MultiPlan : Q1 2024 results and Business update

MultiPlan Q1 2024 Results and Business Update

May 8, 2024

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Disclaimer

Forward-Looking Statements

This presentation includes statements that express our management's opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, "forward-looking statements". These forward- looking statements can generally be identified by the use of forward-looking terminology, including the terms "believes," "estimates," "anticipates," "expects," "seeks," "projects," "forecasts," "intends," "plans," "may," "will" or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this presentation, including the discussion of financial outlook and guidance, plans to expand or enhance the Company's products and service lines, and the long-term prospects of the Company. Such forward-looking statements are based on available current market and management's expectations, beliefs and forecasts concerning future events impacting the business. Although we believe that these forward-looking statements are based on reasonable assumptions at the time they are made, you should be aware that these forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These factors include: loss of our clients, particularly our largest clients; interruptions or security breaches of our information technology systems and other cybersecurity attacks; the impact of reduced claims volumes resulting from a nationwide outage by a vendor used by our customers; the ability to achieve the goals of our strategic plans and recognize the anticipated strategic, operational, growth and efficiency benefits when expected; our ability to enter new lines of business and broaden the scope of our services; the loss of key members of our management team or inability to maintain sufficient qualified personnel; our ability to continue to attract, motivate and retain a large number of skilled employees, and adapt to the effects of inflationary pressure on wages; trends in the U.S. healthcare system, including recent trends of unknown duration of reduced healthcare utilization and increased patient financial responsibility for services; effects of competition; effects of pricing pressure; our ability to identify, complete and successfully integrate acquisitions; the inability of our clients to pay for our services; changes in our industry and in industry standards and technology; our ability to protect proprietary information, processes and applications; our ability to maintain the licenses or right of use for the software we use; our inability to expand our network infrastructure; our ability to obtain additional financing; our ability to pay interest and principal on our notes and other indebtedness; lowering or withdrawal of our credit ratings; adverse outcomes related to litigation or governmental proceedings; inability to preserve or increase our existing market share or the size of our PPO networks; decreases in discounts from providers; pressure to limit access to preferred provider networks; the loss of our existing relationships with providers; changes in our regulatory environment, including healthcare law and regulations; the expansion of privacy and security laws; heightened enforcement activity by government agencies; the possibility that we may be adversely affected by other political, economic, business, and/or competitive factors; changes in accounting principles or the incurrence of impairment charges; our ability to remediate any material weaknesses or maintain effective internal controls over financial reporting; other factors disclosed in our Securities and Exchange Commission ("SEC") filings from time to time, including, without limitation, those factors described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023; and other factors beyond our control. Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.

There can be no assurance that future developments affecting our business will be those that we have anticipated. Forward-looking statements speak only as of the date made. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Non-GAAP Measures

In addition to the financial measures prepared in accordance with generally accepted accounting principles in the United States ("GAAP"), this presentation contains certain non-GAAP financial measures, including EBITDA, Adjusted EBITDA, Free Cash Flow, Unlevered Free Cash Flow and Adjusted Cash Conversion Ratio. A non-GAAP financial measure is generally defined as a numerical measure of a company's financial or operating performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP. EBITDA, Adjusted EBITDA, Free Cash Flow, Unlevered Free Cash Flow and Adjusted Cash Conversion Ratio are supplemental measures of MultiPlan's performance that are not required by or presented in accordance with GAAP. These measures are not measurements of our financial or operating performance under GAAP, have limitations as analytical tools and should not be considered in isolation or as an alternative to net income (loss), cash flows or any other measures of performance prepared in accordance with GAAP. EBITDA represents net income (loss) before interest expense, interest income, income tax provision (benefit), depreciation and amortization of intangible assets, and non-income taxes. Adjusted EBITDA is EBITDA as further adjusted by certain items as described in the table below. In addition, in evaluating EBITDA and Adjusted EBITDA you should be aware that in the future, we may incur expenses similar to the adjustments in the presentation of EBITDA and Adjusted EBITDA. The presentation of EBITDA and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. The calculations of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. Based on our industry and debt financing experience, we believe that EBITDA and Adjusted EBITDA are customarily used by investors, analysts and other interested parties to provide useful information regarding a company's ability to service and/or incur indebtedness. We also believe that Adjusted EBITDA is useful to investors and analysts in assessing our operating performance during the periods these charges were incurred on a consistent basis with the periods during which these charges were not incurred. Both EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider either in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of the limitations are:

• EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;
• EBITDA and Adjusted EBITDA do not reflect interest expense, or the cash requirements necessary to service interest or principal payments on our debt;
• EBITDA and Adjusted EBITDA do not reflect our tax expense or the cash requirements to pay our taxes; and
• Although depreciation and amortization are non-cash charges, the tangible assets being depreciated will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements.

MultiPlan's presentation of Adjusted EBITDA should not be construed as an inference that our future results and financial position will be unaffected by unusual items. Free Cash Flow as defined as net cash provided by operating activities less capital expenditures, all as disclosed in the Statement of Cash Flows. Unlevered Free Cash Flow is defined as net cash provided by (used in) operating activities less capital expenditures, plus cash interest paid, all as disclosed in the Statements of Cash Flows. Free Cash Flow and Unlevered Free Cash Flow are measures of our operational performance used by management to evaluate our business after purchases of property and equipment and, in the case of Unlevered Free Cash Flow, prior to the impact of our capital structure, in the case of Unlevered Free Cash Flow, and after purchases of property and equipment. Unlevered Free Cash Flow should be considered in addition to, rather than as a substitute for, consolidated net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity. Additionally, MultiPlan's definition of Free Cash Flow and Unlevered Free Cash Flow are limited, in that they do not represent residual cash flows available for discretionary expenditures, due to the fact that the measures do not deduct the payments required for debt service, in the case of Unlevered Free Cash Flow, and other contractual obligations or payments made for business acquisitions. Adjusted Cash Conversion Ratio is defined as Unlevered Free Cash Flow divided by Adjusted EBITDA. MultiPlan believes that the presentation of the Adjusted Cash Conversion Ratio provides useful information to investors because it is an financial performance measure that shows how much of its Adjusted EBITDA MultiPlan converts into Unlevered Free Cash Flow.

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Q1 2024 Highlights

2024 Q1

First Quarter 2024 Results:

• Revenues of $234.5 million
• Adjusted EBITDA1 of $146.8 million, and Adjusted EBITDA2 margin of 62.6%
• Operating cash flow of $49.7 million

During the first quarter, we:

• Identified potential savings of $5.7 billion for Payors, health plan sponsors and health plan members
• Closed 73 sales opportunities and added $19 million in total contract value, representing a 36% YoY increase in new sales
• Added four new logos within HST's Value Driven Health Plans and made progress selling our Balance Bill Protection product through HST
• Closed our first PlanOptix sale and are implementing B2B payments with three clients
• Repurchased $24.4 million face value of our debt, including $21.1 million of our 6.0% Senior Convertible PIK Notes

1 See reconciliation of non-GAAP measures included in Appendix

2Adjusted EBITDA margin is defined as adjusted EBITDA divided by revenues 3

Q1 2024 Results
Quarter-over-Quarter			Year-over-Year
$ in millions
		Q1 2024	(3.9)%	Q4 2023		Q1 2024	(0.9)%	Q1 2023

Revenues

			(18.0%)
		(6.4)%				(6.1)%

Adjusted EBITDA1

Adjusted EBITDA Margin2

62.6%64.2%

62.6%66.0%

1. See reconciliation of non-GAAP measures included in Appendix
2. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by Revenues

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Revenue by Service Line

$ in millions

Current Quarter

Service Line

Q1 2024

Sequential Quarter

Q4 2023

% Change

2024 Q1

Prior Year Quarter

Q1 2023

% Change

Network-Based

$46.2

$52.2 (11.6)%

$57.2 (19.3)%

Analytics-Based

$160.1

$163.5 (2.1)%

$152.4 5.0%

Payment & Revenue Integrity

$28.3

$28.4 (0.6)%

$27.0 4.8%

Total Revenue

$234.5

$244.1 (3.9)%

$236.6 (0.9)%

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Commercial Health Plans - Volumes1

OON Medical Charges Processed

• Q1 2024 charges of $18.3B decreased 5.7% QoQ and decreased 0.5% YoY
• Disruption from clearinghouse cybersecurity incident affected industry-wide claims flows

Identified Savings "Yield"

• Q1 2024 Identified savings "yield" of 29.5%

Identified Potential Savings

• Q1 2024 savings of $5.4B decreased 3.3% QoQ and increased 2.5% YoY
• Disruption from clearinghouse cybersecurity incident affected our savings volumes

Medical Charges Processed ($B)

Identified Savings "Yield"

Identified Potential Savings ($B)

1Gross savings identified. Effective fourth quarter 2022, we modified the methodology for capturing and reporting medical charges processed and potential medical cost savings from
previously reported submissions. We believe this new methodology provides additional insight into our business, increases alignment with our revenue reporting, and will provide a more
accurate portrayal of our portfolio of services as we grow our business through the addition of new claims flows and new service offerings. A full description of the modification to the
methodology can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. All time periods shown reflect the new methodology.	6

Medical Charges Processed and Identified Potential Savings

$ in billions

Current

"Core"

Business

Monetizable Opportunity

	Current Quarter		Sequential Quarter		Prior Year Quarter
		Q1 2024		Q4 2023 % Change		Q1 2023	% Change
Commercial Health Plans
Medical charges processed	$	18.3	$	19.4	(6)%	$	18.4	(1)%
Potential medical cost savings	$	5.4	$	5.6	(3)%	$	5.3	3	%
Potential savings as % of charges		29.5 %		28.8%			28.6 %
Payment & Revenue Integrity, Property & Casualty, and Other
Medical charges processed	$	23.2	$	23.9	(3)%	$	21.3	9	%
Potential medical cost savings	$	0.3	$	0.3	2 %	$	0.3	11	%
Potential savings as % of charges		1.4 %		1.4%			1.4 %
Total
Medical charges processed	$	41.5	$	43.4	(4)%	$	39.7	5	%
Potential medical cost savings	$	5.7	$	5.9	(3)%	$	5.6	3	%
Potential savings as % of charges		13.8 %		13.6%			14.0 %

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	MultiPlan Share of Savings						2024 Q1
	$ in millions
							Key Drivers of Identified
										Savings Volume and Revenue
										as a % of Savings, Q1 2024
				Q1 2024	Q4 2023	Q3 2023	Q2 2023	Q1 2023
			Identified potential savings - PSAV	$4,303	$4,411	$4,239	$4,199	$4,208	• Identified savings from our PSAV
Primary KPI	Revenues - PSAV1	$208	$218	$216	$214	$215		revenue model (~90% of our
	revenue) decreased 2.4% QoQ and
			Revenues as a % of identified savings - PSAV	4.83%	4.94%	5.09%	5.10 %	5.11 %		grew 2.3% YoY
			Identified potential savings - PEPM	$1,433	$1,500	$1,542	$1,460	$1,362	• In our core PSAV revenue model,
				revenue as a % of identified savings
			Revenues - PEPM2	$23	$22	$23	$22	$20		("revenue yield") fell about 10 basis
			Revenues as a % of identified savings - PEPM	1.57%	1.46%	1.46%	1.48 %	1.47 %		points, driven by 5 basis points of
				decline from yield shifts, most of
										which is temporary and likely to
			Identified potential savings - Total	$5,736	$5,911	$5,781	$5,659	$5,570		abate, and about 5 basis points of
				decline from a customer credit that
			Revenues - Total3	$235	$244	$243	$238	$237		we expect to end in Q2
			Revenues as a % of identified savings - Total	4.09%	4.13%	4.20%	4.21 %	4.25 %

1. In our PSAV model, we earn revenue as a percentage of identified savings.
2. In our PEPM model, we earn revenue per covered life.
3. Total revenue includes ~$4 million per quarter or less in other revenue not captured in our PSAV or PEPM models.

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Our Growth Plan - 2023 / 2024 Initiatives

We are on track with our product development roadmap

Objective	Service Lines	Initiatives	Progress Highlights
		• Pro PricerTM next Phase Enhancements	• On track; '23 deployments generating '24 revenue; pipeline growing
Lead the Next-Generation	Analytics	• Balance Bill Protection (BBP) for Pro PricerTM	• BBP for Pro PricerTM - robust sales pipeline
•	Network Intelligence Hub	• Partnership discussions advancing for Network Intelligence Hub
of Core Services to Bend	Network
Cost Curve in Healthcare	•	Micro Network pilot	• Micro Network - assessing strategy and approach
		• Integration of BenInsightsTM Technology	• Integration of BenInsightsTM is complete, building sales pipeline
Expand HST Platform &	Analytics - VDHP	•	Care Navigation Partnerships	• Care Navigation strategy and partnership discussions advancing
Advance Employer	• BBP through HST Platform	• Strong pipeline for HST BBP
Network
Solution in a Box	•	Pharmacy Partnerships	• Exploring Pharmacy product & partnership opportunities
		•	NSA Insights Portal	• Execution of portfolio of NSA / Surprise Bill projects on track
	Analytics - NSA	• NSA Rules-Based Processing
Deepen the Value	• State Surprise Bill Expansion / Automation
Network
Proposition of Core	• Advanced Code Editing (ACE)	• ACE - launch for Regionals / TPAs by end of Q2; pipeline building
P&RI
Services	•	B2B Payments	• B2B payments - three active client implementations
Payments1
	• Market Median Pricing Service
		•	PlanOptix Intelligence Enhancements	• First PlanOptix sale closed; enhancements targeted for Q2
Enhance and Expand Data	Data & Decision	•	Risk Analytics Expansion	• Risk analytics pipeline developing
• Supplemental Services: Auto Pay, Ceres	• First implementation for Auto Pay; Broker Panel in development
& Decision Science	Science1
Services		Broker Panel
	• Price Transparency Solution for Providers	• Provider solutions in development; targeting first release for Q4

1Data & Decision Science and Payments will be reported in Analytics-Based Services while we are scaling these businesses

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Maintaining FY 2024 Guidance

• Despite clearinghouse cybersecurity incident, we are maintaining our FY 2024 guidance
• Continue to expect growth to accelerate in the second half of 2024

Revenues

Adjusted EBITDA1

Interest Expense

Operating Cash Flow

Capex

Depreciation

Intangible

Amortization

Tax Rate

FY 2024E

$1,000 - 1,030M

$630 - 650M $320 - 330M

$170 - 200M

$120 - 130M

$80 - 90M

$345 - 350M

25 - 28%

1 We have not reconciled the forward-looking Adjusted EBITDA guidance included above to the most directly comparable GAAP measure because this cannot be done without unreasonable effort due to the variability and low visibility with respect to certain costs, the most significant of which are incentive compensation (including stock-based compensation), transaction-related expenses, certain fair value measurements, which are potential adjustments to future earnings. We expect the variability of these items to have a potentially unpredictable, and a potentially significant, impact on our future GAAP financial results.

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