Claritev Corporation
11/09/2026 | Press release | Distributed by Public on 11/09/2026 09:49
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This item and other sections of this Quarterly Report on Form 10-Q contain forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which are subject to the "safe harbor" created by those sections based on management's beliefs and assumptions and on information currently available to management. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as "future," "anticipates," "believes," "estimates," "expects," "intends," "predicts," "will," "would," "could," "can," "may," and similar terms. Forward-looking statements are not guarantees of future performance and the Company's actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of the 2025 Form 10-K and Part II, Item 1A of this Form 10-Q, in each case under the heading "Risk Factors." Given these risks, uncertainties, and other factors, you should not place undue reliance on these forward-looking statements. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this filing. We hereby qualify our forward-looking statements by these cautionary statements. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.
The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the information included in the Company's 2025 Annual Report on Form 10-K and the condensed consolidated financial statements and accompanying notes included in Part I, Item 1 in this Quarterly Report on Form 10-Q and risks described elsewhere in this Quarterly Report on Form 10-Q and our other filings with the SEC.
Company Overview
Claritev is a healthcare technology, data and insights company focused on delivering affordability, transparency and quality across the healthcare system. We bring objective, market-based insights to some of the healthcare system's most complex decisions based on decades of claims expertise. By applying data, analytics, and experience, we help organizations across the healthcare ecosystem better understand costs, pricing, and payment dynamics. This clarity enables more informed decision-making, reduces friction, and improves how the healthcare system functions in service of greater affordability, alignment, and long-term sustainability.
Although the end beneficiaries of our solutions are employers and other plan sponsors and their health plan members, our direct clients are typically payers, including payers providing administrative services only, and third-party administrators, who go to market with our solutions to those end clients. We offer these payers a single interface to our solutions, which are used in combination or individually to reduce the medical cost burden on their health plan clients by lowering the per-unit cost of medical services incurred, managing the utilization of medical services, and increasing the likelihood that the services are reimbursed without error and accepted by the provider. We are a technology-enabled service provider and transaction processor and do not deliver health-care services, provide or manage healthcare services, provide care or care management, or adjudicate or pay claims.
The Company, primarily through its operating subsidiary, Multiplan, Inc., d/b/a Claritev, offers its solutions nationally through a range of solution lines, which include:
•Claims Intelligence Solutions are designed to reduce medical cost through data-driven algorithms and insights that detect claims over-charges and either negotiate or recommend fair reimbursement for out-of-network medical costs using a variety of data sources and pricing algorithms. Within our claims intelligence solutions, the claim pricing solutions are generally priced based on a percentage of savings achieved. Also included in this category are solutions that enable lower cost health plans that feature reference-based pricing either in conjunction with or in place of a provider network. These solutions are generally priced at a bundled per-employee-per-month ("PEPM") rate;
•Network Solutions are designed to reduce medical cost by providing access to contracted discounts with healthcare providers with whom payers do not have a contractual relationship, through our expansive network of healthcare providers, which forms one of the largest independent preferred provider organizations in the United States. Our network solutions are priced based on either a percentage of savings achieved or at a per employee/member per month fee. This solution category also includes customized network development and management services for payers seeking to expand their network footprint using outsourced services. These solutions are generally priced on a per provider contract or other project-based price;
•Payment and Revenue Integrity Solutions are designed to reduce medical cost through data, technology, and clinical expertise deployed to identify and remove improper and unnecessary charges before or after claims are paid, or to
identify and help restore premium dollars underpaid by CMS for government health plans caused by discrepancies with enrollment-related data. Payment and revenue integrity solutions are generally priced based on a percentage of savings achieved; and
•Data and Analytics Solutions are designed to reduce medical costs through a next generation suite of solutions that apply modern methods of data science to produce descriptive, predictive, and prescriptive analytics that enable clients to optimize decision-making about plan design and network configurations and to support decision-making to improve clinical outcomes, plan performance, and competitive positioning. Data and analytics solutions are generally priced based on a subscription, licensing, or per-member-per month basis. The Company currently reports revenues from data and analytics solutions in claims intelligence solutions and will likely do so until revenues from this solution line become more significant.
We believe our solutions provide a strong value proposition to payers, their health plan customers and healthcare consumers, as well as to providers. Overall, our solution offerings aim to reduce healthcare costs in a manner that is orderly, efficient, and fair to all parties. In addition, because in most instances the fee for our services is linked to the savings we identify, our revenue model is aligned with the interests of our clients.
Results of Operations
The following table provides the results of operations for the periods indicated (in thousands, except percentages):
| Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| Revenues | $ | 268,311 | $ | 245,959 | $ | 22,352 | 9.1 | % | $ | 770,467 | $ | 718,859 | $ | 51,608 | 7.2 | % | |||||||||||||||||||||||||||||||
| Costs of services (exclusive of depreciation and amortization of intangible assets shown below) | 69,773 | 62,060 | 7,713 | 12.4 | % | 206,520 | 183,319 | 23,201 | 12.7 | % | |||||||||||||||||||||||||||||||||||||
| General and administrative expenses | 66,327 | 60,001 | 6,326 | 10.5 | % | 179,546 | 158,087 | 21,459 | 13.6 | % | |||||||||||||||||||||||||||||||||||||
| Depreciation | 25,569 | 25,968 | (399) | (1.5) | % | 75,548 | 75,775 | (227) | (0.3) | % | |||||||||||||||||||||||||||||||||||||
| Amortization of intangible assets | 85,908 | 85,971 | (63) | (0.1) | % | 257,724 | 257,913 | (189) | (0.1) | % | |||||||||||||||||||||||||||||||||||||
| Loss on disposal of leases | 39 | 1,696 | (1,657) | (97.7) | % | 329 | 6,702 | (6,373) | (95.1) | % | |||||||||||||||||||||||||||||||||||||
| Loss on disposal of assets | 68 | 196 | (128) | (65.3) | % | 125 | 676 | (551) | (81.5) | % | |||||||||||||||||||||||||||||||||||||
| Total expenses | 247,684 | 235,892 | 11,792 | 5.0 | % | 719,792 | 682,472 | 37,320 | 5.5 | % | |||||||||||||||||||||||||||||||||||||
| Operating income | 20,627 | 10,067 | 10,560 | 104.9 | % | 50,675 | 36,387 | 14,288 | 39.3 | % | |||||||||||||||||||||||||||||||||||||
| Interest expense | 100,904 | 101,232 | (328) | (0.3) | % | 300,699 | 292,614 | 8,085 | 2.8 | % | |||||||||||||||||||||||||||||||||||||
| Interest income | (248) | (471) | 223 | (47.3) | % | (625) | (1,282) | 657 | (51.2) | % | |||||||||||||||||||||||||||||||||||||
| Transaction costs related to refinancing transaction | - | - | - | n/a | - | 7,879 | (7,879) | (100.0) | % | ||||||||||||||||||||||||||||||||||||||
| Loss on extinguishment of debt | - | - | - | n/a | - | 670 | (670) | (100.0) | % | ||||||||||||||||||||||||||||||||||||||
| Loss on sale of equity investments | - | 2,667 | (2,667) | (100.0) | % | - | 2,667 | (2,667) | (100.0) | % | |||||||||||||||||||||||||||||||||||||
| Net loss before taxes | (80,029) | (93,361) | 13,332 | (14.3) | % | (249,399) | (266,161) | 16,762 | (6.3) | % | |||||||||||||||||||||||||||||||||||||
| Benefit for income taxes | (18,240) | (23,608) | 5,368 | (22.7) | % | (54,824) | (62,449) | 7,625 | (12.2) | % | |||||||||||||||||||||||||||||||||||||
| Net loss | (61,789) | (69,753) | 7,964 | (11.4) | % | (194,575) | (203,712) | 9,137 | (4.5) | % | |||||||||||||||||||||||||||||||||||||
| Less: net loss attributable to non-controlling interests | (5) | - | (5) | n/a | (5) | - | (5) | n/a | |||||||||||||||||||||||||||||||||||||||
| Net loss attributable to Claritev Corporation | $ | (61,784) | $ | (69,753) | $ | 7,969 | (11.4) | % | $ | (194,570) | $ | (203,712) | $ | 9,142 | (4.5) | % | |||||||||||||||||||||||||||||||
Revenues
The following table presents the total revenue for the periods presented (in thousands, except percentages):
| Three Months Ended September 30, |
Change
|
Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
|
Claims intelligence solutions
|
$ | 192,516 | $ | 164,401 | $ | 28,115 | 17.1 | % | $ | 537,286 | $ | 474,797 | $ | 62,489 | 13.2 | % | |||||||||||||||||||||||||||||||
|
Network solutions
|
49,941 | 52,910 | (2,969) | (5.6) | % | 147,750 | 153,925 | (6,175) | (4.0) | % | |||||||||||||||||||||||||||||||||||||
|
Payment and revenue integrity solutions
|
25,854 | 28,648 | (2,794) | (9.8) | % | 85,431 | 90,137 | (4,706) | (5.2) | % | |||||||||||||||||||||||||||||||||||||
| Total revenue | $ | 268,311 | $ | 245,959 | $ | 22,352 | 9.1 | % | $ | 770,467 | $ | 718,859 | $ | 51,608 | 7.2 | % | |||||||||||||||||||||||||||||||
Revenues increased by $22.4 million, or 9.1%, for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025. This increase in revenues was due to the increase in Claims intelligence solutions revenues of $28.1 million, offset by a decrease in Network solutions and Payment and revenue integrity solutions.
Claims intelligence solutions revenues increased by $28.1 million, or 17.1%, for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025. This increase in revenue was primarily due to an increase in Data iSight and Surprise Bill Services.
Network solutions revenues decreased by $3.0 million, or 5.6%, for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025. This decrease in revenue was primarily due to a decrease in the property and casualty market due to non-recurring revenue in the prior period.
Payment and revenue integrity solutions revenue decreased by $2.8 million, or 9.8%, for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025. This decrease in revenue was primarily due to a decrease in Clinical Negotiation.
Revenues increased by $51.6 million, or 7.2%, for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025. This increase in revenues was due to the increase in Claims intelligence solutions revenues of $62.5 million, offset by a decrease in Network solutions and Payment and revenue integrity solutions.
Claims intelligence solutions revenues increased by $62.5 million, or 13.2%, for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025. This increase in revenue was primarily due to an increase in Data iSight and Surprise Bill Services.
Network solutions revenues decreased by $6.2 million, or 4.0%, for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025. This decrease in revenue was primarily due to a decrease in the property and casualty market due to non-recurring revenue in the prior period.
Payment and revenue integrity solutions revenue decreased by $4.7 million, or 5.2%, for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025. This decrease in revenue was primarily due to a decrease in Clinical Negotiation.
Costs of Services (exclusive of depreciation and amortization of intangible assets):
The following table presents the total cost of services for the periods presented (in thousands, except percentages):
| Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| Personnel expenses excluding stock-based compensation | $ | 54,118 | $ | 47,618 | $ | 6,500 | 13.7 | % | $ | 158,049 | $ | 141,581 | $ | 16,468 | 11.6 | % | |||||||||||||||||||||||||||||||
| Stock-based compensation, including cRSUs | 2,597 | 2,800 | (203) | (7.3) | % | 8,091 | 7,095 | 996 | 14.0 | % | |||||||||||||||||||||||||||||||||||||
| Access and bill review fees | 5,606 | 5,028 | 578 | 11.5 | % | 19,272 | 17,249 | 2,023 | 11.7 | % | |||||||||||||||||||||||||||||||||||||
| Other cost of service expenses | 7,452 | 6,614 | 838 | 12.7 | % | 21,108 | 17,394 | 3,714 | 21.4 | % | |||||||||||||||||||||||||||||||||||||
| Total cost of services | $ | 69,773 | $ | 62,060 | $ | 7,713 | 12.4 | % | $ | 206,520 | $ | 183,319 | $ | 23,201 | 12.7 | % | |||||||||||||||||||||||||||||||
The increase in costs of services of $7.7 million for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025 was primarily due to the increase in personnel expenses of $6.5 million.
The increase in costs of services of $23.2 million for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025 was primarily due to increases in personnel expenses of $16.5 million, access and bill review fees of $2.0 million, and other cost of service expenses of $3.7 million.
General and Administrative Expenses:
The following table presents the total general and administrative expenses for the periods presented (in thousands, except percentages):
| Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| Personnel expenses excluding stock-based compensation | $ | 19,304 | $ | 20,246 | $ | (942) | (4.7) | % | $ | 47,548 | $ | 55,014 | $ | (7,466) | (13.6) | % | |||||||||||||||||||||||||||||||
| Stock-based compensation, including cRSUs | 5,448 | 7,443 | (1,995) | (26.8) | % | 15,312 | 18,964 | (3,652) | (19.3) | % | |||||||||||||||||||||||||||||||||||||
| Transformation costs | 7,963 | 13,883 | (5,920) | (42.6) | % | 29,003 | 29,536 | (533) | (1.8) | % | |||||||||||||||||||||||||||||||||||||
| Other general and administrative expenses | 33,612 | 18,429 | 15,183 | 82.4 | % | 87,683 | 54,573 | 33,110 | 60.7 | % | |||||||||||||||||||||||||||||||||||||
| Total general and administrative expenses | $ | 66,327 | $ | 60,001 | $ | 6,326 | 10.5 | % | $ | 179,546 | $ | 158,087 | $ | 21,459 | 13.6 | % | |||||||||||||||||||||||||||||||
The increase in general and administrative expenses of $6.3 million for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025 was primarily due to higher other general and administrative expenses of $15.2 million primarily associated with legal expenses related to antitrust matters and software hosting and related expenses. This was partially offset by a decrease in transformation costs of $5.9 million, personnel expenses of $0.9 million and lower stock-based compensation of $2.0 million.
The increase in general and administrative expenses of $21.5 million for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025 was primarily due to higher other general and administrative expenses of $33.1 million primarily associated with legal expenses related to antitrust matters and software hosting and related expenses. This was partially offset by a decrease in personnel expenses of $7.5 million, due to more personnel assigned to capital and transformation projects, and lower stock-based compensation of $3.7 million.
Interest Expense
Interest expense remained stable in the three months ended September 30, 2026, as compared to the three months ended September 30, 2025.
The increase in interest expense of $8.1 million, or 2.8% for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025 was primarily due to the increase in average indebtedness outstanding during the periods as a result of PIK interest charges.
As of September 30, 2026 and September 30, 2025, our total debt had an annualized weighted average cash interest rate of 6.84% and 6.95%, respectively, which decreased by 0.11%. As of December 31, 2025, our total debt had a weighted average cash interest rate of 6.92%.
Benefit for income taxes
Net loss before income taxes for the three months ended September 30, 2026 of $80.0 million generated a benefit for income taxes of $18.2 million. Net loss before income taxes for the three months ended September 30, 2025 of $93.4 million generated a benefit for income taxes of $23.6 million.
Net loss before income taxes for the nine months ended September 30, 2026 of $249.4 million generated a benefit for income taxes of $54.8 million. Net loss before income taxes for the nine months ended September 30, 2025 of $266.2 million generated a benefit for income taxes of $62.4 million.
The effective tax rate for the nine months ended September 30, 2026 and 2025 differed from the statutory rate primarily due to non-deductible stock-based compensation expense, limitation on executive compensation and state taxes.
Non-GAAP Financial Measures
We use EBITDA, Adjusted EBITDA, and adjusted earnings per share ("Adjusted EPS") to evaluate our financial performance. EBITDA, Adjusted EBITDA, and Adjusted EPS are financial measures that are not presented in accordance with GAAP. We believe the presentation of these non-GAAP financial measures provides useful information to investors in assessing our financial condition and results of operations across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our financial operating results of our core business.
These measurements of financial performance have important limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Additionally, they may not be comparable to other similarly titled measures of other companies. Some of these limitations are:
•such measures do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
•such measures do not reflect changes in, or cash requirements for, our working capital needs;
•such measures do not reflect the significant interest expense, or cash requirements necessary to service interest or principal payments on our debt;
•such measures do not reflect any cash requirements for any future replacement of depreciated assets;
•such measures do not reflect the impact of stock-based compensation upon our results of operations;
•such measures do not reflect our income tax (benefit) expense or the cash requirements to pay our income taxes;
•such measures do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; and
•other companies in our industry may calculate these measures differently from how we do, limiting their usefulness as a comparative measure.
In evaluating EBITDA, Adjusted EBITDA, and Adjusted EPS, you should be aware that in the future we may incur expenses similar to those eliminated in the presentation.
EBITDA, Adjusted EBITDA, and Adjusted EPS are widely used measures of corporate profitability eliminating the effects of financing and capital expenditures from the operating results. We define EBITDA as net loss adjusted for interest expense, interest income, income tax (benefit) expense, depreciation, amortization of intangible assets, and non-income taxes. Non-income taxes includes personal property taxes, real estate taxes, sales and use taxes and franchise taxes which are included in cost of services and general and administrative expenses. We define Adjusted EBITDA as EBITDA further adjusted to eliminate the impact of certain items that we do not consider to be indicative of our core business, including legal expenses associated with antitrust matters, loss on disposal of assets, including right-of-use assets, transformation costs, integration expenses, transaction costs related to refinancing transaction, loss on extinguishment of debt, one-time charitable contribution, stock-based compensation, including cRSUs, and other expenses. See our condensed consolidated financial statements included in this Quarterly Report for more information regarding these adjustments. Adjusted EBITDA is used in our agreements governing our outstanding indebtedness for debt covenant compliance purposes. Our Adjusted EBITDA calculation is consistent with the definition of Adjusted EBITDA used in our debt instruments.
Adjusted EPS is used in reporting to our Board and executive management and as a component of the measurement of our performance. We believe that this measure provides useful information to investors because it is the profitability measure we use to evaluate earnings performance on a comparable year-to-year basis. Adjusted EPS is defined as net loss adjusted for amortization of intangible assets, legal expenses associated with antitrust matters, other expenses, net, transformation costs, integration expenses, transaction costs related to refinancing transaction, loss on disposal of assets, including right-of-use assets, loss on extinguishment of debt, one-time charitable contribution, stock-based compensation, including cRSUs, and tax effect of adjustments to arrive at adjusted net income divided by our basic weighted average number of shares outstanding.
The following table presents a reconciliation of net loss to EBITDA and Adjusted EBITDA for the periods presented (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net loss | $ | (61,789) | $ | (69,753) | $ | (194,575) | $ | (203,712) | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
| Interest expense | 100,904 | 101,232 | 300,699 | 292,614 | |||||||||||||||||||
| Interest income | (248) | (471) | (625) | (1,282) | |||||||||||||||||||
| Benefit for income tax | (18,240) | (23,608) | (54,824) | (62,449) | |||||||||||||||||||
| Depreciation | 25,569 | 25,968 | 75,548 | 75,775 | |||||||||||||||||||
| Amortization of intangible assets | 85,908 | 85,971 | 257,724 | 257,913 | |||||||||||||||||||
| Non-income taxes | - | 581 | - | 1,697 | |||||||||||||||||||
| EBITDA | $ | 132,104 | $ | 119,920 | $ | 383,947 | $ | 360,556 | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
| Legal expenses associated with antitrust matters | 10,349 | 4,086 | 21,531 | 8,485 | |||||||||||||||||||
| Loss on disposal of assets, including right-of-use assets | 107 | 1,902 | 454 | 7,378 | |||||||||||||||||||
|
Transformation costs(1)
|
7,963 | 13,883 | 29,003 | 29,536 | |||||||||||||||||||
| Integration expenses | - | 66 | - | 579 | |||||||||||||||||||
| Transaction costs related to refinancing transaction | - | - | - | 7,879 | |||||||||||||||||||
| Loss on extinguishment of debt | - | - | - | 670 | |||||||||||||||||||
| Loss on sale of equity investments | - | 2,667 | - | 2,667 | |||||||||||||||||||
| One-time charitable contribution of treasury stock | 1,770 | - | 1,770 | - | |||||||||||||||||||
| Stock-based compensation, including cRSUs | 8,045 | 10,243 | 23,403 | 26,059 | |||||||||||||||||||
|
Other expenses, net(2)
|
1,634 | 2,365 | 4,577 | 7,420 | |||||||||||||||||||
| Adjusted EBITDA | $ | 161,972 | $ | 155,132 | $ | 464,685 | $ | 451,229 | |||||||||||||||
(1)"Transformation costs" represent costs directly associated with our multi-year transformation program called Vision 2030 which includes internal personnel costs for employees that have been either hired or redeployed and are fully dedicated to transformation activities, as well as other non-recurring and duplicative costs. At such time that internal personnel are redeployed to non-transformation activities, they will no longer be included as an adjustment herein.
(2)"Other expenses, net" represents impairment of other assets, non-integration related severance costs, start-up costs related to international expansion and miscellaneous non-recurring expenses.
The following table presents a reconciliation of net loss to Adjusted EPS for the periods presented (in thousands, except share and per share amounts):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net loss | $ | (61,789) | $ | (69,753) | $ | (194,575) | $ | (203,712) | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
| Amortization of intangible assets | 85,908 | 85,971 | 257,724 | 257,913 | |||||||||||||||||||
| Legal expenses associated with antitrust matters | 10,349 | 4,086 | 21,531 | 8,485 | |||||||||||||||||||
| Loss on disposal of assets, including right-of-use assets | 107 | 1,902 | 454 | 7,378 | |||||||||||||||||||
|
Transformation costs(1)
|
7,963 | 13,883 | 29,003 | 29,536 | |||||||||||||||||||
|
Other expenses, net(2)
|
1,634 | 2,365 | 4,577 | 7,420 | |||||||||||||||||||
| Integration expenses | - | 66 | - | 579 | |||||||||||||||||||
| Transaction costs related to refinancing transaction | - | - | - | 7,879 | |||||||||||||||||||
| Loss on extinguishment of debt | - | - | - | 670 | |||||||||||||||||||
| Loss on sale of equity investments | - | 2,667 | - | 2,667 | |||||||||||||||||||
| One-time charitable contribution of treasury stock | 1,770 | - | 1,770 | - | |||||||||||||||||||
| Stock-based compensation, including cRSUs | 8,045 | 10,243 | 23,403 | 26,059 | |||||||||||||||||||
| Estimated tax effect of adjustments | (24,018) | (27,094) | (74,032) | (77,080) | |||||||||||||||||||
| Adjusted net income | $ | 29,969 | $ | 24,336 | $ | 69,855 | $ | 67,794 | |||||||||||||||
| Weighted average shares outstanding - Basic and Diluted | 16,975,211 | 16,480,703 | 16,879,209 | 16,403,821 | |||||||||||||||||||
| Net loss per share - Basic and Diluted | $ | (3.64) | $ | (4.23) | $ | (11.53) | $ | (12.42) | |||||||||||||||
| Adjusted earnings per share | $ | 1.77 | $ | 1.48 | $ | 4.14 | $ | 4.13 | |||||||||||||||
(1)"Transformation costs" represent costs directly associated with our multi-year transformation program called Vision 2030 which includes internal personnel costs for employees that have been either hired or redeployed and are fully dedicated to transformation activities, as well as other non-recurring and duplicative costs. At such time that internal personnel are redeployed to non-transformation activities, they will no longer be included as an adjustment herein.
(2)"Other expenses, net" represents impairment of other assets, non-integration related severance costs, start-up costs related to international expansion and miscellaneous non-recurring expenses.
Liquidity and Capital Resources
As of September 30, 2026, we had a cash balance of $23.0 million, which includes cash and cash equivalents of $10.1 million and restricted cash of $12.9 million. Additionally, we have access to $248.6 million of the total $350.0 million loan availability under the 2025 Revolving Credit Facility.
As of September 30, 2026, we had $95.0 million outstanding under our 2025 Revolving Credit Facility and $6.4 million of outstanding letters of credit under such facility. Of these outstanding irrevocable letters of credit, we have four which are used to satisfy real estate lease security deposit requirements for our office locations in lieu of cash deposits in an aggregate amount of $4.4 million as of September 30, 2026 and December 31, 2025, respectively. The Company also has an irrevocable letter of credit to satisfy the security requirements of a captive insurance subsidiary in the amount of $2.0 million as of September 30, 2026 and December 31, 2025.
Our primary sources of liquidity are internally generated funds combined with our borrowing capacity under our 2025 Revolving Credit Facility. We believe these sources will provide sufficient liquidity for us to meet our working capital, and capital expenditure and other cash requirements for the next twelve months. We may from time to time at our sole discretion purchase, redeem or retire our long-term debt, through tender offers, in privately negotiated or open market transactions or otherwise. We plan to finance our capital expenditures with cash from operations. Furthermore, our future liquidity and future ability to fund capital expenditures, working capital, and debt requirements are also dependent upon our future financial performance, which may be subject to many economic, commercial, financial and other factors that are beyond our control, including the ability of financial institutions to meet their lending obligations to us. If those factors significantly change, our business may not be able to generate sufficient cash flow from operations or future borrowings may not be available to meet our liquidity needs. We anticipate that to the extent we require additional liquidity as a result of these factors or in order to execute our strategy, it would be financed either by borrowings under our senior secured credit facilities, by other indebtedness, additional equity financings, sale of assets, or a combination of the foregoing. We may be unable to obtain any such additional financing on reasonable terms or at all.
Cash Flow Summary
The following table is derived from our condensed consolidated statements of cash flows (in thousands):
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net cash flows provided by (used in): | |||||||||||
| Operating activities | $ | 65,029 | $ | 51,038 | |||||||
| Investing activities | (128,771) | (86,359) | |||||||||
| Financing activities | 58,441 | 56,294 | |||||||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | $ | (5,301) | $ | 20,973 | |||||||
For the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025
Cash Flows from Operating Activities
Cash flows from operating activities increased by $14.0 million, primarily due to favorable changes in working capital. Changes in our working capital requirements primarily reflect the timing of collection on trade accounts receivable, net and payment of accounts payable, accrued expenses and liabilities, and accrued interest.
Cash Flows from Investing Activities
Net cash used in investing activities increased by $42.4 million, as compared to the prior-year period, due to increased investments in technologies to support our transformation initiatives, and proceeds from the sale of investments in the prior period.
Cash Flows from Financing Activities
Net cash provided by financing activities increased by $2.1 million as compared to the prior-year period, primarily due to the increase in net borrowing of $5.0 million on our 2025 Revolving Credit Facility due to working capital and capital investment needs, partially offset by repurchase of treasury stock of $3.5 million.
Term Loans and Revolvers
In connection with the Refinancing Transaction that closed on January 30, 2025, MPH issued senior secured credit facilities composed of $325.0 million of First-Out First Lien Term Loans and $1,143.9 million of Second-Out First Lien Term Loans (collectively, the "First Lien Term Loans") and entered into a $350.0 million 2025 Revolving Credit Facility. The First Lien Term Loans mature on December 31, 2030 and the 2025 Revolving Credit Facility matures on December 31, 2029.
See Note 4, Long-Term Debt of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional information.
Interest Rate Swap Agreements
The Company is exposed to interest rate risk on its floating rate debt. On September 12, 2023, the Company entered into three interest rate swap agreements with a total notional value of $800.0 million to effectively convert a portion of its floating rate debt to a fixed-rate basis of 4.59% as a weighted-average across the three swaps. The interest rate swap agreements were effective August 31, 2023 and expired on August 31, 2026.
See Note 3, Derivative Financial Instruments of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional information.
Senior Notes
In connection with the Exchange Offers on January 30, 2025, $1,044.2 million, $974.5 million, and $1,253.5 million of the 5.50% Notes, the 5.750% Senior Notes, and the Senior Convertible PIK Notes, respectively, were cancelled. Accordingly, following completion of the Exchange Offers, $5.8 million, $5.3 million, and $0.4 million of the 5.50% Notes, the 5.750% Senior Notes, and the Senior Convertible PIK Notes, respectively, remain outstanding.
On January 30, 2025, MPH issued $600.2 million and $763.1 million in aggregate principal amount of Second-Out First Lien A Notes and Second-Out First Lien B Notes, respectively, with a maturity date of December 31, 2030. MPH issued $752.5 million and $969.4 million in aggregate principal amount of Third-Out First Lien A Notes and Third-Out First Lien B Notes, respectively, with a maturity date of March 31, 2031.
See Note 4, Long-Term Debt of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional information.
Guarantees and Security
There have been no changes to guarantees and security described in Note 9. Long-Term Debt of the Notes to the Consolidated Financial Statements included in our 2025 Annual Report on Form 10-K.
Debt Covenants and Events of Default
As of September 30, 2026 and December 31, 2025 we were in compliance with all debt covenants.
There have been no changes to the debt covenants and events of default described in Note 9. Long-Term Debt of the Notes to the Consolidated Financial Statements in our 2025 Annual Report on Form 10-K.
Critical Accounting Policies and Estimates
The preparation of condensed consolidated financial statements and related disclosures in conformity with GAAP and the Company's discussion and analysis of its financial condition and operating results, require the Company's management to make judgments, assumptions, and estimates, which we believe are reasonable and prudent based on the available facts and circumstances. These judgments, assumptions and estimates affect the amounts reported. There have been no material changes to the Company's critical accounting policies and estimates described in Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2025 Annual Report on Form 10-K.
Client Concentration
One client individually accounted for 38.0% of revenue for the three months ended September 30, 2026. Two clients individually accounted for 29.2% and 10.4% of revenues for the year ended December 31, 2025. The loss of the business of one or more of our larger clients could have a material adverse effect on our results of operations. For further discussion on our client concentration, please refer to Part I, Item 1A. "Risk Factors" in our 2025 Annual Report on Form 10-K.
Recent Accounting Pronouncements
See Note 1, General Information and Basis of Accounting of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional information.
Quantitative and Qualitative Disclosure About Market Risk
See Item 3. "Quantitative and Qualitative Disclosure about Market Risk" below.
Internal Controls Over Financial Reporting
For further information on the Company's internal controls over financial reporting see Item 4. "Controls and Procedures".
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