MultiPlan Corporation (NYSE:MPLN) Q4 2022 Earnings Call Transcript

MultiPlan Corporation (NYSE:MPLN) Q4 2022 Earnings Call Transcript February 28, 2023

Operator: Ladies and gentlemen, welcome to MultiPlan Corporation Fourth Quarter 2022 Earnings Conference Call. My name is Glenn, and I’ll be the moderator for today’s call. I would now like to hand the conference over to Shawna Gasik, AVP of Investor Relations. Thank you. Please go ahead.

Shawna Gasik: Thank you. Good morning, and welcome to MultiPlan’s fourth quarter 2022 earnings call. Joining me today is Dale White, Chief Executive Officer; and Jim Head, Chief Financial Officer. The call is being webcast and can be accessed through the Investor Relations section of our website at www.multiplan.com. During our call, we will refer to the supplemental slide deck that is available on the Investor Relations portion of our website along with the fourth quarter 2022 earnings press release issued earlier this morning. Before we begin, a couple of reminders. Our remarks and responses to questions today may include forward-looking statements. These forward-looking statements represent management’s beliefs and expectations only as of this day of the call.

Actual results may differ materially from those forward-looking statements due to a number of risks. A summary of these risks can be found on the second page of the supplement of slide deck and a more complete description on our annual report and Form 10-K and other documents we file with the SEC. We will also be referring to several non-GAAP measures, which we believe provide investors with a more complete understanding of MultiPlan’s underlying mean operating results. An explanation of these non-GAAP measures and reconciliations to the most comparable GAAP measure can be found in the earnings press release and in the supplemental slide deck. With that, I would now like to turn the call over to our Chief Executive Officer, Dale White. Dale?

Dale White: Thank you, Shawna. Good morning, everyone, and welcome to the call. As we close 2022 and reflect on the past year, I’m proud of the progress we have made as an organization. While we have endured a period of softness in the second half and recent performance of the business has fallen short of your expectations and ours, we have taken tangible steps to improve the position of the company and have now reset to a stable base from which we can invest in the business and resume growth. We have made meaningful strides throughout the year. Once again, we demonstrated the critical value we provide to the health care ecosystem, processing $155.2 billion of medical charges and identifying $22.3 billion of potential medical cost savings in 2022.

We implemented our new No Surprises Act services, taking advantage of our domain knowledge and considerable investment and turning what many viewed as a threat into a real strength of the company. We executed a holistic review of our growth strategy to prioritize our most strategic opportunities for growth, and we reinforced our case for investing in our business. And we continue to execute on a variety of fronts by selling new business, continuing to drive strong enrollment growth in our HST services, building our sales pipeline, investing in our people and solutions and managing our costs, all while continuing to deliver high levels of value and service to our customers. During the fourth quarter, we made further headway with actions we have been taking to strengthen the company’s position.

Since our last earnings call, we renewed a multiyear contract with another of our larger customers. We have now signed multiyear contract renewals with 2 of our larger customers in the last 6 months, increasing the stability and visibility of our business for the next several years. Also, we made progress on reducing our debt by repurchasing $136 million of face value of our 5.75% unsecured bonds in the open market at a greater than 25% discount to par and even after that repurchase still ended the quarter with over $300 million of cash that we can use for further debt reduction, accretive M&A or opportunistic share repurchases. And importantly, we enacted a new Growth Plan, which includes concrete initiatives to expand and diversify our products and our service lines and to reposition our business for growth and success in the coming years.

Turning to our fourth quarter results, as shown on Page 3 of the supplemental deck, revenues of $241.1 million were at the midpoint of our guidance range and declined about $8 million from the prior quarter. Adjusted EBITDA of $161.5 million was also at the midpoint of our guidance range and declined about $11 million from the prior quarter. Our adjusted EBITDA margin was 67% in the quarter, down slightly from 68.7% for the prior quarter. While the external environment remains sluggish for the fourth quarter overall, we are encouraged that health care utilization may be normalizing as December was our strongest month for identified potential savings since May of 2022. For full year 2022, revenues were $1.079 billion, down about 3% from the prior year.

And adjusted EBITDA was $768.7 million, down about 8% from the prior year. Adjusted EBITDA margin was 71.2% for fiscal year 2022 versus 75% in 2021. We generated over $370 million of operating cash flow in 2022, and our levered free cash flow was over $280 million. We ended the year in the fourth quarter with $334 million of cash on the balance sheet, even after the considerable cash we used to repurchase our debt. As a result, we maintained significant flexibility to invest in our Growth Plan and also allocate our capital opportunistically. I’d like to spend a few minutes discussing our new Growth Plan, which I and the entire management team tremendously excited about. Over the last several months, we have embarked on a collaborative, extensive and forward-looking review of our service line and product positioning.

We engaged our leadership to take stock of our existing offerings, our untapped or our underutilized capabilities and the gaps we need to fill, and we arrayed all of that against the evolving needs of our customers and our markets. As a result of this effort, we identified numerous tangible opportunities to invest in our business to increase the value we provide to our customers by expanding our core service lines and adding new service lines. To give you an idea of what this means, in 2023 alone, we expect to launch 4 new products or products enhancements within our core service lines and to add a new exciting service line. As shown on Page 9 of the supplemental deck, these 4 core expansions include a next generation of out-of-network claim processing product that leverages machine learning and data science.

It also includes a product focused on improving member protections against balanced bills on non-NSA-related claims; an enhanced NSA product that improves our customers’ ability to tailor their approach to better fit their business goals; and an expansion of the features and functionality of our itemized bill review product. We believe these 2023 core expansions alone have the potential to generate $50 million to $100 million of incremental revenue within the next few years with very affordable investments in operating and capital expenditures. Also in 2023, we plan to launch a new data and analytics service line, which we believe holds transformative potential for MultiPlan. We have already identified a number of use cases that enable health care payers to benchmark their performance, better understand their risk and optimize their benefit plan designs among others.

The data and analytics service line will help us deliver a broader set of products and services to address the significant claims and charge volume already flowing through our platform from over 700 payers. And it will help us expand beyond our commercial health out-of-network footprint by enabling us to address new flows of in-network commercial and Medicare Advantage charge volumes and claims, which we anticipate to increase significantly for MultiPlan by year-end 2023. And importantly, the 2023 launches represent only what is at the front of our pipeline as our growth strategy review surfaced several additional expansion opportunities across all of our core service lines and within the new data and analytics service line that we intend to execute over the next few years.

We are also working this year to advance the potential of an additional service line to be introduced in 2024. We look forward to discussing this and our other growth initiatives with all of you in greater detail at our Investor Day later in the second quarter. Before I leave the topic of our Growth Plan and move on to our guidance, let me spend a few minutes on NSA services. During the inaugural year of these products, we priced over $1.75 million surprise bill claims and processed about 150,000 requests from providers to negotiate a settlement, closing 124,000 of them at only 6% over the QPA. We also received requests to arbitrate over 57,000 claims, closing over 11,000 of them. Needless to say, there has been a sharp increase in IDR volumes as providers sought to test the process given the flux in the regulations.

We are very pleased with the value we have delivered thus far in helping our customers navigate this highly complex new set of requirements. Our NSA products have leveraged every core competency from fee schedule creation and management to claim routing, to pricing, to provider negotiation, data analytics and data science. We believe we offer the industry’s most sophisticated and flexible offering. And with the expansion initiatives in our Growth Plan for 2023, this will become even more apparent. We have focused in three areas: one, an advanced product that uses our proprietary patient severity score and machine learning to determine the most effective approach to navigating each surprise bill through the process based on the customers’ experience; two, a portal that gives our customers progress and performance reporting, analytic tools and insights across the entire claim process in near real time; and three, continued data science-enabled models and tools to improve our success in negotiation and arbitration.

Another thing we learned from our NSA implementation effort is the importance of being nimble. It’s been a turbulent first year for the legislation with 4 lawsuits from the provider community, challenging various aspects of the regulations and a much higher-than-anticipated volume of claims taken through arbitration. Two of those 4 lawsuits have now had rulings in favor of the plaintiffs. We benefited from the decision we made early on to provide flexibility to incorporate all of the arbitration considerations allowed in the law, but both rulings call for even greater sophistication in how arbitration offers are formulated and defended, and we are well equipped to pivot as needed. Moving on to our guidance. I’m sure by now, many of you have had an opportunity to review our outlook for 2023 presented in our press release and the supplemental deck.

Jim will review the full details with you momentarily, but let me provide some overarching context. As discussed on previous earnings calls, we have been anticipating that a multiyear contract renewal with one of our larger customers would mute our 2023 revenue growth, all things being equal. As I mentioned previously, during the last few months, we also renewed a multiyear contract with another one of our larger customers. In aggregate, we expect the impact of these contract renewals and other renewals with larger customers anticipated this year to pose a headwind against growth in 2023, which is fully reflected in our guidance. Additionally, as we discussed last quarter, we began encountering volume softness during the second half of 2022.

And while we are encouraged by the early signs of improvement in health care utilization that I mentioned earlier, at this time, we are not banking on any material recovery as our 2023 guidance assumes the volume run rate we experienced in the fourth quarter and through January with only a modest uptick throughout the course of the year. Partially offsetting these headwinds in 2023, we expect growth contribution from the combination of net new sales, medical inflation and early gains from the Growth Plan initiatives. In total, we expect our 2023 top line to decline about 10% to 14% from fiscal year 2022 and be flat to down 4% from the annualized Q4 2022 revenue run rate of $964 million. While we understand our guidance falls short of expectations, we believe 2023 will be a pivotal year for our company as the steps we are taking to reposition the business will help us land on solid footing with greater visibility and regroom our growth in the coming years.

More specifically, we expect 2023 to be a low point for revenues and EBITDA as the contract renewals with our largest customers stabilize our core business over the next several years as health care utilization eventually recovers and as our new Growth Plan lifts our results and allows us to resume our growth in 2024 and beyond. I’d like now to turn the call over to our Chief Financial Officer, Jim Head. Jim?

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Jim Head: Thanks, Dale, and good morning, everyone. Before I begin, let me just say that I share the enthusiasm about the steps that we’re taking to reposition this business and share the enthusiasm that we have an opportunity to drive growth going forward. I’m going to walk through today the financial results and the balance sheet for the fourth quarter and full year ’22. I’ll then turn to our outlook for 23, and I’ll close by commenting on our plans for capital allocation. As shown on Page 5 of the supplemental deck, fourth quarter revenue was $241.1 million, a decline of 19.2% over Q4 ’21 and a decline of 3.7% from the prior quarter. The quarter was characterized by consecutive monthly improvements in our volumes of identified potential savings as October was the nadir for the year, November showed improvement and December was our strongest month for savings since May of 2022.

Our total revenues for the full year were $109.7 million, down 3.4% from the prior year. As shown on Page 6 of the supplemental deck, relative to Q3 ’22, network-based revenues declined 7.6%, analytics-based revenues declined 2.2% and payment and revenue Integrity revenues declined 4.8%. In aggregate, these revenue trends were in line with our Q4 ’22 guidance, which was largely informed by the run rates we were experiencing as we exited the third quarter. Versus the prior year quarter, fourth quarter revenues were about 20% declines for each of our service lines, reflecting a more challenging environment for utilization in the second half of ’22. The customer shifts disclosed in our third quarter earnings call and difficult comparisons with our record fourth quarter of 2021.

For full year 2022, network-based revenues declined 11.9%, analytics-based revenues grew 0.6% and payment and revenue integrity revenues declined 7%. Turning to expenses. Fourth quarter adjusted EBITDA expenses were $79.6 million, up $5.2 million from $74.4 million in the prior year quarter and up $1.3 million from Q3 2022. The increase of $5.2 million over Q4 ’21 was driven by structural cost increases and investments in our business. Our adjusted EBITDA expenses for the year were $311 million. As discussed in our last earnings call, in the fourth quarter, we took action to reduce costs. We expect the benefit of those cost reductions to be fully realized in 2023 as we seek to contain adjusted EBITDA expense growth while funding our investments in our platform and our growth plan.

Adjusted EBITDA was $161.5 million in Q4 ’22, down $27.8 million from $223.6 million in Q4 of ’21 and down 6% from $172.2 million in Q3 ’22. Full year adjusted EBITDA was $768.7 million, down 8.3% from $838.3 million in ’21. Turning to our margins. Adjusted EBITDA margin was 67.0% in Q4, 22% versus 75.0% in Q4 ’21 and 68.7% in the prior quarter. Our full year ’22 adjusted EBITDA margin was 71.2%, down from 75% for the full year ’21, driven largely by the combination of lower revenues and high incremental margin, structural cost increases and investments in the business. As you are aware from our press release, we conducted our annual impairment test in the fourth quarter of 2022, which incorporates current financial market conditions, including the recent performance of our share price, market discount rates and other factors.

Based on this test, the estimated fair values of our goodwill and indefinite-lived assets were less than their carrying values. As a result, noncash impairment charges of $657.9 million for our goodwill and $4.3 million for our indefinite life intangibles were recorded and recognized in our GAAP earnings results. As Dale reported, our operating cash flow totaled $372 million for full year ’22. Our full year ’22 free cash flow was $283 million. As shown on Page 14 of the supplemental deck, we ended the year with $334 million of unrestricted cash, which is net of the $100 million we used for debt repurchase in the fourth quarter. Net of cash, our total and operating leverage ratios were 5.8% and 4.1%, respectively. As you will see from our press release and earnings deck, we’ve also made some changes to our disclosures.

First, we are breaking out medical charges processed and identified potential savings slide into 2 categories, which reflects the performance of 2 distinct claim flows on our platform, commercial health plans and the remainder of our business, including payment integrity. Second, based on feedback from investors, we are providing more detail on our share of savings slide, which shows performance of our PSAV and PEPM models. We hope these changes will provide additional clarity into our business performance. Separately, the estimated COVID-related impact on our results were de minimis in the second half of ’22 and, therefore, we plan to eliminate the disclosure of the COVID-related impacts on our revenue and adjusted EBITDA going forward. Moving on to 2023 outlook, our guidance is presented on Page 10 of the supplemental deck.

We anticipate 2023 revenues of $925 million to $975 million, down 10% to 14% from 2022. The revenue bridge on Page 11 of the supplemental deck illustrates the key components and assumptions in our guidance. First, we are entering 2023 at a lower run rate of revenues versus full year ’22, driven by the dynamics discussed in our third quarter earnings calls, including weaker utilization of health care services, unfavorable mix shift of claims volume and some customer shifts. The lower run rate accounts for a gross contribution of 11 percentage points of the expected revenue decline in 2023. Importantly, our guidance does not assume a meaningful recovery in health care utilization during 2023. Instead, we are assuming volumes of claims flows remain largely flattish from the Q4 run rate.

Second, as Dale noted earlier, we have now renewed multiyear contracts with 2 of our larger customers. We expect these renewals and other renewals with larger customers slated for this year to pose a headwind to revenues of about 8% in ’23. Despite this impact, these renewals improve our competitive positioning, increase the visibility of our core business and provide a more stable base of revenue from which we can grow in the coming years. Partially offsetting the volume run rate and contract-related headwinds, we expect the combination of core business growth and early returns from our new growth initiatives to contribute 4 percentage points to 9 percentage points of growth to our revenues in 2023. Within that, we expect 3% to 7% core business growth, driven mostly by net new sales and some medical cost inflation.

As shown on the adjusted EBITDA bridge on Page 12 of the supplemental deck, we expect to continue delivering best-in-class adjusted EBITDA margins in 2023, albeit lower than those in prior years. This largely reflects the combination of our lower revenue run rate and lean, relatively fixed expense base and is captured in the Q4 ’22 exit rate of our adjusted EBITDA margin. Bridging from Q4 ’22 to our 2023 margin guidance, we expect about 100 basis points of total margin contraction. Within that annual amount, we anticipate 50 basis points of investments to support our new Growth Plan, a100 basis points of margin pressure from structural cost increases and 100 basis points of platform investments, including additional NSA-related costs we are absorbing to support a substantial increase in IDR volumes.

These additional costs are expected to be offset by 150 basis points of cost reductions we have already identified. These reductions are in flight as we follow through on the — with the action plan that we laid out on our third quarter earnings call. Returning to Page 10, our revenue cost expectations imply a forecast of $600 million to $650 million for adjusted EBITDA in ’23. Page 10 also shows other guidance items related to our P&L and cash flow to help you gauge free cash flow generation for 2023. We expect interest expense of $325 million to $340 million in 2023, up from about $300 million in 2022, driven by higher floating rates associated with our Term Loan B. We are forecasting CapEx of $100 million to $115 million in 2023, up from about $90 million in ’22, as we deepen our investment in our platform and new products identified by our Growth Plan.

We expect depreciation of $70 million to $75 million and a tax rate between 25% and 28%. Finally, we anticipate operating cash flow to be between $175 million and $215 million in 2023 versus $372 million for full year ’22, driven primarily by lower adjusted EBITDA, higher interest expense and capital expenditures and a onetime shareholder litigation settlement of $24 million. As outlined on Page 13 of the supplemental deck and the press release this morning, for Q1 ’23, we anticipate revenues of $225 million to $240 million and adjusted EBITDA of $145 million to $160 million. These projections are flat to $15 million lower versus Q4 ’22, assuming a stable volume environment and the impact of our 2 contract renewals. The full impact of the contract renewals will have flowed through our results starting in the second quarter of 2023.

Therefore, we expect our first 2 quarters will be similar, while we expect third and fourth quarters of ’23 to be higher as we realize new business growth and some early gains from the growth initiatives we plan to launch this year. Turning to capital allocation. We maintain significant flexibility to pursue our growth initiatives and opportunistically deploy our capital. As we’ve indicated in the past, our highest priority is investing in the business, both organically and through M&A, to drive growth and long-term value. Our guidance implies that we plan to make roughly $20 million to $30 million of incremental investment through the P&L and capital expenditures to support the core platform and fund our new growth initiatives. We think these investments have an attractive return on investment and encompass a series of modest investments rather than larger bets.

On the M&A front, we continue to target small to midsized acquisitions comparable in size to the HST and Discovery Health Partners transactions we’ve done in the past that allow us to expand and diversify our products and service lines. And you heard Dale say that we’re particularly focused on launching a new data and analytics service line in ’23, and M&A could be a useful tool to accelerate that progress. Also high on our list of capital priorities is reducing our debt. As noted, we repurchased $136 million of face value of our 5.75% senior notes during the fourth quarter with approximately $100 million cash from our balance sheet. Even as we use our capital to fund our planned organic and inorganic investments, we expect to have flexibility to use additional balance sheet and free cash flow to continue reducing our debt over the next few years.

Of note, we have no maturities on our funded debt until Q4 2027. Finally, share buybacks. We’ve been consistent that this is not our highest priority or our largest allocation of capital. However, we are reinstating our authorization, which expired December ’22, in the amount of $100 million through December 2023. We believe our shares are undervalued, and repurchasing our stock could be an attractive component of our overall strategy. In fact, we believe the prices of all of our securities seem dislocated from the fundamentals of our business as we know it, and we will continue to be opportunistic regarding the repurchase of our securities. That brings me to the end of my comments. I’ll turn it back over to Dale.

Dale White: Jim, thank you. Before I open up to Q&A, I want to say how extremely proud I am of our team at MultiPlan. Despite the difficulties posed by our — by the external environment, our over 2,500 employees have risen to this moment by embracing the challenges and adjusting to change. They are super energized by our Growth Plan and continue to be dedicated to our mission to deliver affordability, efficiency and fairness to the U.S. health care system. Our Growth Plan sets forth concrete objectives to execute against, and it is largely because of our employees’ unique talent, knowledge and expertise that I am confident we will achieve these objectives and that I continue to believe MultiPlan’s best days lie in the years ahead. Operator, would you kindly open the call up for Q&A, please?

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Q&A Session

Operator: We have our first question comes from Joshua Raskin from Nephron Research LLC. Joshua, your line is now open.

Marco Criscuolo: This is actually Marco on for Josh. Just had a couple of quick ones on our end. First, I was wondering if you could give us a sense of what percent of your revenues are already contracted for 2023. And also you mentioned that there were more planned client renewals through this year. Are any of those renewals among top 10 customers? And is there any additional detail you can provide to help frame your exposure there?

Dale White: Yes. And thanks. It’s a really good question. And I guess I’ll frame it up. We — as you know, it’s — we are always reluctant to discuss contracts in specific. But as you listen to our commentary, I think you can surmise a couple of things, and here’s what we told you just now. We have now renewed two multiyear contracts with our larger customers. We expect to renew with another larger customer in the first half of 2023. The total expected impact of all of these renewals in ’23 is included in our 2023 revenue guidance, and that’s that 8% headwind that we talked about. So what we’ve done is we’ve given you the impact in totality that gives us a lot of visibility for the next few years, and it gives us the confidence to reinvest in the business and support our customers.

We’ve sharpened our competitive position as a result of this, and we think we’ve removed the overhang. And I guess, in aggregate, we can tell you that we just — this will represent over 50% of our revenues getting resigned.

Marco Criscuolo: And then just one more quick one. It looks like you’re incorporating a softer volume outlook in your 2023 guidance. Is there any specific reason for that? Or is that just more of a general conservatism in forecasting the year?

Dale White: No, we’re actually — maybe to give you a little context here. We’re forecasting a stable volume environment as we exited the year. You’ll see revenues come down a little bit because it’s the impact of these contract renewals in 2023. So when — if you could go to our share of potential savings and think about a stable volume environment and kind of take our guidance and run it through the take rate and things like that, you’ll see the take rate come down a little bit. We do not think that it’s a major move, but it does reflect new pricing. And — but just to be clear, this is price impact versus volume impact in our first quarter guidance.

Operator: We have our next question, comes from Steven Valiquette from Barclays.

Steven Valiquette: So with all the moving parts on Slide 11, around the revenue bridge for ’23, just curious if there’s any more color you can provide just on the outlook by segment. When you think about the network-based services, analytics-based solutions, payment integrity, is there any one of the three, I guess, which ones are going to maybe decline the most year-over-year? Is it pretty evenly spread? Just trying to get a better sense for framing the ’23 outlook for revenue across the three segments.

Jim Head: Yes. I think it’s — let’s start with maybe the easier one first. I think we don’t expect — we think Payment Integrity, there’s some degradation at the second half of last year. We think that’s kind of washed through. I think there’s always a little bit of interplay between network and analytics, not because network is poorly performing. It’s just the substitution in between the 2 as the claims flow through our client environments. I would say that we will continue to see a little bit of substitution in the network side, but largely the analytics is going to drive the performance.

Operator: We have our next question, it comes from Daniel Grosslight from Citigroup. Daniel, your line is open.

Daniel Grosslight: I wanted to go back to the question around utilization and try to square a couple of comments that you made. So December was the strongest quarter from a utilization standpoint that you’ve seen since May 2022. Your guidance isn’t really assuming any meaningful uptick in utilization. Why shouldn’t we expect the utilization recovery in 2023 if December was so strong?

Dale White: Daniel, it’s a great question. And I’d love to be able to tell you exactly — pinpoint exactly when utilization will come back. But as we said, December is a — December was the strongest month for us since May of 2022, and really October was the lowest point, right? So that was the nadir. You always have to remember that we have that claim lag of about 4 to 8 weeks built into our volume. Going forward in 2023, we’ve really been conservative, right? We took — we anticipated that our run rate would be flattish and that there’s only a very modest uptick in recovery.

Daniel Grosslight: Got it.

Jim Head: Daniel, I think what you’re hearing from this is — this is the utilization environment, you can look at some leading indicators and feel a little bit better about it. But we’re a little — as you know, from last year, we’re idiosyncratic, and we’re just not ready to call a massive turn and get ahead of ourselves on the utilization front. So I think as Dale mentioned, we’re being conservative. I think we’ve got maybe 2% over the course of year increase off a relatively kind of low base rate. So we’re not even getting close to where we were in Q1 or Q2 of last year at all. We’re kind of — I think you’re kind of saying a somber utilization environment until we see different data points.

Daniel Grosslight: And I appreciate more of the color that you’ve disclosed in your presentation around PEPM and percent of savings rates and revenue. But I just wanted to dig in a little deeper into some of the dynamics there. You’ve seen a nice increase in savings, potential savings from the PEPM model recently, but revenue yields from that savings is compressing a little bit. Just curious if you can describe what’s going on there in a little more detail, savings rate — saving growing in PEPM and revenue declining.

Jim Head: Yes. So this is the good news, bad news of HST. The good news is it’s a really sticky business that is on a per employee per month basis. And if they do better and generate more savings with their special brand of reference-based pricing that they employ, the savings will go up. And this is one of the reasons why we broke it out because we’re compensated on a much stickier basis on a per member per month, and that’s what you’re seeing in the PEPM is HST generating more savings for their clients. And that makes us stickier and it makes us more valuable.

Operator: Our next question comes from Rishi Parekh from JPMorgan Chase. Rishi, your line is now open.

Rishi Parekh: I have two questions. One, on the utilization. Are there any specific specialties that might be driving that utilization pressure that you saw either in Q4 and then what you expect to see in 2023? And then my second question, as it relates to the contracts, did the second renewal go into effect on Jan 1? Meaning is that 8% impact that you’re expecting for this year, is that an annualized impact? And then with that, I think you also said that you expect to resign a third major customer. Is that contract also that contract expectation also included in that 8%?

Jim Head: Yes. Good to hear your voice, Rishi, and albeit with the New Jersey. And just to answer your contract question, the second — the contract that we alluded to, we signed in the fourth quarter, the rates go into effect at the beginning of the year. The additional customer will be, as we said, will be signed in the first half. So what we’ve done is amalgamated the entirety of all of those into one adjustment that reflects the entirety of the year. And I think it’s a good basis for you to understand the impact of all that in totality.

Dale White: And it’s included — all of that — all the expected impact of our renewals with these larger customers is baked into, it’s already included in our revenue guidance that we gave to you.

Jim Head: You want to talk about utilization?

Dale White: Utilization, I think you asked a question about the softness in utilization. As I’ve said, we — look, we’re predicting only a modest uptick in recovery as Jim said, you can look at the leading indicators and start to see some positive trends in utilization. We’ve seen considerable softness in the second half of last year around what I’ll call non-emergent procedures. So it’s ambulatory surgery, it’s orthopedics, it’s surgery, it’s PT, OT, it’s a lot of the cyromuscularskeletal procedures. That’s where we see — that’s where we’ve seen a — saw a drop off in procedures and treatment that was done. And again, it’s mostly in that non-emerging area. Our ER and what we call our surprise build procedures is tracking to expectations. It’s right in line with where we expected to be. It’s been very steady, and it’s exactly where we thought it would be.

Operator: We have no further questions on the line. Ladies and gentlemen, this concludes today’s call. Thank you for joining. You may now disconnect your lines.