure of certain types of protected information, in particular individually identifiable information and health information, is subject to federal and state privacy and security regulations, and our failure to comply with those regulations or adequately secure the information we hold could result in significant liability or reputational harm.
We may be unable to expand or adapt our network infrastructure to meet additional demand or our customers' changing needs on a timely basis, at a commercially reasonable cost or at all.
We may be unable to expand or adapt our network infrastructure to implement our growth strategy or otherwise meet additional demand or our customers' changing needs on a timely basis, at a commercially reasonable cost or at all.
Any prolonged disruption in the operations of our facilities, whether due to technical difficulties, power failures, break-ins, destruction or damage to the facilities as a result of a natural disaster, fire, or any other reason, could cause service interruptions or reduce the quality level of 32 Table of Contents services that we provide, damage our reputation and harm our operating results.
Any prolonged disruption in the operations of our facilities, in particular our data centers, whether due to technical difficulties, power failures, break-ins, destruction or damage to the facilities as a result of a natural disaster, fire, or any other reason, could cause service interruptions or reduce the quality level of products and services that we provide, damage our reputation and harm our operating results.
The terms of many open source licenses have not been interpreted by U.S. courts and there is a risk that the licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to operate our systems.
Additionally, the software powering our technology systems incorporates software covered by open source licenses. The terms of many open source licenses have not been interpreted by U.S. courts and there is a risk that the licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to operate our systems.
The healthcare industry is subject to extensive and evolving federal, state and local regulations, including among other things, laws and regulations relating to: • health benefit plans subject to ERISA; • commercial health benefit plans subject to state licensure and regulation; • privacy and security of patient information, including HIPAA; • the conduct of operations, including fraud and abuse, anti-kickback, patient inducement and false claims prohibitions; • mental health parity obligations imposed by federal and state laws; • the operation of provider networks, including transparency, access, licensing, certification and credentialing requirements; • the methods of payment of out-of-network claims, including "surprise" billing subject to the requirements of the No Surprises Act and its implementing regulations, or applicable state law; • Payors subject to the requirements of the Transparency in Coverage Rule; • health information technology; • breach of duty, the corporate practice of medicine and fee-splitting prohibitions; • laws and regulations relating to business corporations in general; • additional restrictions relating to our ability to utilize the claims data we collect from providers; and • Payors subject to the requirements for health reform under Affordable Care Act.
The healthcare industry is subject to extensive and evolving federal, state and local regulations, including among other things, laws and regulations relating to: • health benefit plans subject to ERISA; • commercial health benefit plans subject to state licensure and regulation; • privacy and security of patient information, including HIPAA; • the conduct of operations, including fraud and abuse, anti-kickback, patient inducement and false claims prohibitions; • mental health parity obligations imposed by federal and state laws; • the operation of provider networks, including transparency, access, licensing, certification and credentialing requirements; • the methods of payment of out-of-network claims, including "surprise" billing subject to the requirements of the No Surprises Act and its implementing regulations, or applicable state law; • Payors subject to the requirements of the Transparency in Coverage Rule; Tabl e of Contents • health information technology, including new and increasing efforts to regulate the use of artificial intelligence and related technology, especially in the healthcare space; • breach of duty, the corporate practice of medicine and fee-splitting prohibitions; • laws and regulations relating to business corporations in general; • additional restrictions relating to our ability to utilize the claims data we collect from providers; • state laws and licensure requirements required for insurance producers and adjusters; and • Payors subject to the requirements for health reform under Affordable Care Act.
These changing rules, regulations and stakeholder expectations have resulted in, and are likely to continue to result in, increased general and administrative expenses and increased management time and attention spent complying with or meeting such regulations and expectations.
These changing laws, rules, regulations and stakeholder expectations have resulted in, and are likely to Tabl e of Contents continue to result in, increased general and administrative expenses and increased management time and attention spent complying with or meeting such regulations and expectations.
Trends in the utilization of the U.S. healthcare system can be influenced by a multitude of factors, including, without limitation, under-employed workers or decisions to delay medical care, especially elective procures, due to factors such as COVID-19 and other pandemics, inflation and recessions.
Trends in the utilization of the U.S. healthcare system can be influenced by a multitude of factors, including, without limitation, under-employed workers or decisions to delay medical care, especially elective procures, due to a variety of factors including COVID-19 and other pandemics, inflation, recessions and any shift in approach by Payors.
Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial condition and operating performance, which in turn are subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control.
Our ability to make scheduled payments on or to refinance, or otherwise settle, our debt obligations depends on our financial condition and operating performance, which in turn are subject to prevailing economic and competitive conditions and Tabl e of Contents to certain financial, business and other factors beyond our control.
Provisions in our organizational documents and stockholders agreement could delay or prevent a change of control.
Provisions in our organizational documents, debt agreements and instruments and stockholders agreement could delay or prevent a change of control.
In support of our growth strategy, we have developed, and will continue to develop, new or additional strategic plans which include initiatives across sales and marketing, product development and mergers and acquisitions, and efficiency measures to help self-fund some of the necessary investments to support these initiatives.
In support of our growth strategy, we have developed, and will continue to develop, new or additional strategic plans, including product development and service expansions, sales and marketing initiatives, mergers and acquisitions, improvement initiatives and efficiency measures to help self-fund some of the necessary investments to support these strategic plans.
If we are unable to identify, complete and successfully integrate acquisitions, our ability to grow our business may be limited and our business, financial position and results of operations may be adversely impacted.
Tabl e of Contents If we are unable to identify, complete and successfully integrate acquisitions, including BST, our ability to grow our business may be limited and our business, financial position and results of operations may be adversely impacted.
PPOs compete on the basis of many factors, including the quality of healthcare services, the breadth of provider networks, the discounts afforded by the provider contracts and the efficiency of the administration of claims. However, we expect that price will continue to be a significant competitive factor.
Likewise, our network-based services compete on the basis of many factors, including the quality of healthcare services, the breadth of provider networks, the discounts afforded by the provider contracts, and the efficiency of the administration of claims, but we expect that price will continue to be a significant competitive factor.
Violations of prompt payment laws, which regulate the amount of time that may elapse from when a Payor receives a claim for services rendered to when those services are paid, may result in requirements to pay interest in addition to any amounts owed to providers, and may lead to reputational harm or result in a breach of our contractual obligations to certain customers.
Violations of prompt payment laws, which regulate the amount of time that may elapse from when a Payor receives a claim for services rendered to when those services are paid, may result in requirements to pay interest in addition to any amounts owed to providers, and may lead to reputational harm or result in a breach of our contractual obligations to certain customers if our failure to reprice claims timely causes Payor's to become responsible for such amounts.
Although we are one of the largest independent PPO network providers, regional and local PPO network providers may have deeper discounts or broader networks within their particular region. Our customers may select regional competitors in specific geographies based upon potential deeper discounts and broader networks.
Although we are one of the largest independent PPO network providers, regional and local PPO network providers may have deeper discounts or broader networks within their particular region, potentially leading our customers to select such competitors in specific geographies.
For example, it could: • make it more difficult for us to satisfy obligations with respect our indebtedness and any repurchase obligations that may arise thereunder; • require us to dedicate a substantial portion of cash flow from operations to payments on our indebtedness, thereby reducing funds available for working capital, capital expenditures, acquisitions, research and development and other purposes; • increase our vulnerability to adverse economic, market and industry conditions and limit our flexibility in planning for, or reacting to, these conditions; • expose us to the risk of increased interest rates as certain of our borrowings are at variable rates of interest; • result in a lowering or withdrawal of our credit ratings; • limit our flexibility to adjust to changing market conditions and our ability to withstand competitive pressures, and we may be more vulnerable to a downturn in general economic or industry conditions or be unable to carry out capital spending that is necessary or important to our growth strategy; • limit our ability to borrow additional funds or to dispose of assets to raise funds, if needed, for working capital, capital expenditures, acquisitions, research and development and other corporate purposes; and 41 Table of Contents • limit our ability to compete with others who are not as highly-leveraged.
For example, it could: • make it more difficult for us to satisfy obligations with respect our indebtedness and any repurchase obligations that may arise thereunder; • require us to dedicate a substantial portion of cash flow from operations to payments on our indebtedness, thereby reducing funds available for working capital, capital expenditures, acquisitions, research and development, expenditures necessary for our growth strategy and other purposes; • expose us to the risk of increased interest rates as certain of our borrowings are at variable rates of interest, notwithstanding our entrance into interest rate swap agreements with a total notional value of $800.0 million in 2023; • result in a lowering or withdrawal of our credit ratings; • limit our ability to adjust to, or withstand, changing economic, market and industry conditions and our ability to withstand competitive pressures, and we may be more vulnerable to a downturn in general economic or industry conditions or be unable to carry out capital spending that is necessary or important to our growth strategy; • limit our ability to borrow additional funds or to dispose of assets to raise funds, if needed, for working capital, capital expenditures, acquisitions, research and development and other corporate purposes; and • limit our ability to compete with others who are not as highly-leveraged.
In addition, many healthcare providers and insurers have greater financial resources than us and other healthcare cost management providers have and may be more willing to engage in, and devote resources to, litigation as a result.
Exacerbating this risk is that many healthcare providers and insurers have greater financial resources than us and other healthcare cost management providers have and may be more willing to engage in, and devote resources to, litigation as a result.
For instance, developing and implementing new or ongoing ESG initiatives and collecting, measuring and reporting ESG related information and metrics can be costly, difficult and time consuming and subject to evolving reporting standards, including the SEC’s recently proposed climate-related reporting requirements, and similar proposals by other international regulatory bodies.
For instance, developing and implementing new or ongoing ESG initiatives and collecting, measuring and reporting ESG-related information and metrics can be costly, difficult and time consuming and subject to evolving reporting standards, including recently enacted laws in California with broad applicability and the SEC’s proposed climate-related reporting requirements, and similar proposals by other governmental or regulatory bodies.
In addition, we would have had an additional $448.2 million available for borrowing under the revolving credit facility (giving effect to the $1.8 million of outstanding letters of credit referred to above).
In addition, we would have had an additional $442.1 million available for borrowing under the revolving credit facility (giving effect to the $7.9 million of outstanding letters of credit referred to above).
As a provider of network management services to our customers and as a contractor and/or subcontractor with federal and state governments, we are subject to extensive and increasing regulation by a number of governmental entities at the federal, state and local levels with respect to the above laws.
As a provider of healthcare cost management products, services and technology as well as network management services to our customers, and as a subcontractor to contractors with federal and state governments, we are subject to extensive and increasing regulation by a number of governmental entities at the federal, state and local levels with respect to the above laws.
Our success is dependent on our ability to deliver high-quality and uninterrupted access for our customers to our computer system, requiring us to protect our computer equipment, software and the information stored in servers against damage by fire, natural disaster, power loss, telecommunications failures, unauthorized intrusion and other catastrophic events.
Our success is dependent on our ability to deliver high-quality and uninterrupted access for our customers to our computer system, requiring us to protect our computer equipment, software and the information stored in servers against damage by fire, natural disaster, power loss, telecommunications failures, and other catastrophic events, in addition to the cybersecurity and privacy breaches, noted in the above risk factor.
Pandemics or epidemics and any associated protective or preventative measures taken to limit their spread may cause disruptions to our business.
Pandemics or epidemics and any associated protective or preventative measures taken to limit their spread have caused and may, in the future, cause disruptions to our business.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties We lease all of our properties, which are located in 12 states. Our corporate headquarters are located in New York, New York. Our primary data center is hosted by a leading provider of co-location hosting services in Texas.
Biggest changeItem 2. Properties We lease all of our properties, which are located in 11 states. Our corporate headquarters are located in New York, New York. Our primary data center is hosted by a leading provider of co-location hosting services in Texas.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe settlement is being paid pursuant to the Company’s indemnification obligations and from available director and officer insurance policies. On February 28, 2023, the Delaware Court of Chancery held a settlement hearing relating to the Delaware Action and approved the settlement.
Biggest changeOn February 28, 2023, the Delaware Court of Chancery held a settlement hearing relating to the Delaware Action and approved the settlement, with the court ruling becoming final 30 days thereafter. As a result, the Delaware Stockholder Litigation has been resolved. During the year ended December 31, 2023, the Company paid the settlement of the Delaware Stockholder Litigation.
The Delaware Stockholder Litigation complaint alleges that the Transactions were a product of an unfair process by Churchill, which was allegedly impacted by conflicts of interest, resulting in mispricing of the Transactions. The complaint seeks, among other things, damages, certain equitable relief including the reopening of redemptions, and attorneys’ fees and costs.
The Delaware Stockholder Tabl e of Contents Litigation complaint alleges that the Transactions were a product of an unfair process by Churchill, which was allegedly impacted by conflicts of interest, resulting in mispricing of the Transactions. The complaint seeks, among other things, damages, certain equitable relief including the reopening of redemptions, and attorneys’ fees and costs.
In connection with the settlement, the Company and its insurers have agreed to pay $33.75 million in exchange for a broad release of all claims related to the business combination and ownership of Churchill stock and warrants from February 19, 2020 through October 8, 2020.
In connection with the settlement, the Company and its insurers paid $33.75 million in exchange for a broad release of all claims related to the business combination and ownership of Churchill stock and warrants from February 19, 2020 through October 8, 2020. The settlement was paid pursuant to the Company’s indemnification obligations and from available director and officer insurance policies.
The Company and the Churchill Defendants filed motions to dismiss the complaint. On January 3, 2022, the Chancery Court issued a ruling granting in part the Company’s motion to dismiss and denying the motion to dismiss filed by the Churchill Defendants.
The Company and the Churchill Defendants filed motions to dismiss the complaint. On January 3, 2022, the Chancery Court issued a ruling granting in part the Company’s motion to dismiss and denying the motion to dismiss filed by the Churchill Defendants. While the Company was dismissed from the Delaware Stockholder Litigation, the consolidated lawsuit proceeded against the Churchill Defendants.
On November 17, 2022, the Company and the parties to the Delaware Stockholder Litigation entered into a settlement agreement, which is subject to court approval, to fully and finally resolve the Delaware Stockholder Litigation.
We had previously agreed to indemnify certain of the Churchill Defendants with respect to the Delaware Stockholder Litigation. On November 17, 2022, the Company and the parties to the Delaware Stockholder Litigation entered into a settlement agreement to fully and finally resolve the Delaware Stockholder Litigation.
The Company has also incurred legal expenses in connection with the Delaware Stockholder Litigation, which have been expensed as incurred and are included in general and administrative expenses in the accompanying consolidated statements of (loss) income and comprehensive (loss) income. Item 4. Mine Safety Disclosures N/A Part II
The Company has also incurred legal expenses in connection with the Delaware Stockholder Litigation, which have been expensed as incurred and are included in general and administrative expenses in the accompanying consolidated statements of (loss) income and comprehensive (loss) income. On May 31, 2023, a putative class action complaint captioned Sarkar v. White, C.A. No. 2023-0576-NAC (Del.
Removed
While the Company was dismissed from the Delaware Stockholder Litigation, the consolidated lawsuit proceeded against the Churchill Defendants, some of whom we had agreed to indemnify with respect to the Delaware Stockholder Litigation.
Added
Ch.) was filed against our Board in the Court of Chancery of the State of Delaware. The complaint alleges violations of 8 Del. C. §213(a) in fixing record dates more than 60 days before the Company’s annual meetings on April 26, 2022 (“2022 Annual Meeting”) and April 26, 2023 (“2023 Annual Meeting”).
Removed
We expect the court's ruling will become final in 30 days, at which point the Delaware Action will be fully and finally resolved, which will bring to an end all pending stockholder litigation against the Company and its directors.
Added
The complaint alleged that, because these record dates violated 8 Del. C. §213(a), the actions taken at the 2022 and 2023 Annual Meetings were invalid. The complaint also asserted claims for breach of fiduciary duty.
Removed
As of December 31, 2022, the Company has accrued a contingent liability of $24.3 million in accrued legal settlements on the accompanying consolidated balance sheets in connection with the settlement of the Delaware Stockholder Litigation.
Added
On August 4, 2023, the Company held a meeting at which stockholders voted to ratify the election of the four Class II and the four Class III directors, as well as ratify the 2023 Employee Stock Purchase Plan. These actions mooted Plaintiff’s claims.
Added
On August 14, 2023, the Court granted the plaintiff’s request to voluntarily dismiss this action without prejudice as to the named plaintiff only, and retained jurisdiction solely for the purpose of adjudicating an anticipated application for attorney’s fees and expenses incurred by plaintiff’s counsel.
Added
Without admitting any fault or wrongdoing, the Company agreed to pay $300,000 in attorneys’ fees and expenses to plaintiff’s counsel in connection with the mooted claims. On December 26, 2023, the Court entered an order closing the case, subject to the Company filing an affidavit with the Court confirming compliance with the Court’s order.
Added
In entering the order, the Court did not review, and did not pass judgment on, the payment of the attorneys’ fees and expenses or their reasonableness. Item 4. Mine Safety Disclosures N/A Part II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 48 Part II Item 5. Market for Registrant ' s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 48 Item 6. [Reserved] 50 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 51 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 71 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 57 Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 57 Item 6. [Reserved] 59 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 60 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 78 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeMarket for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Price and Ticker Symbols Our Class A common stock and Public Warrants are currently listed on NYSE under the symbols "MPLN" and "MPLN.WS," respectively. 48 Table of Contents Holders As of February 22, 2023, there were 92 holders of record of our Class A common stock.
Biggest changeItem 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Price and Ticker Symbols Our Class A common stock are currently listed on NYSE under the symbol "MPLN". Our Public Warrants trade over the counter under the symbol "MPLNW".
Issuer Purchases of Equity Securities On February 27, 2023, the Company's Board of Directors approved a share repurchase program authorizing the Company to repurchase up to $100 million of its Class A common stock from time to time in open market transactions. The repurchase program was effective immediately and expires on December 31, 2023.
Issuer Purchases of Equity Securities On February 27, 2023, the Company's Board of Directors approved a share repurchase program authorizing the Company to repurchase up to $100 million of its Class A common stock from time to time in open market transactions. The repurchase program was effective immediately and was set to expire on December 31, 2023.
Such numbers do not include beneficial owners holding our securities through nominee names. Dividend Policy We have not paid any cash dividends on our Class A common stock to date.
Holders As of February 22, 2024, there were 99 holders of record of our Class A common stock. Such numbers do not include beneficial owners holding our securities through nominee names. Tabl e of Contents Dividend Policy We have not paid any cash dividends on our Class A common stock to date.
The graph is based on historical data and is not necessarily indicative of future performance. 49 Table of Contents October 9, 2020 ($) December 31, 2021 ($) March 31, 2022 ($) June 30, 2022 ($) September 30, 2022 ($) December 31, 2022 ($) MultiPlan Corporation 100.00 45.76 48.35 56.71 29.55 11.88 S&P 500 Index 100.00 139.52 133.10 111.67 106.22 114.25 S&P Composite 1500 Health Care Technology Index 100.00 137.40 130.95 117.05 111.16 117.13
The graph is based on historical data and is not necessarily indicative of future performance. Tabl e of Contents October 9, 2020 ($) December 31, 2021 ($) December 31, 2022 ($) December 31, 2023 ($) MultiPlan Corporation 100.00 45.76 11.88 14.88 S&P 500 Index 100.00 139.52 114.25 144.29 S&P Composite 1500 Health Care Technology Index 100.00 137.40 117.13 85.22
Added
On November 8, 2023, the Company announced that its Board of Directors extended the Company’s $100 million program to repurchase shares of the Company’s common stock through December 31, 2024.
Added
As of December 31, 2023, the Company has repurchased $15.2 million in shares of its common stock under the Share Repurchase Program, leaving up to $84.8 million in authorized repurchases of its common stock through the remainder of the Share Repurchase Program, as extended.
Added
The Company expects to fund the remainder of the Share Repurchase Program using the Company’s cash on hand and cash from operations.
Added
Repurchases under the Share Repurchase Program may be made, from time to time, using a variety of methods, which may include open market purchases, in privately negotiated transactions or by other means, including through the use of preset trading plans meeting the requirements of Rule 10b5-1 under the Exchange Act.
Added
Repurchases by the Company under the Share Repurchase Program will be subject to general market and economic conditions, applicable legal requirements and other considerations, and the Share Repurchase Program may be further extended, suspended, modified or discontinued by the Board at any time without prior notice at the Company’s discretion.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThree Months Ended (in billions) December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021 Commercial Health Plans Medical charges processed $ 18.1 $ 17.9 $ 18.6 $ 19.5 $ 20.0 $ 19.2 $ 19.0 $ 18.5 Potential medical cost savings $ 5.1 $ 5.1 $ 5.4 $ 5.5 $ 5.6 $ 5.3 $ 5.2 $ 5.0 Potential savings as % of charges 28.3 % 28.6 % 29.0 % 28.3 % 27.9 % 27.7 % 27.5 % 27.3 % Payment & Revenue Integrity, Property & Casualty, and Other Medical charges processed $ 20.9 $ 20.8 $ 20.8 $ 18.6 $ 18.3 $ 18.3 $ 17.0 $ 13.9 Potential medical cost savings $ 0.3 $ 0.3 $ 0.3 $ 0.2 $ 0.3 $ 0.3 $ 0.3 $ 0.2 Potential savings as % of charges 1.4 % 1.3 % 1.3 % 1.3 % 1.4 % 1.4 % 1.6 % 1.7 % Total Medical charges processed $ 39.0 $ 38.7 $ 39.4 $ 38.1 $ 38.3 $ 37.5 $ 36.1 $ 32.4 Potential medical cost savings $ 5.4 $ 5.4 $ 5.7 $ 5.8 $ 5.8 $ 5.6 $ 5.5 $ 5.3 Potential savings as % of charges 13.9 % 14.0 % 14.4 % 15.2 % 15.2 % 14.8 % 15.2 % 16.3 % 54 Table of Contents Year Ended December 31, (in billions) 2022 2021 Commercial Health Plans Medical charges processed $ 74.2 $ 76.6 Potential medical cost savings $ 21.2 $ 21.1 Potential savings as % of charges 28.6 % 27.6 % Payment & Revenue Integrity, Property & Casualty, and Other Medical charges processed $ 81.0 $ 67.6 Potential medical cost savings $ 1.1 $ 1.0 Potential savings as % of charges 1.3 % 1.5 % Total Medical charges processed $ 155.2 $ 144.2 Potential medical cost savings $ 22.3 $ 22.1 Potential savings as % of charges 14.3 % 15.4 % Medical charges processed represent the aggregate dollar amount of claims processed by our cost management and payment accuracy solutions in the period presented.
Biggest changeYear Ended December 31, (in billions) 2023 2022 Commercial Health Plans Medical charges processed $ 75.1 $ 74.2 Potential medical cost savings $ 21.7 $ 21.2 Potential savings as % of charges 28.9 % 28.6 % Payment & Revenue Integrity, Property & Casualty, and Other Medical charges processed $ 93.6 $ 81.0 Potential medical cost savings $ 1.3 $ 1.1 Potential savings as % of charges 1.3 % 1.3 % Total Medical charges processed $ 168.6 $ 155.2 Potential medical cost savings $ 22.9 $ 22.3 Potential savings as % of charges 13.6 % 14.3 % Medical charges processed represent the aggregate dollar amount of claims processed by our cost management and payment and revenue integrity solutions in the period presented.
The dollar amount of the claim for purposes of this calculation is the dollar amount of the claim prior to any reductions that may be made as a result of the claim being processed by our solutions.
The dollar amount of the claim for the purposes of this calculation is the dollar amount of the claim prior to any reductions that may be made as a result of the claim being processed by our solutions.
(Gain) Loss on Extinguishment of Debt The Company recognizes a loss (gain) on extinguishment of debt for the difference between the net carrying amount of the extinguished debt immediately before the refinancing and the fair value of the new debt instruments, and fees associated with the issuance of the new debt under the refinancing.
(Gain) Loss on Extinguishment of Debt The Company recognizes a (gain) loss on extinguishment of debt for the difference between the net carrying amount of the extinguished debt immediately before the refinancing and the fair value of the new debt instruments, and fees associated with the issuance of the new debt under the refinancing.
Components of Results of Operations Revenues We generate revenues from several sources including: (i) Network-Based Services that process claims at a discount compared to billed fee-for-service rates and by using an extensive network, (ii) Analytics-Based Services that use our leading and proprietary information technology platform to offer customers solutions to reduce medical costs, and (iii) Payment and 55 Table of Contents Revenue Integrity Services that use data, technology, and clinical expertise to identify improper, unnecessary and excessive charges.
Table of Contents Components of Results of Operations Revenues We generate revenues from several sources including: (i) Network-Based Services that process claims at a discount compared to billed fee-for-service rates and by using an extensive network, (ii) Analytics-Based Services that use our leading and proprietary information technology platform to offer customers solutions to reduce medical costs, and (iii) Payment and Revenue Integrity Services that use data, technology, and clinical expertise to identify improper, unnecessary and excessive charges.
Our effective tax rate for the year ended December 31, 2022 differed from the statutory rate primarily due to non-deductible stock-based compensation expense, non-deductible mark-to-market liability, non-deductible intangible asset impairment charge, limitations on executive compensation, changes in the Company’s deferred state tax rate due to previous acquisitions, tax credits, operations and state tax expense.
Our effective tax rate for the year ended December 31, 2022 differed from the statutory rate primarily due to non-deductible stock-based compensation expense, non-deductible mark-to-market liability, non-deductible intangible impairment charge, limitations on executive compensation, changes in the Company's deferred state tax rate due to previous acquisitions, tax credits, operations, and state tax expense.
The 5.50% Senior Secured Notes are guaranteed and secured as described below under "—Guarantees and Security." During November and December of 2022, the Company repurchased and cancelled $136.2 million of the 5.750% Notes, resulting in the recognition of a gain on debt extinguishment of $34.6 million in the year ended December 31, 2022.
The 5.50% Senior Secured Notes are guaranteed and secured as described below under "—Guarantees and Security." During the year ended December 31, 2022, the Company repurchased and cancelled $136.2 million of the 5.750% Notes, resulting in the recognition of a gain on debt extinguishment of $34.6 million in the year ended December 31, 2022.
The results described below are not necessarily indicative of the results to be expected in any future periods. Company Overview MultiPlan is a leading provider of data analytics and technology-enabled solutions designed to bring affordability, efficiency and fairness to the U.S. healthcare industry.
The results described below are not necessarily indicative of the results to be expected in any future periods. Company Overview MultiPlan is a market leading provider of data analytics and technology-enabled solutions designed to bring affordability, efficiency and fairness to the U.S. healthcare industry.
Amortization of Intangible Assets Amortization of intangible assets includes amortization of the value of our customer relationships, provider network, technology, and trademarks which were identified in valuing the intangible assets in connection with the June 6, 2016 acquisition by H&F and its affiliates, as well as recent acquisitions of HST and DHP by the Company.
Amortization of Intangible Assets Amortization of intangible assets includes amortization of the value of our customer relationships, provider network, technology, and trademarks which were identified in valuing the intangible assets in connection with the June 6, 2016 acquisition by H&F and its affiliates, as well as recent acquisitions of BST, HST and DHP by the Company.
Factors Affecting Our Results of Operations 52 Table of Contents Medical Cost Savings Our business and revenues are driven by the ability to lower medical costs through claims savings for our customers. The volume of medical charges associated with those claims is a primary driver of our ability to generate claim savings.
Table of Contents Factors Affecting Our Results of Operations Medical Cost Savings Our business and revenues are driven by the ability to lower medical costs through claims savings for our customers. The volume of medical charges associated with those claims is a primary driver of our ability to generate claim savings.
Debt Refinancings, Repayments and Repricing On August 24, 2021, MPH issued new senior secured credit facilities composed of $1,325.0 million of Term Loan B and $450.0 million of a Revolver B, and $1,050.0 million in aggregate principal amount of 5.50% Senior Secured Notes.
Debt Refinancings and Repricing On August 24, 2021, MPH issued new senior secured credit facilities composed of $1,325.0 million of Term Loan B and $450.0 million of a Revolver B, and $1,050.0 million in aggregate principal amount of 5.50% Senior Secured Notes.
Services included in this category are as follows: ◦ Network-Based Services ▪ Commercial health primary networks ▪ Commercial health complementary networks ◦ Analytics-Based Services (All Analytics-Based Services are included in this category) ▪ Reference-Based Pricing ▪ Value-Driven Health Plan Services ▪ Financial Negotiation ▪ Surprise Billing Services ◦ Payment and Revenue Integrity Services ▪ Clinical Negotiations • Payment & Revenue Integrity Services, Property & Casualty, and Other .
Services included in this category are as follows: ◦ Network-Based Services ▪ Commercial health primary networks ▪ Commercial health complementary networks ◦ Analytics-Based Services (Analytics-Based Services are included in this category) ▪ Reference-Based Pricing ▪ Value-Driven Health Plan Services ▪ Financial Negotiation ▪ Surprise Billing Services ◦ Payment and Revenue Integrity Services ▪ Clinical Negotiations • Payment & Revenue Integrity Services, Property & Casualty, and Other .
Additional growth in healthcare costs are driven by availability of new medical technologies, therapies, and modalities. As expenditures continue to rise, stakeholders and especially Payors, are becoming increasingly focused on solutions that reduce medical costs and improve payment accuracy.
Additional growth in healthcare costs is driven by availability of new medical technologies, therapies, and modalities. As expenditures continue to rise, stakeholders and especially Payors, are becoming increasingly focused on solutions that reduce medical costs and improve payment accuracy.
The Revolver Ratio is such that, if, as of the last day of any fiscal quarter of MPH, the aggregate amount of loans under the revolving credit facility, letters of credit issued under the revolving credit facility (to the extent not cash collateralized or backstopped or, in the aggregate, in excess of $10.0 million) and swingline loans are outstanding and/or issued in an aggregate amount greater than 35% of the total commitments in respect of the revolving credit facility at such time, the revolving credit facility will require MPH to maintain a maximum first lien secured leverage ratio of 6.75 to 1.00.
The Revolver Ratio is such that, if, as of the last day of any fiscal quarter of MPH, the aggregate amount of loans under the revolving credit facility, letters of credit issued under the revolving credit facility (to the extent not cash collateralized or backstopped or, in the aggregate, in excess of $10.0 million) and swingline loans are outstanding and/or issued in an aggregate amount greater than 35% of the total commitments in respect of the revolving credit facility at such time, the revolving credit Table of Contents facility will require MPH to maintain a maximum first lien secured leverage ratio of 6.75 to 1.00.
(Gain) Loss on Investments (Gain) loss on investments consists of the changes in the fair value of the Company's investments. 56 Table of Contents Gain on change in fair value of Private Placement Warrants and Unvested Founder Shares The Company re-measures, at each reporting period, the fair value of the Private Placement Warrants and Unvested Founder Shares.
Table of Contents (Gain) Loss on Investments (Gain) loss on investments consists of the changes in the fair value of the Company's investments. Gain on change in fair value of Private Placement Warrants and Unvested Founder Shares The Company re-measures, at each reporting period, the fair value of the Private Placement Warrants and Unvested Founder Shares.
These covenants limit our and/or certain of our subsidiaries' ability to, among other things: • incur additional indebtedness or issue disqualified or preferred stock; • pay certain dividends or make certain distributions on capital stock or repurchase or redeem capital stock; • make certain loans, investments or other restricted payments; • transfer or sell certain assets; • incur certain liens; • place restrictions on the ability of its subsidiaries to pay dividends or make other payments to us; • guarantee indebtedness or incur other contingent obligations; • prepay junior debt and make certain investments; 66 Table of Contents • consummate any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or dispose of all or substantially all of its business units, assets or other properties; and • engage in transactions with our affiliates.
These covenants limit our and/or certain of our subsidiaries' ability to, among other things: • incur additional indebtedness or issue disqualified or preferred stock; • pay certain dividends or make certain distributions on capital stock or repurchase or redeem capital stock; • make certain loans, investments or other restricted payments; • transfer or sell certain assets; • incur certain liens; • place restrictions on the ability of its subsidiaries to pay dividends or make other payments to us; • guarantee indebtedness or incur other contingent obligations; • prepay junior debt and make certain investments; • consummate any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or dispose of all or substantially all of its business units, assets or other properties; and • engage in transactions with our affiliates.
We determine the fair value of Employee NQSOs with an exercise price equal to the price of the Company's Class A common stock on the grant date ("at-the-money") using a Black-Scholes option pricing model while taking into consideration the price of the Company's Class A common stock, vesting conditions, and the expected term obtained using the simplified method of averaging the vesting term and the original contractual term of the options.
We determine the fair value of Employee NQSOs with an exercise price equal to the price of the Company's Class A common stock on the grant date ("at-the-money") using a Black-Scholes option pricing model while taking into consideration the price of the Company's Class A common stock, vesting conditions, and the expected term obtained using Table of Contents the simplified method of averaging the vesting term and the original contractual term of the options.
Depreciation Expense The increase in depreciation expense for the year ended December 31, 2022 as compared to the year ended December 31, 2021 was due to purchases of property and equipment, including internally generated capitalized software in the years ended December 31, 2022 and 2021, partially offset by assets that were written-off or became fully depreciated in the period.
Depreciation Expense The increase in depreciation expense for the year ended December 31, 2023 as compared to the year ended December 31, 2022 was due to purchases of property and equipment, including internally generated capitalized software in the years ended December 31, 2023 and 2022, partially offset by assets that were written-off or became fully depreciated in the period.
Adjusted EPS is used in reporting to our Board and executive management and as a component of the measurement of our performance. We believe that this measure provides useful information to investors because it is the profitability measure we use to evaluate earnings performance on a comparable year-to-year basis.
Table of Contents Adjusted EPS is used in reporting to our Board and executive management and as a component of the measurement of our performance. We believe that this measure provides useful information to investors because it is the profitability measure we use to evaluate earnings performance on a comparable year-to-year basis.
Interest on Term Loan B and Revolver B is calculated, at MPH's option, as (a) LIBOR (or, with respect to the term loan facility only, 0.50%, if higher), plus the applicable margin, or (b) the highest rate of (1) the prime rate, (2) the federal funds effective rate, plus 0.50%, (3) the LIBOR for an interest period of one month, plus 1.00% and (4) 0.50% for Term Loan B and 1.00% for Revolver B, in each case, plus an applicable margin of 4.25% for Term Loan B and between 3.50% and 4.00% for Revolver B, depending on MPH's first lien debt to consolidated EBITDA ratio.
Interest on Term Loan B and Revolver B is calculated, at MPH's option, as (a) Term SOFR (or, with respect to the term loan facility only, 0.50%, if higher), plus the applicable SOFR adjustment, plus the applicable margin, or (b) the highest rate of (1) the prime rate, (2) the federal funds effective rate, plus 0.50%, (3) the Term SOFR for an interest period of one month, plus the applicable SOFR adjustment, plus 1.00% and (4) 0.50% for Term Loan B and 1.00% for Revolver B, in each case, plus an applicable margin of 4.25% for Term Loan B and between 3.50% and 4.00% for Revolver B, depending on MPH's first lien debt to consolidated EBITDA ratio.
Adjusted EPS is defined as net (loss) income adjusted for amortization of intangible assets, stock-based compensation, transaction related expenses, (gain) loss on debt extinguishment, (gain) loss on investments, other expense, gain on change in fair value of Private Placement Warrants and 57 Table of Contents Unvested Founder Shares, loss on impairment of goodwill and intangible assets and tax effect of adjustments to arrive at Adjusted net income divided by our basic weighted average number of shares outstanding.
Adjusted EPS is defined as net (loss) income adjusted for amortization of intangible assets, stock-based compensation, transaction related expenses, (gain) loss on debt extinguishment, (gain) loss on investments, other expense, gain on change in fair value of Private Placement Warrants and Unvested Founder Shares, loss on impairment of goodwill and intangible assets and tax effect of adjustments to arrive at Adjusted net income divided by our basic weighted average number of shares outstanding.
See Note 2 Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for additional information. Goodwill Goodwill is calculated as the excess of the purchase price in an acquisition over the fair value of identifiable net assets acquired.
See Note 2 Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for additional information. Table of Contents Goodwill Goodwill is calculated as the excess of the purchase price in an acquisition over the fair value of identifiable net assets acquired.
The loss of the business of one or more of our larger customers could have a material adverse effect on our results of operations. Recent Accounting Pronouncements See Note 3 New Accounting Pronouncements of the Notes to Consolidated Financial Statements for additional information. Quantitative and Qualitative Disclosure About Market Risk 70 Table of Contents See Item 7A.
The loss of the business of one or more of our larger customers could have a material adverse effect on our results of operations. Recent Accounting Pronouncements See Note 3 New Accounting Pronouncements of the Notes to Consolidated Financial Statements for additional information. Quantitative and Qualitative Disclosure About Market Risk See Item 7A.
For the year ended December 31, 2021 as compared to the year ended December 31, 2020 For a discussion comparing our cash flows from operating activities, investing activities, and financing activities from the year ended December 31, 2021 with the year ended December 31, 2020, refer to Part II, Item 7.
For the year ended December 31, 2022 as compared to the year ended December 31, 2021 For a discussion comparing our cash flows from operating activities, investing activities, and financing activities from the year ended December 31, 2022 with the year ended December 31, 2021, refer to Part II, Item 7.
If the future financial performance falls below our expectations or there are unfavorable revisions to 68 Table of Contents significant assumptions, or if our market capitalization significantly declines, we may need to record an additional non-cash loss on impairment of goodwill and intangible assets charge in a future period.
If the future financial performance falls below our expectations or there are unfavorable revisions to significant assumptions, or if our market capitalization significantly declines, we may need to record an additional non-cash loss on impairment of goodwill and intangible assets charge in a future period.
MPH used 65 Table of Contents the net proceeds from Term Loan B, issued with a discount of 1.00%, and the 5.50% Senior Secured Notes to repay all of the outstanding balance of its Term Loan G of $2,341.0 million, and pay fees and expenses in connection therewith.
MPH used the net proceeds from Term Loan B, issued with a discount of 1.00%, and the 5.50% Senior Secured Notes to repay all of the outstanding balance of its Term Loan G of $2,341.0 million, and pay fees and expenses in connection therewith.
The transaction-related expenses have been expensed as incurred and are included in general and administrative expenses in the accompanying consolidated statements of (loss) income and comprehensive (loss) income.
The transaction-related expenses have been expensed as incurred and are Table of Contents included in general and administrative expenses in the accompanying consolidated statements of (loss) income and comprehensive (loss) income.
These credits are the result of Payors not 67 Table of Contents utilizing the discounts that were initially calculated, or differences between our estimates of savings achieved for a customer and the amounts self-reported in the following month by that same customer.
These credits are the result of Payors not utilizing the discounts that were initially calculated, or differences between our estimates of savings achieved for a customer and the amounts self-reported in the following month by that same customer.
Each Private Placement Warrant and Unvested Founder Share is initially recorded at fair value on the date of consummation of the Transactions using an option pricing model, and it is re-measured to fair value at each 69 Table of Contents subsequent reporting date.
Each Private Placement Warrant and Unvested Founder Share is initially recorded at fair value on the date of consummation of the Transactions using an option pricing model, and it is re-measured to fair value at each subsequent reporting date.
Loss (gain) on extinguishment of debt In the year ended December 31, 2022, the Company repurchased in the open market and cancelled $136.2 million of the 5.750% Notes, resulting in the recognition of a gain on extinguishment of debt of $34.6 million, representing the difference between the purchase price including associated fees and the net carrying value.
In the year ended December 31, 2022, the Company repurchased in the open market and cancelled $136.2 million of the 5.750% Notes, resulting in the recognition of a gain on extinguishment of debt of $34.6 million, representing the difference between the purchase price including associated fees and the net carrying amount of the extinguished debt.
The interest rate on the 5.750% Notes is fixed at 5.750%, and is payable semi-annually on May 1 and November 1 of each year. On August 24, 2021 MPH issued $1,050.0 million in aggregate principal amount of 5.50% Senior Secured Notes with a maturation date of September 1, 2028.
On August 24, 2021 MPH issued $1,050.0 million in aggregate principal amount of 5.50% Senior Secured Notes with a maturation date of September 1, 2028. The interest rate on the 5.50% Senior Secured Notes is fixed at 5.50% and is payable semi-annually on March 1 and September 1 of each year.
These claims are pre-payment in nature, generate savings through repricing, and are characterized by a higher percentage of potential medical cost savings as a percentage of medical charges processed. For the year ended December 31, 2022, this category represented approximately 92% of our revenues.
These claims are pre-payment in nature, generate savings through repricing, and are characterized by a higher percentage of potential medical cost savings as a percentage of medical charges processed. For the year ended December 31, 2023, this category represented approximately 89% of our revenues.
GDP in 2022, to represent 19.6% of GDP by 2030, representing a compound annual growth rate of 5.2%. There are a multitude of factors driving this expected growth, including recent regulations and ongoing secular trends, such as the aging population and other demographic factors, which are driving expanded healthcare coverage and increased utilization in the long-term.
GDP in 2023, to represent 19.6% of GDP by 2031, representing a compound annual growth rate of 5.5%. There are a multitude of factors driving this expected growth, including recent regulations and ongoing secular trends, such as the aging population and other demographic factors, which are driving expanded healthcare coverage and increased utilization in the long-term.
See Note 15 Stock-Based Compensation of the Notes to Consolidated Financial Statements for additional information. Private Placement Warrants and Unvested Founder Shares The Company classifies the Private Placement Warrants and Unvested Founder Shares as a long-term liability on its consolidated balance sheets.
The Company recognizes forfeitures as they occur. See Note 15 Stock-Based Compensation of the Notes to Consolidated Financial Statements for additional information. Private Placement Warrants and Unvested Founder Shares The Company classifies the Private Placement Warrants and Unvested Founder Shares as a long-term liability on its consolidated balance sheets.
After the consummation of the Transactions The fair value of the awards under the 2020 Omnibus Incentive Plan is measured on the grant date. We determine the fair value of the Employee RS, Employee RSUs and Director RSUs with time based vesting using the value on our common stock on the date of the grant.
Stock-Based Compensation The fair value of the awards under the 2020 Omnibus Incentive Plan is measured on the grant date. We determine the fair value of the Employee RS, Employee RSUs and Director RSUs with time-based vesting using the value on our common stock on the date of the grant.
The following table shows the significant assumptions in the development of the fair value of the Private Placement Warrants and the Unvested Founder Shares: Year Ended December 31, Significant Unobservable Inputs 2022 2021 Stock price $ 1.15 $ 4.43 Strike price $ 11.50 $ 11.50 Remaining life (in years) 2.75 3.75 Volatility 72.7 % 79.0 % Risk-free interest rate 4.3 % 1.1 % Expected dividend yield — % — % Income Taxes The Company accounts for income taxes using the asset and liability method.
The following table shows the significant assumptions in the development of the fair value of the Private Placement Warrants and the Unvested Founder Shares: Year Ended December 31, Significant Unobservable Inputs 2023 2022 Stock price $ 1.44 $ 1.15 Strike price $ 11.50 $ 11.50 Remaining life (in years) 1.75 2.75 Volatility 64.1 % 72.7 % Risk-free interest rate 4.4 % 4.3 % Expected dividend yield — % — % Income Taxes Table of Contents The Company accounts for income taxes using the asset and liability method.
Potential medical cost savings represent the aggregate amount of potential savings in dollars identified by our cost management and payment accuracy solutions in the period presented.
Potential medical cost savings represent the aggregate amount of potential savings in dollars identified by our cost management and payment and revenue integrity solutions in the period presented.
Results of Operations for the Years Ended December 31, 2021 and December 31, 2020 For a discussion comparing our consolidated operating results from the year ended December 31, 2021 with the year ended December 31, 2020, refer to Part II, Item 7.
Table of Contents Results of Operations for the Years Ended December 31, 2022 and December 31, 2021 For a discussion comparing our consolidated operating results from the year ended December 31, 2022 with the year ended December 31, 2021, refer to Part II, Item 7.
Interest on the senior secured credit facilities is calculated, at MPH's option, as (a) LIBOR (or, with respect to the term loan facility only, 0.50%, whichever is higher), plus the applicable margin, or (b) the highest rate of (1) prime rate, (2) the federal funds effective rate, plus 0.50%, (3) the LIBOR for an interest period of one month, plus 1.00% and (4) 0.50% for Term Loan B and 1.00% for Revolver B, in each case, plus an applicable margin of 4.25% for Term Loan B and between 3.50% and 4.00% for Revolver B, depending on MPH's first lien debt to consolidated EBITDA ratio.
Interest on Term Loan B and Revolver B is calculated, at MPH's option, as (a) Term SOFR (or, with respect to the term loan facility only, 0.50%, if higher), plus the applicable SOFR adjustment, plus the applicable margin, or (b) the highest rate of (1) the prime rate, (2) the federal funds effective rate, plus 0.50%, (3) the Term SOFR for an interest period of one month, plus the applicable SOFR adjustment, plus 1.00% and (4) 0.50% for Term Loan B and 1.00% for Revolver B, in each case, plus an applicable margin of 4.25% for Term Loan B and between 3.50% and 4.00% for Revolver B, depending on MPH's first lien debt to consolidated EBITDA ratio.
Payors typically compensate us through either a PSAV achieved or a PEPM rate. Approximately 92% of revenues for the year ended December 31, 2022 were based on a PSAV achieved rate.
Payors typically compensate us through either a PSAV achieved or a PEPM rate. Approximately 90% of revenues for the year ended December 31, 2023 were based on a PSAV achieved rate.
Amortization of Intangible Assets The increase in the amortization of intangible assets for the year ended December 31, 2022 as compared to the year ended December 31, 2021 was primarily due to the acquisitions of HST and DHP. This expense represents the amortization of intangible assets, as explained above and in the Notes to Consolidated Financial Statements.
Amortization of Intangible Assets The increase in the amortization of intangible assets for the year ended December 31, 2023, as compared to the year ended December 31, 2022 was primarily due to the acquisitions of BST. This expense represents the amortization of intangible assets, as explained above and in the Notes to Consolidated Financial Statements.
"Management’s Discussion and Analysis of Financial Condition and Results of Operations – Cash Flow Summary – For the year ended December 31, 2021 as compared to the year ended December 31, 2020" in our Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the Commission on February 25, 2022.
"Management’s Discussion and Analysis of Financial Condition and Results of Operations – Cash Flow Summary – For the year ended December 31, 2022 as compared to the year ended December 31, 2021" in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the Commission on March 1, 2023.
As of December 31, 2022, we have three letters of credit totaling $1.8 million of utilization against the revolving credit facility. The three letters of credit are used to satisfy real estate lease agreements for three of our offices in lieu of security deposits.
As of December 31, 2023, we have four letters of credit totaling $7.9 million of utilization against the revolving credit facility. Three letters of credit are used to satisfy real estate lease agreements for three of our offices in lieu of security deposits in the amount of $1.8 million as of December 31, 2023 and 2022.
Our consolidated first lien debt to consolidated EBITDA ratio was 2.64 times and 2.61 times as of December 31, 2022 and 2021, respectively. As of December 31, 2022 and 2021 we were in compliance with all of the debt covenants.
Our consolidated first lien debt to consolidated EBITDA ratio was 3.70 times and 2.64 times as of December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022 we were in compliance with all of the debt covenants.
Business Model Our business model avoids reimbursement, underwriting and malpractice risk and exposure. We do not provide or manage healthcare services or provide medical care. This reduces our exposure to state and federal regulations that are imposed on insurers and medical services providers. Healthcare Industry Exposure According to CMS, healthcare expenditures will grow from $4.5 trillion, or 18.2% of U.S.
Healthcare Industry Exposure Our business avoids reimbursement and malpractice risk and exposure. We do not provide or manage healthcare services or provide medical care. This reduces our exposure to state and federal regulations that are imposed on insurers and medical services providers. According to CMS, healthcare expenditures will grow from $4.7 trillion, or 17.6% of U.S.
"Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations for the Years Ended December 31, 2021 and December 31, 2020" in our Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the Commission on February 25, 2022.
"Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations for the Years Ended December 31, 2022 and December 31, 2021" in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the Commission on March 1, 2023.
Our effective tax rate for the year ended December 31, 2021 differed from the statutory rate primarily due to non-deductible stock-based compensation expense, non-deductible mark-to-market liability, limitations on executive compensation, changes in the Company's deferred state tax rate due to operations, and state tax expense.
Our effective tax rate for the year ended December 31, 2023 differed from the statutory rate primarily due to non-deductible stock-based compensation expense, non-deductible mark-to-market liability, limitations on executive compensation, non-deductible transaction costs, changes in the Company's deferred state tax rate due to the BST acquisition and client operations, tax credits, operations and state tax expense.
Liquidity and Capital Resources As of December 31, 2022, we had cash and cash equivalents of $340.6 million, which includes restricted cash of $6.5 million, and $448.2 million of loan availability under the revolving credit facility. On August 24, 2021, the maturity of the revolving credit facility was extended from June 7, 2023 to August 24, 2026.
Liquidity and Capital Resources As of December 31, 2023, we had cash and cash equivalents of $81.5 million, which includes restricted cash of $9.9 million, and $442.1 million of loan availability under the revolving credit facility. On August 24, 2021, the maturity of the revolving credit facility was extended from June 7, 2023 to August 24, 2026.
As of December 31, 2022 , our total debt had an annualized weighted average cash interest rate of 6.67%. .
As of December 31, 2023 , our total debt had an annualized weighted average cash interest rate of 6.83%.
The goodwill arose from the acquisition of the Company in 2016 by Holdings, the HST acquisition in 2020 and the DHP acquisition in 2021. The carrying value of goodwill was $3,705.2 million and $4,363.1 million as of December 31, 2022 and 2021, respectively.
The goodwill arose from the acquisition of the Company in 2016 by Holdings, the HST acquisition in 2020, the DHP acquisition in 2021 and the BST acquisition in 2023. The carrying value of goodwill was $3,829.0 million and $3,705.2 million as of December 31, 2023 and 2022, respectively.
For the years ended December 31, 2022, 2021, and 2020, the change in fair value of Private Placement Warrants and Unvested Founder Shares, and stock-based compensation are recorded in the parent company MultiPlan Corporation and not in the MPH operating company and therefore represent differences between MultiPlan Corporation and MPH.
For the years ended December 31, 2023 and December 31, 2022, the change in fair value of Private Placement Warrants and Unvested Founder Shares, and stock-based compensation (excluding the employee stock purchase plan) are recorded in the Table of Contents parent company MultiPlan Corporation and not in the MPH operating company and therefore represent differences between MultiPlan Corporation and MPH.
The change in methodology groups our claims charges into two categories that correspond to differing characteristics of identified savings performance: • Commercial Health Plans . This category primarily represents our Network-Based Services and Analytics-Based Services claims.
We group our claims charges into two categories that correspond to differing characteristics of identified savings performance: • Commercial Health Plans . This category primarily represents our Network-Based Services and Analytics-Based Services claims.
Change in fair value of Private Placement Warrants and Unvested Founder Shares The Company measures at each reporting period the fair values of the Private Placement Warrants and Unvested Founder Shares. For the year ended December 31, 2022, the fair values of the Private Placement Warrants and the Unvested Founder Shares decreased by $67.1 million and $32.6 million, respectively.
Change in fair value of Private Placement Warrants and Unvested Founder Shares The Company measures at each reporting period the fair values of the Private Placement Warrants and Unvested Founder Shares. For the year ended December 31, 2023, the fair values of the Private Placement Warrants and the Unvested Founder Shares decreased by $1.2 million and $0.8 million, respectively.
Although the end beneficiary of our services are employers and other plan sponsors and their health plan members, our direct customers are typically health plan administrators ("Payors") who go out to market with our services.
Although the end beneficiary of our services are employers and other plan sponsors and their health plan members, our direct customers are typically Payors, including ASOs and third-party administrators ("TPAs"), who go to market with our services to those end customers.
Our annualized weighted average cash interest rate increased by 2.03% across our total debt in the year ended December 31, 2022, as compared to the year ended December 31, 2021.
Our annualized weighted average cash interest rate increased by 0.16% across our total debt in the year ended December 31, 2023 , as compared to the year ended December 31, 2022 .
For the years ended December 31, 2022, 2021 and 2020 interest expense for MultiPlan Corporation was $81.9 million, $82.1 million, and $107.2 million higher than interest expense, respectively, for MPH due to interest expense incurred by MultiPlan Corporation on the Senior Convertible Notes (issued on October 8, 2020) and Senior PIK Notes (redeemed October 8, 2020) including amortization of discount on Senior PIK Notes, net of debt issue costs.
For the years ended December 31, 2023 and December 31, 2022 interest expense for MultiPlan Corporation was higher than interest expense for MPH by $82.5 million and $81.9 million, respectively, due to interest expense incurred by MultiPlan Corporation on the Senior Convertible Notes (issued on October 8, 2020), net of debt issue costs.
For the year ended December 31, 2022, this category represented approximately 8% of our revenues.
For the year ended December 31, 2023, this category represented approximately 10% of our revenues.
Stock-Based Compensation Since the consummation of the Transactions, the Company has operated under the 2020 Omnibus Incentive Plan effective October 8, 2020. To date, awards granted under the 2020 Omnibus Incentive Plan have been in the form of Employee RS, Employee RSUs, Fixed Value RSUs, Employee NQSOs and Director RSUs.
Stock-Based Compensation The Company has operated under the 2020 Omnibus Incentive Plan effective October 8, 2020. To date, awards granted under the 2020 Omnibus Incentive Plan have been in the form of Employee RS, Employee RSUs, Fixed Value RSUs, Employee NQSOs and Director RSUs. Stock-based compensation is measured at the grant date based on the fair value of the award.
Customer Concentration Three customers individually accounted for 32%, 20% and 10% of revenues for the year ended December 31, 2022 and 34%, 19% and 10% of revenues for the year ended December 31, 2021 and 35%, 20% and 9% of revenues for the year ended December 31, 2020.
Customer Concentration Three customers individually accounted for 25%, 22% and 8% of revenues for the year ended December 31, 2023, three customers individually accounted for 32%, 20% and 10% of revenues for the year ended December 31, 2022 and three customers individually accounted for 34%, 19% and 10% for the year ended December 31, 2021.
The following table presents a reconciliation of net (loss) income to EBITDA and Adjusted EBITDA for the periods presented: Year Ended December 31, (in thousands) 2022 2021 2020 Net (loss) income $ (572,912) $ 102,080 $ (520,564) Adjustments: Interest expense 303,401 267,475 335,638 Interest income (3,500) (30) (288) Income tax provision (benefit) 12,169 33,373 (26,343) Depreciation 68,756 64,885 60,577 Amortization of intangible assets 340,536 340,210 334,697 Non-income taxes 1,653 1,698 3,221 EBITDA $ 150,103 $ 809,691 $ 186,938 Adjustments: Other expenses, net (1) 4,477 8,295 1,095 Integration expenses 4,055 9,460 801 Change in fair value of Private Placement Warrants and Unvested Founder Shares (67,050) (32,596) (35,422) Transaction-related expenses 34,693 9,647 31,689 (Gain) loss on investments (289) (25) 12,165 (Gain) loss on extinguishment of debt (34,551) 15,843 102,993 Loss on impairment of goodwill and intangible assets 662,221 — — Stock-based compensation 15,083 18,010 406,054 Adjusted EBITDA $ 768,742 $ 838,325 $ 706,313 (1) "Other expenses, net" represents miscellaneous non-recurring income, miscellaneous non-recurring expenses, gain or loss on disposal of assets, impairment of other assets, gain or loss on disposal of leases, tax penalties, and non-integration related severance costs. ____________________ Material differences between MultiPlan Corporation and MPH for the years ended December 31, 2022 and 2021 include differences in interest expense, change in fair value of Private Placement Warrants and Unvested Founder Shares, stock-based compensation, and net insurance premiums associated with our captive insurance company, which are eliminated in the consolidated financial reporting of MultiPlan Corporation.
The following table presents a reconciliation of net (loss) income to EBITDA and Adjusted EBITDA for the periods presented: Year Ended December 31, (in thousands) 2023 2022 2021 Net (loss) income $ (91,697) $ (572,912) $ 102,080 Adjustments: Interest expense 333,208 303,401 267,475 Interest income (8,233) (3,500) (30) Income tax provision (benefit) (15,363) 12,169 33,373 Depreciation 77,323 68,756 64,885 Amortization of intangible assets 342,694 340,536 340,210 Non-income taxes 2,283 1,653 1,698 EBITDA $ 640,215 $ 150,103 $ 809,691 Adjustments: Other expenses, net (1) 4,323 4,477 8,295 Integration expenses 3,358 4,055 9,460 Change in fair value of Private Placement Warrants and Unvested Founder Shares (1,965) (67,050) (32,596) Transaction-related expenses 8,064 34,693 9,647 Gain on investments — (289) (25) (Gain) loss on extinguishment of debt (53,968) (34,551) 15,843 Loss on impairment of goodwill and intangible assets — 662,221 — Stock-based compensation 18,018 15,083 18,010 Adjusted EBITDA $ 618,045 $ 768,742 $ 838,325 (1) "Other expenses, net" represents miscellaneous non-recurring income, miscellaneous non-recurring expenses, gain or loss on disposal of assets, impairment of other assets, gain or loss on disposal of leases, tax penalties, and non-integration related severance costs. ____________________ Material differences in Adjusted EBITDA between MultiPlan Corporation and MPH for the years ended December 31, 2023 and December 31, 2022 include differences in interest expense, change in fair value of Private Placement Warrants and Unvested Founder Shares, stock-based compensation, gain on retirement of debt, and Adjusted EBITDA associated with our captive insurance company, in which revenues and expenses are eliminated in the consolidated financial reporting of MultiPlan Corporation.
Services included in this category are as follows: ◦ Payment and Revenue Integrity Services ▪ Pre-Payment Clinical Reviews ▪ Coordination of Benefits and Subrogation Services ▪ Data Mining ▪ Revenue Integrity Services ◦ Network-Based Services ▪ Property & Casualty Network Services (pre-payment) ▪ Other network services Additional changes to the reporting are as follows: 53 Table of Contents • DHP claims that were previously excluded from our reporting of medical charges processed and potential medical cost savings are included in the data presented below since the date of acquisition of February 26, 2021. • Medical charges processed and potential medical cost savings are reported based on closed claims date, such that the reported claims are claims that have closed during the period presented, which more closely aligns with our receipt of revenue during that period.
Services included in this category are as follows: ◦ Payment and Revenue Integrity Services ▪ Pre-Payment Clinical Reviews ▪ Coordination of Benefits and Subrogation Services ▪ Data Mining ▪ Revenue Integrity Services ◦ Network-Based Services ▪ Property & Casualty Network Services (pre-payment) ▪ Other network services Our reporting methodology consists of the following: • Medical charges processed and potential medical cost savings are reported based on closed claims date, such that the reported claims are claims that have closed during the period presented, which more closely aligns with our receipt of Table of Contents revenue during that period.
This estimated enterprise fair value is then reconciled to our market enterprise value based on our market capitalization at year end with an appropriate implied market participant acquisition premium. Qualitative impairment assessments were performed for the years ended December 31, 2021 and 2020.
This estimated enterprise fair value is then reconciled to our market enterprise value based on our market capitalization at year end with an appropriate implied market participant acquisition premium. Qualitative impairment assessments were performed for the year ended December 31, 2021. Fair value measurements require considerable judgment and are sensitive to changes in underlying assumptions.
The results of operations and financial condition of DHP have been included in the Company's consolidated results from the date of acquisition. In connection with the DHP acquisition, the Company incurred transaction-related expenses of $0.1 million, $4.9 million and $0.6 million for the years ended December 31, 2022, 2021 and 2020, respectively .
The results of operations and financial condition of BST have been included in the Company's consolidated results from the date of acquisition. In connection with the BST acquisition, the Company incurred transaction-related expenses of $6.9 million for the year ended December 31, 2023.
As of December 31, 2021, our long-term debt was $4,879.1 million and included (i) $1,308.4 million Term Loan B, excluding the current portion of Term Loan B of $13.3 million, discount on Term Loan B of $12.9 million, (ii) $1,050.0 million of 5.50% Senior Secured Notes, (iii) $1,300.0 million of 5.750% Notes, (iv) $1,300.0 million of Senior Convertible PIK Notes, discount on Senior Convertible PIK Notes of $27.7 million, and (v) $0.1 million of long-term finance lease obligations, net of (vi) debt issue costs of $38.8 million.
As of December 31, 2023, our long-term debt was $4,532.7 million and included (i) $1,281.9 million Term Loan B, excluding the current portion of Term Loan B of $13.3 million , discount on Term Loan B of $9.3 million , (ii) $1,050.0 million of 5.50% Senior Secured Notes, (iii) $979.8 million of 5.750% Notes, and (iv) $1,275.0 million of Senior Convertible PIK Notes, discount on Senior Convertible PIK Notes of $18.8 million, net of (v) debt issue costs of $25.9 million.
The estimated fair value of our indefinite-lived intangibles was less than their carrying value and as a result a loss on impairment $4.3 million was recorded during the year ended December 31, 2022.
The estimated fair value of our indefinite-lived intangibles was greater than their carrying value and as a result no impairment was recorded during the year ended December 31, 2023.
Fair value measurements require considerable judgment and are sensitive to changes in underlying assumptions. As a result, there can be no assurance that estimates and assumptions made for purposes of the impairment assessment will prove to be an accurate prediction of the future.
As a result, there can be no assurance that estimates and assumptions made for purposes of the impairment assessment will prove to be an accurate prediction of the future.
In the year ended December 31, 2022, and 2021, MPH had higher EBITDA expenses than MultiPlan Corporation of $2.9 million and $0.4 million, respectively due to insurance premiums paid to our captive insurance company, net of related captive insurance company costs which are eliminated in the consolidated financial reporting of MultiPlan Corporation. 58 Table of Contents The following table presents a reconciliation of net (loss) income to Adjusted EPS for the periods presented: Year Ended December 31, ($ in thousands, except share and per share amounts) 2022 2021 2020 Net (loss) income $ (572,912) $ 102,080 $ (520,564) Adjustments: Amortization of intangible assets 340,536 340,210 334,697 Other expenses, net (1) 4,477 8,295 1,095 Integration expenses 4,055 9,460 801 Change in fair value of Private Placement Warrants and Unvested Founder Shares (67,050) (32,596) (35,422) Transaction-related expenses 34,693 9,647 31,689 (Gain) loss on investments (289) (25) 12,165 (Gain) loss on extinguishment of debt (34,551) 15,843 102,993 Loss on impairment of goodwill and intangible assets 662,221 — — Stock-based compensation 15,083 18,010 406,054 Estimated tax effect of adjustments (91,295) (98,671) (106,989) Adjusted net income $ 294,968 $ 372,253 $ 226,519 Weighted average shares outstanding – Basic 638,925,689 651,006,567 470,785,192 Net (loss) income per share – basic $ (0.90) $ 0.16 $ (1.11) Adjusted earnings per share $ 0.46 $ 0.57 $ 0.48 (1) "Other expenses, net" represents miscellaneous non-recurring income, miscellaneous non-recurring expenses, gain or loss on disposal of assets, impairment of other assets, gain or loss on disposal of leases, tax penalties, and non-integration related severance costs.
The following table presents a reconciliation of net (loss) income to Adjusted EPS for the periods presented: Year Ended December 31, ($ in thousands, except share and per share amounts) 2023 2022 2021 Net (loss) income $ (91,697) $ (572,912) $ 102,080 Adjustments: Amortization of intangible assets 342,694 340,536 340,210 Other expenses, net (1) 4,323 4,477 8,295 Integration expenses 3,358 4,055 9,460 Change in fair value of Private Placement Warrants and Unvested Founder Shares (1,965) (67,050) (32,596) Transaction-related expenses 8,064 34,693 9,647 Gain on investments — (289) (25) (Gain) loss on extinguishment of debt (53,968) (34,551) 15,843 Loss on impairment of goodwill and intangible assets — 662,221 — Stock-based compensation 18,018 15,083 18,010 Estimated tax effect of adjustments (79,781) (91,295) (98,671) Adjusted net income $ 149,046 $ 294,968 $ 372,253 Weighted average shares outstanding – Basic 645,134,657 638,925,689 651,006,567 Net (loss) income per share – basic $ (0.14) $ (0.90) $ 0.16 Adjusted earnings per share $ 0.23 $ 0.46 $ 0.57 (1) "Other expenses, net" represents miscellaneous non-recurring income, miscellaneous non-recurring expenses, gain or loss on disposal of assets, impairment of other assets, gain or loss on disposal of leases, tax penalties, and non-integration related severance costs.
The Company cannot predict the occurrence of certain events or changes in circumstances that might adversely affect the carrying value of goodwill.
The Company cannot predict the occurrence of certain events or changes in circumstances that might adversely affect the carrying value of goodwill. The fair value of our reporting unit exceeded its carrying value by less than 5%.
Certain covenants related to the 5.50% Senior Secured Notes will cease to apply to the 5.50% Senior Secured Notes for so long as such notes have investment grade ratings from both Moody’s Investors Service, Inc. and S&P Global Ratings.
The Term Loan B, Revolver B, 5.50% Senior Secured Notes, and 5.750% Notes have Speculative Grade ratings. The Senior Convertible PIK Notes are unrated. Certain covenants related to the 5.50% Senior Secured Notes will cease to apply to the 5.50% Senior Secured Notes if such notes have investment grade ratings from both Moody’s Investors Service, Inc. and S&P Global Ratings.
This decrease in revenues was due to decreases in Network-Based Service revenues of $33.2 million, and Payment and Revenue Integrity Services of $9.2 million, partially offset by a $4.4 million increase in Analytics-Based Services revenues. Network-Based Services revenues decreased $33.2 million, or 11.9%, in the year ended December 31, 2022, as compared to the year ended December 31, 2021.
This decrease in revenues was due to decreases in Network-Based Services revenues of $21.9 million, Analytics-Based Services revenues of $88.0 million, and Payment and Revenue Integrity Services of $8.3 million. Network-Based Services revenues decreased $21.9 million, or 8.9%, in the year ended December 31, 2023, as compared to the year ended December 31, 2022.
Net income before income taxes for the year ended December 31, 2021 of $135.5 million generated a provision for income taxes of $33.4 million with an effective tax rate of 24.6%.
Net loss before income taxes for the year ended December 31, 2022 of $560.7 million generated a provision for income taxes of $12.2 million with an effective tax rate of (2.2)%.
On October 29, 2020, the Company issued $1,300.0 million in aggregate principal amount of the 5.750% Notes. The 5.750% Notes are guaranteed on a senior unsecured basis jointly and severally by the Company and its subsidiaries and have a maturation date of November 1, 2028. The 5.750% Notes were issued at par.
The 5.750% Notes are guaranteed on a senior unsecured basis jointly and severally by the Company and its subsidiaries and have a maturation date of November 1, 2028. The 5.750% Notes were issued at par. The interest rate on the 5.750% Notes is fixed at 5.750% and is payable semi-annually on May 1 and November 1 of each year.
As of December 31, 2022, the Company has repurchased approximately $100.0 million of its Class A common stock as part of this program using cash on hand. Our primary sources of liquidity are internally generated funds combined with our borrowing capacity under our revolving credit facility.
As of December 31, 2022, the Company repurchased approximately $100.0 million of its Class A common stock as part of this program using cash on hand.
MultiPlan offers services to our customers in three categories: • Analytics-Based Services: a suite of data-driven algorithms and insights that detect claims over-charges and either negotiate or recommend fair reimbursement for out-of-network medical costs using a variety of data sources and pricing algorithms.
The Company, through its operating subsidiary, MultiPlan, Inc., offers its solutions nationally through a range of service lines, which include: • Analytics-Based Services reduce medical cost through data-driven algorithms and insights that detect claims over-charges and either negotiate or recommend fair reimbursement for out-of-network medical costs using a variety of data sources and pricing algorithms.
The decrease was primarily due to the variations in the stock price of the Company's Class A common stock over that period. 63 Table of Contents Provision (Benefit) for Income Taxes Net loss before income taxes for the year ended December 31, 2022 of $560.7 million generated a provision for income taxes of $12.2 million with an effective tax rate of (2.2)%.
The decrease was primarily due to the passage of time over that period. Provision (Benefit) for Income Taxes Net loss before income taxes for the year ended December 31, 2023 of $107.1 million generated a benefit for income taxes of $15.4 million with an effective tax rate of 14.3%.
Cash Flow Summary The following table is derived from our consolidated statements of cash flows: For the Year Ended December 31, (in thousands) 2022 2021 Net cash flows provided by (used in): Operating activities $ 372,364 $ 404,687 Investing activities $ (104,446) $ (228,379) Financing activities $ (115,738) $ (114,684) 64 Table of Contents For the year ended December 31, 2022 as compared to the year ended December 31, 2021 Cash Flows from Operating Activities Cash flows from operating activities provided $372.4 million for the year ended December 31, 2022 and $404.7 million for the year ended December 31, 2021.
Cash Flow Summary The following table is derived from our consolidated statements of cash flows: For the Year Ended December 31, (in thousands) 2023 2022 Net cash flows provided by (used in): Operating activities $ 171,720 $ 372,364 Investing activities $ (249,792) $ (104,446) Financing activities $ (180,993) $ (115,738) Table of Contents For the year ended December 31, 2023 as compared to the year ended December 31, 2022 Cash Flows from Operating Activities Cash flows from operating activities decreased by $200.6 million, or 53.9%, primarily due to lower earnings once adjusted for non-cash items, and unfavorable changes in working capital.
Costs of Services (exclusive of depreciation and amortization of intangible assets) Year Ended December 31, Change ($ in thousands) 2022 2021 $ % Personnel expenses excluding stock-based compensation $ 169,703 $ 147,342 $ 22,361 15.2 % Stock-based compensation 3,351 2,618 733 28.0 % Personnel expenses including stock-based compensation 173,054 149,960 23,094 15.4 % Access and bill review fees 16,580 13,526 3,054 22.6 % Other cost of services expenses 14,464 11,806 2,658 22.5 % Total costs of services $ 204,098 $ 175,292 $ 28,806 16.4 % The increase in costs of services of $28.8 million, or 16.4%, for the year ended December 31, 2022 as compared to the year ended December 31, 2021 was primarily due to increases in personnel expenses of $23.1 million, access and bill review fees of $3.1 million, and other costs of services expenses of $2.7 million.
Costs of Services (exclusive of depreciation and amortization of intangible assets) Table of Contents Year Ended December 31, Change ($ in thousands) 2023 2022 $ % Personnel expenses excluding stock-based compensation $ 194,028 $ 169,703 $ 24,325 14.3 % Stock-based compensation 5,532 3,351 2,181 65.1 % Personnel expenses including stock-based compensation 199,560 173,054 26,506 15.3 % Access and bill review fees 19,327 16,580 2,747 16.6 % Other cost of services expenses 16,581 14,464 2,117 14.6 % Total costs of services $ 235,468 $ 204,098 $ 31,370 15.4 % The increase in costs of services of $31.4 million, or 15.4%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022 was primarily due to increases in personnel expenses of $26.5 million from increases in employee headcount and year-over-year increases in compensation and related fringe benefits of $21.7 million, increases in personnel expenses from the acquisition of BST of $2.6 million, and stock-based compensation of $2.2 million.
General and Administrative Expenses Year Ended December 31, Change ($ in thousands) 2022 2021 $ % General and administrative expenses excluding stock-based compensation and transaction-related expenses $ 120,412 $ 126,056 $ (5,644) (4.5) % Stock-based compensation 11,732 15,392 (3,660) (23.8) % Transaction-related expenses 34,693 9,647 25,046 259.6 % General and administrative expenses $ 166,837 $ 151,095 $ 15,742 10.4 % The increase in general and administrative expenses of $15.7 million, or 10.4%, for the year ended December 31, 2022, as compared to the year ended December 31, 2021 was primarily due to increases in transaction-related expenses of $25.0 million, non-stock-based compensation expenses of $2.6 million, insurance of $1.1 million primarily related to higher insurance costs, equipment lease and maintenance of $1.4 million, and telecommunication expenses of $0.9 million, and net increase in other expenses of $2.0 million, partially offset by decreases in stock-based compensation of $3.7 million, integration expenses of $5.4 million primarily related to the acquisitions of HST and DHP, professional fees of $1.1 million, loss on disposal of equipment of $1.8 million, and an increase in the capitalized software development offset of $5.3 million.
General and Administrative Expenses Year Ended December 31, Change ($ in thousands) 2023 2022 $ % General and administrative expenses excluding stock-based compensation and transaction-related expenses $ 123,507 $ 120,412 $ 3,095 2.6 % Stock-based compensation 12,486 11,732 754 6.4 % Transaction-related expenses 8,064 34,693 (26,629) (76.8) % General and administrative expenses $ 144,057 $ 166,837 $ (22,780) (13.7) % The decrease of $22.8 million, or 13.7%, in general administrative expenses for the year ended December 31, 2023, as compared to the year ended December 31, 2022 was primarily due to a decrease in transaction-related expenses of $26.6 million as explained below, a decrease in insurance of $3.0 million, and a net decrease in personnel expenses of $4.5 million due to higher capitalized development costs, and a net decrease in other general and administrative expenses of $5.5 million, offset by an increase in professional fees of $5.7 million, an increase in equipment lease and maintenance of $2.6 million, and other increases due to the acquisition of BST of $8.5 million that are not comparable to the prior year.
Stock-based compensation is measured at the grant date based on the fair value of the award. For the year ended December 31, 2022, the Company has granted 7.3 million Employee NQSOs, 4.0 million Employee RSUs, and 0.2 million Director RSUs under the 2020 Omnibus Incentive Plan.
For the year ended December 31, 2023, the Company has granted no Employee NQSOs, 29.8 million Employee RSUs, and 0.7 million Director RSUs under the 2020 Omnibus Incentive Plan.
The annual commitment fee rate was 0.50% at December 31, 2022 and 2021. The fee can range from an annual rate of 0.25% to 0.50% based on our consolidated first lien debt to consolidated EBITDA ratio, as defined in the agreement.
The fee can range from an annual rate of 0.25% to 0.50% based on our consolidated first lien debt to consolidated EBITDA ratio, as defined in the agreement. Table of Contents Senior Notes On October 8, 2020, the Company issued $1,300.0 million in aggregate principal amount of Senior Convertible PIK Notes.
The quantitative assessment of our goodwill as of December 31, 2022 indicated that the estimated fair value of the reporting unit of approximately $6.3 billion was less than its carrying value of approximately $6.9 billion. As a result, a loss on impairment of $657.9 million was recorded during the year ended December 31, 2022.
The estimated fair values of our goodwill and indefinite-lived assets were less than their carrying values and as a result impairment charges of $657.9 million for our goodwill and $4.3 million for our indefinite-lived intangibles were recorded during the year ended December 31, 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeFrom time to time, we have entered into interest rate swap and cap agreements or other financial instruments in the normal course of business for purposes other than trading. These financial instruments were used to mitigate interest rate or other risks, although to some extent they exposed us to market risks and credit risks.
Biggest changeWe manage our exposure to fluctuations in interest rates with respect to our senior secured credit facilities by entering into interest rate swap agreements. During the year ended December 31, 2023, we entered into three interest rate swap agreements to mitigate interest rate risk, although to some extent they exposed us to market risks and credit risks.
In the event that the counterparty failed to meet the terms of a contract or agreement then our exposure would have been limited to the current value, at that time, of the interest rate differential, not the full notional or contract amount. Management believes that such contracts and agreements were executed with creditworthy financial institutions.
In the event that the counterparty failed to meet the terms of a contract or agreement then our exposure would Table of Contents have been limited to the current value, at that time, of the interest rate differential, not the full notional or contract amount. Management believes that such contracts and agreements were executed with creditworthy financial institutions.
We currently have no derivative instruments and had no derivatives in 2022, 2021 and 2020. We controlled the credit risks associated with these instruments through the evaluation of the creditworthiness of the counterparties.
We controlled the credit risks associated with these instruments through the evaluation of the creditworthiness of the counterparties.
A 100-basis point increase (decrease) in the variable interest rates under Term Loan B would result in a $13.1 million increase (decrease) in interest expense, per annum on our borrowings. We may manage our exposure to fluctuations in interest rates with respect to our senior secured credit facilities by entering into interest rate swap or cap agreements.
A 100-basis point increase (decrease) in the variable interest rates under Term Loan B (excluding $800 million subject to interest rate swap agreements) would result in a $5.0 million increase (decrease) in interest expense, per annum on our borrowings.
Removed
As such, we considered the risk of nonperformance to be remote. In July 2017, the United Kingdom Financial Conduct Authority announced its intention to phase out LIBOR rates by the end of 2021, some of which have recently been extended to June 30, 2023.
Added
As such, we considered the risk of nonperformance to be remote. Table of Contents
Removed
The effect of any changes in the methods by which LIBOR is determined, or any other reforms to LIBOR that may be enacted in the United Kingdom or elsewhere cannot be predicted.
Removed
Such developments may cause LIBOR to perform differently from the past, including sudden or prolonged increases or decreases in LIBOR, or LIBOR may cease to exist resulting in the application of a successor base rate under our credit facilities. Either development could have unpredictable effects on our interest payment obligations, including an increase in interest payments under our credit facilities.
Removed
See above for our sensitivity to an increase or decrease in the variable interest rates under Term Loan B. 71 Table of Contents

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