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Ladies and gentlemen, thank you for standing by and welcome to the MultiPoint Corporation, fourth quarter 2020 conference call. At this time, all participants are in listen only mode. After the speakers presentation, there will be a question and answer session to ask a question. During the session, you will need to press star one on your telephone as a courtesy to others. We ask that each participant themselves to one question and if necessary, one follow up question before returning to the queue. Please be advised that today’s conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to you. Speaker today. Shawna Gasik, EVP of Investor Relations. Thank you. Please go ahead, madam.

Thank you, Chris. Good morning and welcome to Multiple-entry, fourth quarter and full year, 2020 earnings call. Joining me today is Mark Tabak, Chairman and Chief Executive Officer; Dale White, President Payor. Markets, and David Redmond, Chief Financial Officer. This call is being webcast and can be accessed through the investor relations section of our website at WWW.YOUTUBE.COM. Also available on our investor relations website will be a supplement slide to today’s call in addition to the fourth quarter and full year 2020 earnings press release issued earlier this morning. Before we begin, I’d like to remind you that our remarks and responses to questions may include forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those stated or implied by forward looking statements due to risks and uncertainties associated with our business which are discussed and the risk factors included in their registration statement and form S-1 and other FEC filings, any such forward looking statements represent management’s estimates as of the date of this call. While we may elect to update such forward looking statements at some point in the future, please note that we assume no obligation to do so. Certain financial measures we will discuss on this call are non-GAAP financial measures. We believe that providing these measures helps investors be more helpful and complete understanding of our financial results and is consistent with how management views our financial results. A reconciliation of these non-GAAP financial measures to the most comparable gap measure to the extent available without unreasonable effort is available in the earnings press release and in this slide included in the investor relations portion of our company’s website. I would now like to turn the call over to our chief executive officer, Mark Tabak Mark.

Thank you, Shanna. Welcome, everyone, to Multibillions plans, fourth quarter and full year 2020 earnings call. Before we begin, I’d like to say that we hope everyone is staying safe of the of would also like to acknowledge that more than 2000 outstanding multiples colleagues their tireless effort and thank our customers for their enduring trust and partnership. We are very pleased to announce our results today that reporting stronger than expected results in the third quarter day, we delivered even stronger fourth quarter results we’ve seen in both our revenue and adjusted EPS guidance for the fourth quarter and for the full year. Even with the continuing impact of covid revenues for the fourth quarter, we’re up fourteen point two percent over Q3 2020 three point six percent over the fourth quarter of last year. Adjusted EBITDA for the fourth quarter was strong, up seventeen point eight percent over Q3 and up 4.5 percent over last Q4 2019. Again, even with the continuing impact of covered for the full year 2020 for revenues and adjusted EBITDA decline modestly compared to the full year 2019, we believe that excluding the impact of covid both would have grown. We began 2020 with an excellent momentum and delivered strong first quarter results as a current pandemic unfolded. We responded quickly by enabling our teams to work remotely ensure the health and safety of our employees while continuing to provide uninterrupted service to our customers. Like many other companies, our revenues absorbed a large hit in Q2 as h0ealth care utilization declined. However, by staying focused and ready to help our customers, we made solid, solid progress in Q3, which carried into an excellent Q4. We were incredibly proud of the dedication and professionalism of our people, and because of their efforts, we…

Thank you, Mark. Good morning, everyone. As you just heard, we delivered a strong fourth quarter. We generated revenue up fourteen point two percent over Q3 and up three point six percent over Q4. Two percent over two, three and a three point six percent over two for 2019. In fact, our Q4 2020 performance was slightly ahead of our performance in Q1 2020, the last quarter before covid signaling that our business and that of our customers is both buoyant and adaptable. With the onset of covid and subsequent lockdown’s, we saw a dip in claims charges in Q2 by the start of Q3, you began to see a rebound. So the reduction in claim charges appears to have been only temporary. That said, the claims mix has been and continues to be different with more lower dollar claims, which makes sense considering all of the covid testing, telehealth and to some extent, the covid treatment services. Weekly covid testing claims between mid-June at the height of the pandemic. And now are up by a factor of 10 telehealth volume spikes starting in April and reached what has become a new normal running about the same from week to week since May. Treatment services are about 50 percent less costly on average now compared to the early months as the health care system has stabilized around effective protocols. These trends, together with the limited health system capacity for nonurgent services due to the recent surge in covid testing, testing in cases leads us to expect continued pressure on the business as a result of covid into 2021. These headwinds should abate as 2021 progresses. Spurred by their own covid driven business impacts, our customers have heightened interest in initiatives to strengthen cost management and payment accuracy. For example, in…

Thank you, Dale, and good morning, both our press release this morning and Mark’s comments a few minutes ago on this call had already covered our strong performance in Q4 and our meaningful progress from Q2 to Q4 and 2020. Let me add a few comments about Q4 and the full year 2020. Along the way, I will also review some key assumptions to help those of you maintaining financial models of the company, including some thoughts about covid and the related recent acquisitions and cash flow. Our net loss in 2020 of five hundred and twenty nine point six dollars million included four hundred five point eight million of stock based compensation related to the best thing and value of Class B units of multiplexing which vested upon the closing of the transaction on October eight thirty one point seven million of transaction costs which have been expensed in the period, and 103 million of costs related to this extinguishment of debt are Holdco notes and our seven, eight and one eight percent debentures, which were basically paid off in October of this past year, all in connection with the merger with Churchill on October 8th and subsequent replacement with of those notes by comparable debt, these three expenses aggregating five hundred and forty point five million represents substantially all of the difference between the net loss of five fifty six point four million in 2020 and net income in 2019. In addition, substantially all of the difference between the net loss of one eighty two point four million in Q4 and net income of eleven point eight million in Q4 2019 is from 106 million of the same stock based compensation transaction costs in the fourth quarter of twenty six million dollars and again to one hundred and…

Thanks, Dave. Thanks, Dale. Before we go to Q&A, I’d like to offer a few closing thoughts. I’m extremely excited about our company’s future. Well, if you play multiple and plays an essential role in identifying addressing savings opportunities, the U.S. health care system and remains a critical partner in delivering tens of billions of dollars in value to our payer customers who deep, deep IT and process integration into their workflows. The foundation for growth is a longstanding strength of our business model, which includes our data and our algorithms, our platform and our provider network. We are already connected to more than 700 payers, one point two million providers. We believe we are unique among the competition in providing an enterprise level platform that has capacity and scale help. Even the largest and most complex of our payer customers address challenges and opportunities for decades now. The strength of our business model has been and continues to be reflected in our financial results. The financial hydraulics of multiple our powerful, vast majority of our revenues are recurring. We have very limited customer turnover and are fortunate that many of our customers, with many of our customers, we routinely increase the level and scope of engagement. We remain excited about organic growth and continuing operations as we expand our relationship with our customers. We have also, over time made significant investments in technology and as a result, many of our processes are highly automated. This automation leads to a virtuous cycle of high margins and very to a high level of cash flow. A portion of which is then reinvested to further drive our technology drive value to our for our customers. And the whole cycle repeats again and again. 2020 was quite a year for every person, every family, every company. We are proud to have navigated the years successfully and we recognize the challenges are not over yet. We are optimistic that the worst is behind us and the 21 will be another year of meaningful progress. Before opening to questions, I want to establish one ground rule we have deep respect and gratitude for the unique relationships that we have with our customers. We also have great respect for our investors, including those of you on the call today. We understand that investors would like to understand every possible detail about our company. We also understand that we have a duty of confidentiality to our customers. Our goal is to honor our relationships with both our customers and the investors and do that successfully. We will not be able to answer questions regarding specific customers or regarding businesses owned by those customers. We would appreciate that with for those asking those questions to respect this position that I’d like to open the floor to your questions. Thank you.

At this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad. Again, as a courtesy to others, we ask that each participant limit themselves to one question and if necessary, one follow up question before returning to the queue. The first question comes from Josh Raskin of Nephron Research. Your line is open.

Hi, thanks. Good morning, guys. First question. It’s actually a series of numbers, clarifications. First, the 110 million covid impact in 2020. How much was in the fourth quarter? I think you said the second part would be I think you said 20 to 25 million of company cost, public company costs in 2010. In 2021. What is that? Versus 2020. And then I, I think, gave you maybe I couldn’t get the CapEx number. I don’t know if you said 70 to 75 or 75 to 80. So just some quick clarifications there. And then I’ve got a question.

They’re going to walk through that.

The CapEx number is 70 to 75, the well, actually 75 to 80 is where we are now. It was about 72 last year relative to Q4. We estimate that the covid impact was probably 12 to 16 million dollars, which is lower than it was in Q2 and Q3, but still certainly higher. And the last question was, what was the third one the public company costs in 2020? Public company costs in 2020 were relatively nominal. There were only about two to three million dollars. Most of that occurred late in the fourth quarter. So obviously, the big numbers, the dental coverage.

Gotcha. And then my real question is just maybe you could talk a little bit about 2021. I understand that, you know, there’s a lot of uncertainty was covid, et cetera. But maybe if you could just talk about broadly about customer retention, I know you’re not going to talk specifically about any individual customers, and I understand that. But maybe any meaningful additions or subtractions, again, without naming names to start the year, any big changes that we should know about. And then if you could just remind us of the seasonality that’s causing the lower ones. No, I guess I’m just not as I just you know, we don’t have a ton of history here. So I just I’m not sure I get this seasonal weakness on cue.

Let me talk about seasonality and then turn it over to Mark and Dale for the customer discussion, typically. And it’s not a deep seasonality. It’s probably one to two percent kind of as you go from Q4 to Q1. Mostly it’s a byproduct of obviously in Q1 most people are on calendar year health plans. And so, you know, you’re new, your new deductible, your new co-pays kick in and people tend to be a little bit reluctant to, you know, utilize a lot of services. Obviously, services that they have to have, they use. But elective stuff generally is pushed into later in the year after that. They kind of have a sense of where they are from a health plan perspective and what deductibles that they’ve used up. So it’s a relatively minor number. Gosh, I’d say, you know, it’s probably one percent because we really are not heavily, seasonally adjusted. But there is a slight softness generally in Q1.

Ok, Mark?

Josh, look, we are deeply engaged in discussions with our customers. We have a high level of persistency and the relationship and services we offer to those customers continues to expand there. Why don’t you just go without naming names, want you to talk again about some of the projects that we have that are being implemented and other discussions that are underway to reinforce the fact that we are we are a valuable component in helping them rein in health care costs and make sure that health care can be made more affordable to their customers and their subscribers.

Yes. Thanks, Mark. As Mark said, we have a number of projects underway with our customers to continue to, you know, to strengthen, you know, their response and affordability and payment accuracy. And they range in, you know, across a number of engagements, if you will. As I mentioned, we’re collaborating with payers on the development of Medicare Advantage and networks. As everyone knows, Medicare Advantage is growing significantly. And this that’s an opportunity for us. We continue to expand are data eyesight services on our reference based pricing services into payers. We have implemented program changes with a number of our with a number of our clients. And we continue to add new clients through our expanded sales efforts. We’re continuing to add new clients across to the commercial market, the third party administrator market and the blues market as well. And we’re really excited. Right? I mean, I think you heard that in my remarks and Mark’s opening comments about the opportunities through the acquisition of Høst and Discovery. We’re super excited about both of these and we’ve wasted no time in try and hitting the market hard with initially høst and the next generation of reference based pricing services. And we’re already beginning to look at opportunities to cross-sell discoveries, services into their customers and to ours. And they clearly widened and deepened our team and integrity suite. And by the addition of premium, you know, the premium services, the coordination of benefits, the subrogation, and we’re excited about those opportunities as well. We’re also and I just the market. I’m sorry to get that. No, no, go ahead and I’ll finish.

The words are important, but I’m going to I’m going to guide you to the numbers even. And even in a covered environment, revenues for the fourth quarter were up over 14 percent over Q3. And they were up they were up three point six percent over the fourth quarter of last year. That should punctuate the strength of the relationship and the ongoing expansion of the business as the customers recognize the value we bring to the marketplace.

Yeah, I mean, that’s how I want to put words in your mouth. But is the bottom line, as we sort of think about 2021 as a jumping off point is for accused the right run rate, they’ll be maybe one percent, two percent seasonality, maybe some. Disruption from Texas, but the remainder of the base business is intact with potential opportunities through new acquisitions, new customers at that, a fair way to frame 2021?

Organic, supplemented by opportunistic and organic M&A activities. And it leverages the incredible efficiency because in addition to the other metrics, I’d guide you to, obviously, in addition to the revenue growth, look at the adjusted EBITDA growth of Q4 versus Q3, up 17 plus percent and a four and a half percent over Q4 of last year.

Perfect. Thank you.

Your next question comes from Daniel Gross of Citi, your line is open.

Thanks for taking the question, guys. Just focusing back on that 2021 guide or lack thereof, it seems like it’s just covid right now that’s preventing you from providing that type of clarity. And so I heard you correctly inform you that covid impact was around 12 to 16 million. And it doesn’t sound like you expect that to increase heading into one. Q So, you know, putting this all together, it does seem like you have some clarity into 2021 right now. Seems like the impact of covid has decreased substantially from 2003 to over 20 and it seems like in the back half of 2021 you expect that to be even further dissipated. So I guess I’m just curious what you need to see at this point to get more clarity for 2021 and provide that type of annual guidance.

I think, Daniel, we probably need to see another, you know. 40 to 60 days to just see how it plays out, obviously, as we talked about, we have kind of a delay in our claims for six to eight weeks. So we clearly want to make sure we understand what happened in Q4 in terms of claims and how that impacts us, where we’re excited about the vaccine rollout. We’re excited about, you know, a lot of the company opening up. As you know, I live in Florida. You know, if we were 100 percent Florida based company, you know, we’d probably be a little bit more optimistic on, you know, a lesser covid impact. But, you know, we’re a national company with a national footprint. And our five largest markets are California, New York, Illinois, Texas and Florida. And so, you know, Texas and Florida are a little bit different than the other three in terms of how much they’ve opened so far. You know, there’s been a lot of discussion about I think California pretty much opens up in April. And I think we just you know, if you sat in a room and asked everybody, what do you think the covid impact is and wrote down a number, that that number just varies quite significantly, kind of depending on your everybody’s point of view and the data that we have. And it made it really difficult for us to say we’re going to settle on this number, given not really having 100 percent of the information we think we needed to settle on a number.

Understood, right.

Despite the impact of covert, we would not have been able to achieve these kind of results. And among our customers along the customer base that we have.

Yeah, yeah, understand. OK, and then just going back to the surprise billing comment you made, it seems like now you expect that could, you know, will not have a negative impact on you and could even be positive. If you look at the literature of similar legislation passed at the state level, out of network claims dropped pretty dramatically. So what I was wondering if you can bridge us to no net impact and probably impossibly positive impact, given we’re likely to see claims out of network claims dropped at the national level when this legislation is implemented.

Why don’t you speak why don’t you speak to the role we played at the state level and when surprising legislation was implemented at the insured book of business, and then I’ll punctuate that after that intro.

Yeah, let me take Daniel from two perspectives. One, as you well know, there’s there has been surprise building legislation on a state level for four per year, for several years now. In fact, I think about 30 states that have surprised, you know, are faced with surprise building legislation on their fully insured business. And we have had played a role with those inside those states with our health plan customers on helping them to achieve compliance in response to this, you know, to the state legislation that’s in place, and we played a vital and critical role in that regard. As you also noted, the legislation that the federal level has just passed and we only have the statute, HHS has to work through the rulemaking and, you know, an end to it has critical questions about the process will remain unsettled at the same time, you know, the way the law is, the way the law was passed, it certainly protects consumers from receiving balanced bill when they seek emergency care and other ancillary related services related to that emergency care. The state does not include any benchmark payment standard for insurers to, you know, upfront to pay out of out of network providers. There’s a 30 day care period for payers and providers to negotiate. And if those negotiations fail, there’s a process for independent dispute resolution. We think, you know and believe all of these features of the statute suggest that multi-client has the opportunity to continue to play a critical role in helping our clients to achieve savings for our customers and the plan members they serve and after the legislation goes into effect.

You know, I find the reliance that that those payer customers have on multiple plan to deal with the state level surprise building legislation, that same alliance will take place at a federal level with the insured book of business or even a broader, broader scale because of the added complexity and the size of that AZO market governed by the recently enacted surprising legislation.

And I just echo it’s early in the rulemaking still needs to run its course, but we’re already in discussions with a number of our customers about how to work with them, how to help them evolve solutions, how to help them comply under the new statute.

Understood. I appreciate all the other guys, thanks.

Thanks.

If you would like to ask a question for a star, then the number one on your telephone keypad, the next question comes from Andrew Kugler of Goldman Sachs. Your line is open.

Hey, guys, thanks for taking my questions. Look, following up on the guidance as we think about your one. Q and extrapolate it to the full year, is there reason to believe that Cobban lives using your product should change materially after one? Q Or given that, as you mentioned, the health care plans are typically renewed at the end of the year in November December, are the covered lives going to be rather consistent through the course of the year? And then I have a follow up. Thank you.

You to take that.

It’s you would expect most of the lives to remain consistent and go throughout, you know, once you get past January, but there are changes that take place periodically throughout the year based on their very cyclical in terms of when employer groups renew with their payors and providers. Jan is a big month for that. April, July and October tend to be smaller, but relatively meaningful months when payers benefits. That’s typically renewed. So there are some you know, there’s typically some ups and downs throughout the course of the year.

I would have to look, as you know, our top our top 10 national customers represent about 80 percent of our revenues, and that relationship with those top 10 continues to grow. It continues to expand. And as they expand their commercial book of business, they expand their government business, particularly Medicare and Medicaid. They bring our services of networks, analytics and integrity along with that. So in addition to the expansion of lives, it’s how they use our services on a much broader and a much broader footprint.

All right, thanks. And then following up on that last comment. So in terms of, you know, switching programs and, you know, adding to the services that you’re providing for these customers, can you guys just update us on sort of where you are with recouping revenues from the programs that ended up getting suspended in 2018 and that were resolved at the end of fiscal year 19? Just given the growth that you saw year over year, even including the impact of the covid headwinds, it does seem like there was a large benefit. So I’m just curious how that’s involved throughout fiscal year 20 and then how you’re looking at it continuing to expand over the next year. Thank you.

Dave, you want to step into that?

So. Yeah, Mark, make a couple of comments first and then I’ll add on to you.

But again, I’ll go back to my previous comment. You know, we’re deeply embedded in with the international customers, those top 10, those top 10 customers. That business continues to grow and expand. We wouldn’t have achieved those results without the expansion and regaining business. That was suspended previously. Plus adding new business through this to new installations and new programs that are being rolled out by our customers. We’re not going to talk about the customers, but when I look at the that that tough customer base, our business continues to expand in terms of revenues, claims, claims and charges submitted claims that that we match and reprice and the discounts that they use to drive efficiency and cost savings.

Right. And, you know, the revenues from that that particular customer continue to grow. So, I mean, to a great extent, 2018, 2019, what happened is behind us. Obviously, that customer has, as has moved, moved on and corrected what impacted our revenues in those two years. And our growth from that customer continues to grow every quarter. And so we believe that 18 and 19 is behind us and that, you know, all of our customers are working very closely with Dell on new initiatives and new savings opportunities and continue to grow. Moving forward, I need you to do the heavy reimplemented they have reinstalled and reimplemented, those programs that were suspended previously and they’ve added they’ve added new services and new installations that multipoint has brought to the market.

Let me just add let me just add a comment that that like we have done for decades now, we work with our customers, you know, every year, every month, every day to find additional opportunities to generate savings and more value with our customers. And we do that through our art sales and account management team there, fully and deeply engaged with our customers to follow their needs and their desires and their direction, their focus. And we work with them on identifying new initiatives and things that we can do that either expand what we do for them today, move into payment integrity, add additional services, help them focus on Medicare Advantage. If they’re pursuing Medicare, all of those things take place and took place throughout 2020, despite covid.

Your next question comes from Rishi Parekh of Barclays. Your line is open.

Hey, thanks for taking my question. Just going back on the last question, you processed about 26 billion of claims in Q4, 19 and 29 billion of claims in Q4 20. Key bridge that increase. Can you just give us an idea? You know, just going back on the last question. We know that there are some challenges with some payors. How much of that increase, as you are said, improves of the year was realized in Q4? I don’t even know if you have this level of detail, but how much of it was due to delayed procedures that were in Q4? I’m just trying to better understand the run rate and also better understand your take rates for 2020, 2021.

We don’t really have the ability to analyze how much as, you know, catch up from delayed procedures. You know, our revenues as a percentage of our. Savings is up about 5.2 percent in Q4. That’s up over numbers that were in the high fours, four eight four nine in the previous quarters. Q1, I think was about 5.1 Q4 last year, about 5.2. So we’re basically at a revenue as a percentage of savings similar to where we were in Q4 last year in Q1, which really didn’t have much of an impact, and that’s in spite of the fact that, you know, as Dale mentioned in his call, a higher percentage of our claims are corporate related claims, which result in a less savings number and lower reimbursement than what our claims have been previously. So we’re pretty proud of where we are, revenue, percentage of savings. And it is certainly expanded and rebounded from the levels that we were at in Q2 and Q3, which is primarily driven by covid.

As you know, the delays were largely in diagnostic and elective procedures. And we don’t have that level of detail to discern electors from non, non, non-electors. But we can look at the charges that we received and the relationship with our customers. And again, we would not have produced these kind of results quarter over quarter and year every year or without that expansion that that you’ve seen. Yep.

And then on your guidance for the year, you know, your organic growth rate is consistent to what you said in the past. But you also talked about opportunities. You’ve made two acquisitions, Høst Discovery. You’re working with some M.A plans. You have the blues opportunity as well. How should we think about those opportunities in 21? Is it, you know, mid-single digits, high single digits, low single digit type growth expectations and putting a cycle? I get that covid as an impact and is impacting your view on 21. But putting aside all of that, what do you think those opportunities are for these new programs that you’re winning?

They want to speak again to the attraction of Høst and Discovery, and then let’s talk about again the aggressive integration and cross selling that is well underway with those two programs to expand our TAM and also expand the scope of services we can bring to the market.

Sure, like we do every year, we, you know, and let me let me speak to a couple of different points. Like, every year we look for opportunities within our existing customer to customer base to deepen the relationships that we have through the implementation of additional services to we always look for new opportunities and new logos and through our sales talent. And as Mark mentioned earlier, we expanded our data. We expanded our sales talent last year, late last year, and expect them to drive additional opportunities and grow through the addition of new logos and new opportunities relative to Høst team discovery. Høst, as is, you know, as you know, was acquired in November 2020. And it expands our analytics based services category by adding a new line of value driven health plan services. And there’s significant opportunity for us. We’re excited about it because of its position as the next generation of health care services and reference based pricing that it brings to the market for to both for both our TPA market space and our regional health plan. Our provider sponsored an independent health plans. Discovery is also interesting to us, very excited about that opportunity because it does a couple of different things. It certainly adds payment, integrity and revenue and integrity services. It grows our government market footprint. It’s adding several new Medicare Advantage and new Medicaid customers. It’s expanding our portfolio of payment integrity products from two to six. And we now have six that much more deeper and wider suite of payment integrity services spanning both pre and post payment modalities and significantly, you know, strengthening our ability to land and expand. And that also adds another service line focused on what we call premium payment accuracy for Medicare Advantage plans and with the opportunity to look at Medicaid and perhaps ACA exchange based plans, it increases our footprint. And in network claims, as we’ve mentioned before, in our extend strategy, one of our goals is not only to deepen our relationships and regional health plans and CPAs, but it’s also to extend our reach into any network claims of the payor. And the addition of discovery does that. At the same time, there’s a number of clients that we don’t work with today or they don’t work with us today. And cross-sell operate the cross-selling opportunities between multiclass and adding data that I support. Discovery services, their discoveries, cross-selling multipoint services into its unique client base with something we’ll pursue this year as well.

There are no further questions at this time. I will now return the call to representatives.

Thank you very much. We appreciate your continued support and we look forward to speaking to you again following our Q1 earnings call. Thank you very much. Stay safe.

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.