Business Wire | Mar 10, 2021 06:00AM EST

MultiPlan Reports Fourth Quarter and Full Year 2020 Results

Mar. 10, 2021

NEW YORK--(BUSINESS WIRE)--Mar. 10, 2021--MultiPlan Corporation ("MultiPlan" or the "Company") (NYSE: MPLN), a leading value-added provider of data analytics and technology-enabled end-to-end cost management, payment and revenue integrity solutions to the U.S. healthcare industry, today announced financial results for the fourth quarter ended December 31, 2020 and full year 2020.

The Company reported strong consecutive quarterly growth as it continued to execute its growth strategy to enhance its product offerings to payors, extend into new payor customer segments and expand its platform to serve MultiPlan's 1.2 million providers, its more than 700 payors and 60 plus million consumers. The Company processed a record $29.0 billion in claims during the fourth quarter of 2020, identifying potential medical cost savings of approximately $4.9 billion. For the year ended December 31, 2020, the Company processed $105.4 billion in claims and identified approximately $18.8 billion in potential savings.

"MultiPlan had a milestone fourth quarter in terms of both performance and execution of our growth plan," said Mark Tabak, CEO of MultiPlan. "After reporting stronger than expected results in the third-quarter, we delivered even stronger fourth quarter results despite pandemic conditions and their impact on elective healthcare service. We also made great strides in achieving the goals of our Extend growth strategy with the integration of HST well underway, and the acquisition of Discovery Health Partners which closed last month. I'm proud of our mission to deliver fairness, efficiency and affordability to the U.S. healthcare system, and the pace at which we are progressing in achieving it."

Business and Financial Highlights

* Outperformed initial management expectations from COVID-19 impact with revenues of $255.3 million for Q4 2020, up from $223.5 million for Q3 2020, reflecting a 14.2% quarter-over-quarter increase, and an increase of 3.6% over Q4 2019 revenues of $246.4 million. * Net loss of $182.4 million for Q4 of 2020 compared to net loss of $288.4 million for Q3 2020. The reduction in loss was principally due to increased revenues of $31.8 million and reduced stock-based compensation costs of $155.9 million, net of $26.5 million in transaction costs in Q4 2020 primarily related to the transaction with Churchill which closed on October 8, 2020, and $103.0 million of losses on extinguishment of debt in Q4 2020. Net income for Q4 2019 was $11.8 million. * Adjusted EBITDA of $195.1 million for Q4 2020 compared to $165.5 million for Q3 2020, and $186.7 million for Q4 2019. * Revenues of $937.8 million for full year 2020 compared to $982.9 million for full year 2019. The revenue decline is primarily due to the impact of COVID-19, particularly in the second and third quarters of 2020. * Net loss for full year 2020 of $529.6 million compared to net income of $9.7 million for full year 2019. The decline was principally due to stock-based compensation costs of $406.1 million, $31.7 million in transaction costs primarily related to the transaction with Churchill which closed on October 8, 2020, and $103.0 million of losses on extinguishment of debt in Q4 2020 and full year 2020. * Adjusted EBITDA of $706.3 million for full year 2020 compared to $750.4 million for full year 2019. The Adjusted EBITDA decline was primarily a result of reduced revenues because of COVID-19.

2021 Outlook

Due to variability in COVID-19 case trends and public policy responses to the COVID-19 pandemic across different regions in MultiPlan's national footprint, and the uncertainty in evaluating the impact of those dynamics on the Company's customers and operating and financial results, the Company is not providing annual or quarterly guidance at this time. The Company will continue to monitor the impact of the COVID-19 pandemic on its business and may elect to communicate guidance later in 2021. While the company is not providing guidance, it anticipates Q1 2021 revenues and adjusted EBITDA will reflect substantially similar operating performance as Q4 2020, adjusted for the usual seasonal softness of Q1, the impact of $2 to $3 million of additional public company costs in Q1 2021 as compared to Q4 2020 and the possible impact of operational disruption related to the extreme weather in Texas during February.

Conference Call Information

The Company will host a conference call today, Wednesday, March 10, 2021 at 8:00 a.m. U.S. Eastern Time (ET) to discuss its financial results. To access the live conference call, please dial (833) 423-1182 (domestic) or (236) 714-2584 (international). The conference ID for the live call is 5907987. Interested investors and other parties can also listen to a webcast of the live conference call by logging onto the Investor Relations section of the Company's website at investors.multiplan.com/events-and-presentations. A supplementary slide presentation will also be available on such website.

For those unable to listen to the live conference call, a replay will be available approximately two hours after the call through the archived webcast on the MultiPlan website or by dialing (800) 585-8367 or (416) 621-4642. The conference ID for the replay is 5907987.

About MultiPlan

MultiPlan is committed to helping healthcare payors manage the cost of care, improve their competitiveness and inspire positive change. Leveraging sophisticated technology, data analytics and a team rich with industry experience, MultiPlan interprets clients' needs and customizes innovative solutions that combine its payment and revenue integrity, network-based and analytics-based services. MultiPlan is a trusted partner to over 700 healthcare payors in the commercial health, government and property and casualty markets. For more information, visit multiplan.com.

Forward Looking Statements

This press release includes statements that express our and our subsidiaries' 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 press release, including the discussion of 2021 outlook, and these forward-looking statements reflect management's expectations regarding our future growth, results of operations, operational and financial performance and business prospects and opportunities. Such forward-looking statements are based on available current market material 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 many factors could affect our actual financial results, including: the impact from the COVID-19 and its related effects on our projected results of operations, financial performance or other financial metrics; loss of our customers, particularly our largest customers; decreases in our existing market share or the size of our Preferred Provider Organization networks; effects of competition; effects of pricing pressure; the inability of our customers to pay for our services; decreases in discounts from providers; the loss of our existing relationships with providers; the loss of key members of our management team; pressure to limit access to preferred provider networks; 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 identify, complete and successfully integrate acquisitions; changes in our industry; interruptions or security breaches of our information technology systems; our ability to protect proprietary applications; our inability to expand our network infrastructure; our ability to remediate any material weakness or maintain effective internal controls over financial reporting; changes in our regulatory environment, including healthcare law and regulations; the expansion of privacy and security laws; heightened enforcement activity by government agencies; our ability to pay interest and principal on our notes and other indebtedness; the possibility that we may be adversely affected by other political, economic, business, and/or competitive factors; other factors disclosed in our SEC filings; and other factors beyond our control.

The forward-looking statements contained in this press release are based on our current expectations and beliefs concerning future developments and potential effects on our business. There can be no assurance that future developments affecting our business will be those that we have anticipated. 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 risks and uncertainties include, but are not limited to, those factors described indicated in our Registration Statement on Form S-1 filed with the Securities and Exchange Commission ("SEC") on October 30, 2020, including those under "Risk Factors" therein, and other documents filed or to be filed with the SEC by us. 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. 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 Financial Measures

In addition to the financial measures prepared in accordance with generally accepted accounting principles in the United States ("GAAP"), this press release contains certain non-GAAP financial measures, including EBITDA and Adjusted EBITDA. A non-GAAP financial measure is generally defined as a numerical measure of a company's financial performance or financial position that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP.

EBITDA, and Adjusted EBITDA 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 performance or liquidity 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 or liquidity prepared in accordance with GAAP.

EBITDA represents net income before interest expense, interest income, income tax provision (benefit) and depreciation and amortization of intangible assets. 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.

MultiPlan CorporationConsolidated Balance Sheets($ in thousands, except share and per share data) ? Years Ended December 31,? 2020 2019

Assets Current assets: Cash and cash equivalents $ 126,755 $ 21,825

Trade accounts receivable, 63,198 77,071netPrepaid expenses 17,708 14,393

2,130Prepaid taxes -

Other current assets, net 1,193 195

Total current assets 208,854 115,614

Property and equipment, 187,631 177,992netOperating lease 31,339 29,998right-of-use assetsGoodwill 4,257,336 4,142,013

Other intangibles, net 3,584,187 3,886,643

Other assets 14,231 8,151

Total assets $ 8,283,578 $ 8,360,411

Liabilities and Shareholders' EquityCurrent liabilities: Accounts payable $ 15,261 $ 9,565

Accrued interest 31,528 17,966

Accrued taxes 10,176 382

Operating lease 6,439 9,521obligation, short-termAccrued compensation 21,843 26,311

Other accrued expenses 27,251 22,041

Total current liabilities 112,498 85,786

Long-term debt 4,578,488 5,397,122

Operating lease 27,499 23,086obligation, long-termUnvested founder shares 70,544 and Private Placement -WarrantsDeferred income taxes 900,633 869,199

Total liabilities 5,689,662 6,375,193

Commitments and contingencies (Note 13)Shareholders' equity: Shareholder interests Preferred stock, $0.0001 par value - 10,000,000 - -shares authorized; noshares issued Common stock, $0.0001 parvalue - 1,500,000,000shares authorized; 66 664,183,318 and 42415,700,000 issued;655,075,355 and415,700,000 outstandingAdditional paid-in capital 2,575,524 1,347,613

Retained earnings 107,936 637,563

Treasury stock - 9,107,963 (89,610) and 0 shares -

Shareholders' equity 2,593,916 1,985,218

Total liabilities and $ 8,283,578 $ 8,360,411shareholders' equityMultiPlan CorporationConsolidated Statements of (Loss) Income and Comprehensive (Loss) Income($ in thousands, except share and per share data) ? Years Ended December 31,? 2020 2019

$ $ 982,901Revenues 937,763

Costs of services (exclusive of depreciation and 318,675 149,607amortization of intangibleassets shown below)General and administrative 75,225expenses 355,635

55,807Depreciation 60,577

Amortization of intangible 334,053assets 334,697

614,692Total expenses 1,069,584

368,209Operating (loss) income (131,821)

376,346Interest expense 335,638

(196)Interest income (288)

Loss (gain) on extinguishment (18,450)of debt 102,993

Loss on investments 12,165 -

Other income (26,360) -

Net (loss) income before 10,509income taxes (555,969)

(Benefit) Provision for income 799taxes (26,343)

9,710Net (loss) income (529,626)

Weighted average shares 470,785,192 415,700,000outstanding - Basic and Diluted^ (1) Net (loss) income per share - $ $ 0.02Basic and Diluted (1.12)

$ $ 9,710Comprehensive (loss) income (529,626)

(1) In accordance with the accounting guidance, the number of shares outstanding prior to the business combination of Polaris Parent Corp. and Churchill Capital Corp III (the "Transactions") was 415,700,000, which represents the 10 historical shares of Polaris Parent Corp. multiplied by the exchange ratio established in the Transactions (41,570,000:1). At the date of the Transactions, the number of shares outstanding increased to 655,057,192. The increase represents the shares issued by Churchill Capital Corp III prior to the Transactions and the shares issued to PIPE investors at the time of the Transactions, net of shares redeemed and held in treasury upon closing. As of December 31, 2020, the number of shares outstanding is 655,075,355.

MultiPlan CorporationConsolidated Statements of Cash Flows($ in thousands) Years Ended December 31, 2020 2019

Cash flowsfrom operating activities:Net (loss) $ (529,626 ) $ 9,710 incomeAdjustments toreconcile netincome to net cash providedby operatingactivities 55,807 Depreciation 60,577

Amortization 334,053 of intangible 334,697 assetsAmortization of the 8,405 9,594 right-of-useassetStock-based (14,880 )compensation 406,054

Deferred tax ) (111,404 )benefit (45,041

Non-cash 13,368 interest costs 22,888

Loss (gain) on (18,450 )extinguishment 102,993of debtLosses on investments 12,165 -

Loss on disposal of 610 163 property andequipmentOther non-cash ) income (26,360 -

Changes inassets andliabilities,net ofacquiredbalances:Accounts 5,279 receivable, 14,758 netPrepaid ) (8,822 )expenses and (7,480other assets (1,426 )Prepaid taxes 2,130

Operating ) (9,462 )lease (8,461obligationAccountspayable and 20,783 accrued 29,065 expenses andotherNet cash provided by 377,374 284,313 operatingactivitiesInvesting activities:Purchases of ) (66,414 )property and (70,813equipmentHST Acquisition, (140,032 ) - net of cashacquiredNet cash used (210,845 ) (66,414 )in investingactivitiesFinancing activities:Repayments of (369,000 ) (100,000 )Term Loan GExtinguishment (1,615,583 ) of 7.125% -NotesExtinguishment (1,202,302 ) (101,013 )of Senior PIKNotesIssuance of Senior 1,267,500 - ConvertiblePIK NotesIssuance of 1,300,000 5.750% Notes -

Borrowings on revolving 98,000 - creditfacilityRepayment of revolving (98,000 ) - creditfacilityEffect of the Transactions 682,408 -(see note 4)Purchase of (101,123 ) treasury stock -

Payment of ) debt issuance (23,489 -costsPayments on ) (75 )finance (10leases, netNet cash used ) (201,088 )in financing (61,599 activitiesNet increase (decrease) in 104,930 16,811 cash and cashequivalentsCash and cash equivalents at 21,825 5,014 beginning ofperiodCash and cash $ 126,755 $ 21,825 equivalents atend of periodNoncashinvesting and financingactivities:Purchases ofproperty and $ 4,334 $ 3,768 equipment notyet paidSupplementaldisclosure of cash flowinformation:Cash paidduring theperiod for:Interest $ (312,349 ) $ (363,907 )

Income taxes, $ (3,917 ) $ (114,569 )net of refundsMultiPlan CorporationCalculation of EBITDA and Adjusted EBITDA($ in thousands)For the Year EndedDec. 31, 2020Dec. 31, 2019Net income (loss) - GAAP$ (529,626)

$ 9,710

Adjustments:Interest expense335,638

376,346

Interest income (288)

(196)

Income tax (benefit) provision(26,343)

799

Depreciation 60,577

55,807

Amortization of intangible assets 334,697

334,053

Non-income taxes (a)3,221

1,944

EBITDA$ 177,876

$ 778,463

Adjustments:Other expense (b)1,896

1,947

Other income (c)(26,360)

-

Transaction related expenses (d)31,689

3,270

Loss on investments (e)12,165

-

Loss (gain) on debt extinguishment (f)102,993

(18,450)

Stock-based compensation (g)406,054

(14,880)

Adjusted EBITDA$ 706,313

$ 750,350

($ in thousands)For the Three Months EndedDec. 31, 2020Sept. 30, 2020Jun. 30, 2020Mar. 31, 2020Dec. 31, 2019Net income (loss) - GAAP$ (182,384)

$ (288,402)

$ (56,246)

$ (2,594)

$ 11,844

Adjustments:Interest expense76,348

82,275

86,050

90,965

89,908

Interest income (59)

(81)

(77)

(71)

(63)

Income tax (benefit) provision(15,124)

(1,080)

(9,456)

(683)

990

Depreciation 15,674

15,262

15,135

14,506

14,084

Amortization of intangible assets 84,157

83,513

83,514

83,513

83,513

Non-income taxes (a)1,886

415

481

439

535

EBITDA$ (19,502)

$ (108,098)

$ 119,401

$ 186,075

$ 200,811

Adjustments:Other expense (b)587

1,012

149

148

499

Other income (c)(26,360)

-

-

-

-

Transaction related expenses (d)26,527

2,464

2,338

360

3

Loss on investments (e)4,381

7,784

-

-

-

Loss on debt extinguishment (f)102,993

-

-

-

-

Stock-based compensation (g)106,426

262,356

27,911

9,361

(14,572)

Adjusted EBITDA$ 195,052

$ 165,518

$ 149,799

$ 195,944

$ 186,741

(a) Non-income taxes includes personal property taxes, real estate taxes, sales and use taxes and franchise taxes which are included in costs of services and general and administrative expenses in our consolidated statements of income and comprehensive income. (b) Represents miscellaneous expenses, gain or loss on disposal of assets, gain or loss on disposal of leases, tax penalties, management fees, and costs associated with the integration of acquired companies into MultiPlan. (c) Represents the changes in fair value of the unvested founder shares and private placement warrants. (d) Represents ordinary course transaction costs and transaction costs related to the Transactions, the acquisition of HST and the acquisition of Discovery Health Partners. (e) Loss on investments primarily reflects the change in fair value of shares purchased prior to the Transaction. These shares are now held in treasury. (f) Represents the 2019 gain related to the repurchase and cancellation of $121.3 million in aggregate principal amount of Senior PIK Notes and the 2020 loss on debt extinguishment related to the prepayment of $369.0 million of indebtedness under our term loan facility, redemption in full of the 7.125% Senior Notes on October 29, 2020 and redemption in full of the Senior PIK Notes on October 8, 2020. (g) Includes the cost of employee and non-employee director stock-based compensation plans.

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CONTACT: Investor Relations Shawna Gasik AVP, Investor Relations MultiPlan 866-909-7427 investor@multiplan.com Media Relations Pamela Walker Senior Director, Marketing & Communications MultiPlan 781-895-3118 press@multiplan.com