mpln-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended March 31, 2024


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-39228

MULTIPLAN CORPORATION

(Exact Name of Registrant as Specified in Its Charter)


Delaware						84-3536151
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

115 Fifth Avenue

New York, NY 10003

(Address of principal executive offices)

(212) 780-2000

(Issuer’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol

Name of each exchange on which registered

Shares of Class A common stock, $0.0001 par value per share

MPLN

New York Stock Exchange

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of May 6, 2024, 644,868,398 shares of Class A common stock, par value $0.0001 per share, were issued and outstanding.

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TABLE OF CONTENTS


			Pages
Glossary			3
Part I. Financial Information
Item 1. Financial Statements
Unaudited Condensed Consolidated Balance Sheets			6
Unaudited Condensed Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income			7
Unaudited Condensed Consolidated Statements of Shareholders' Equity			8
Unaudited Condensed Consolidated Statements of Cash Flows			9
Notes to Unaudited Condensed Consolidated Financial Statements			10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			20
Item 3. Quantitative and Qualitative Disclosures About Market Risk			34
Item 4. Controls and Procedures			34
Part II - Other Information
Item 1. Legal Proceedings			35
Item 1A. Risk Factors			35
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities			35
Item 6. Exhibits			36
Signature			37

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GLOSSARY

Unless otherwise stated in this Quarterly Report on Form 10-Q (this "Quarterly Report") or the context otherwise requires, references to:

"2023 Annual Report" are to our Annual Report on Form 10-K for the fiscal year ended December 31, 2023;

"2020 Omnibus Incentive Plan" are to our 2020 Omnibus Incentive Plan, as it may be amended and/or restated from time to time;

"5.50% Senior Secured Notes" are to the $1,050,000,000 in aggregate principal amount of 5.50% Senior Secured Notes due 2028 issued by MPH;

"5.750% Notes" are to the $1,300,000,000 in aggregate principal amount of 5.750% Senior Notes due 2028 issued by MPH;

"Adjusted EPS" are to adjusted earnings per share;

"ASU" are to Accounting Standard Update;

"Board" are to the board of directors of the Company;

"BST" are to Benefits Science LLC;

"Cash Interest" are to interest paid in cash on the Senior Convertible PIK Notes;

"Churchill" are to Churchill Capital Corp III, a Delaware corporation, which changed its name to MultiPlan Corporation following the consummation of the Transactions;

"Churchill IPO" are to the initial public offering by Churchill which closed on February 19, 2020;

"Churchill's Class A common stock" are, prior to consummation of the Transactions, to Churchill's Class A common stock, par value $0.0001 per share and, following consummation of the Transactions, to our Class A common stock, par value $0.0001 per share;

"Class A common stock" are to MultiPlan's Class A common stock, par value $0.0001 per share;

"Closing" are to the consummation of the Mergers;

"Closing Date" are to October 8, 2020, the date on which the Transactions were consummated;

"Common PIPE Investment" are to the private placement pursuant to which Churchill entered into subscription agreements with certain investors whereby such investors subscribed for (a) 130,000,000 shares of Churchill's Class A common stock at a purchase price of $10.00 per share for an aggregate commitment of $1,300,000,000 and (b) warrants to purchase 6,500,000 shares of Churchill's Class A Common Stock (for each share of Churchill's Class A common stock subscribed, the investor received 1/20th of a warrant to purchase one share of Churchill's Class A common stock, with each whole warrant having a strike price of $12.50 per share and a maturity date of October 8, 2025). The Common PIPE Investment was subject to an original issue discount (which was paid in additional shares of Churchill's Class A common stock) of 1% for subscriptions of $250,000,000 or less and 2.5% for subscriptions of more than $250,000,000, which resulted in an additional 2,050,000 shares of Churchill's Class A common stock being issued. The Common PIPE Investment was consummated on the Closing Date;

"common stock" are, prior to the consummation of the Transactions, to Churchill's Class A common stock and Churchill's Class B common stock and, following consummation of the Transactions, to the Company's Class A common stock;

"Company" are, prior to the consummation of the Transactions, to Churchill and, following consummation of the Transactions, to MultiPlan Corporation;

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"Convertible PIPE Investment" are to the private placement pursuant to which the Company entered into subscription agreements with certain investors whereby such Convertible PIPE Investors agreed to buy $1,300,000,000 in aggregate principal amount of Senior Convertible PIK Notes. The Convertible PIPE Investment was consummated on the Closing Date;

"Convertible PIPE Investors" are to the investors participating in the Convertible PIPE Investment;

"DHP" are to Discovery Health Partners;

"Exchange Act" are to the Securities Exchange Act of 1934, as amended;

"FASB" are to the Financial Accounting Standards Board;

"First Merger Sub" are to Music Merger Sub I, Inc., a Delaware corporation and direct, wholly owned subsidiary of the Company;

"founder shares" are to shares of Churchill's Class B common stock and Churchill's Class A common stock issued upon the automatic conversion thereof in connection with the Closing;

"GAAP" are to generally accepted accounting principles in United States of America;

"Holdings" are to Polaris Investment Holdings, L.P.;

"HST" are to HSTechnology Solutions, Inc.;

"Integration expenses" are costs associated with the integration of acquired companies into MultiPlan;

"Merger Agreement" are to that certain Agreement and Plan of Merger, dated as of July 12, 2020, by and among Churchill, MultiPlan Parent, Holdings, First Merger Sub and Second Merger Sub, as the same has been or may be amended, modified, supplemented or waived from time to time;

"Mergers" are to, together, (a) the merger of First Merger Sub with and into MultiPlan Parent with MultiPlan Parent being the surviving company in the merger (the "First Merger") and (b) immediately following and as part of the same transaction as the First Merger, the merger of MultiPlan Parent with and into Second Merger Sub, with Second Merger Sub surviving the merger as a wholly owned subsidiary of Churchill (the "Second Merger");

"MPH" are to MPH Acquisition Holdings LLC;

"MultiPlan" are MultiPlan Corporation and its consolidated subsidiaries;

"MultiPlan Parent" are to Polaris Parent Corp., a Delaware corporation;

"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;

"other expenses, net" represents miscellaneous non-recurring income, miscellaneous non-recurring expenses, gain or loss on disposal of assets, impairment of other assets, gain or loss on disposal of leases, tax penalties, and non-integration related severance costs;

"Payors" are our customers and potential customers, which include large national insurance companies, Blue Cross and Blue Shield plans, provider-sponsored and independent health plans, third party administrators, bill review companies, Taft-Hartley plans, self-insured employers, federal and state government sponsored health plans and other entities that pay medical bills related to the commercial healthcare, government, workers' compensation and auto medical markets;

"PSAV" are to percentage of savings;

"PEPM" are to per-employee-per-month;

"PIK Interest" are to interest paid through an increase in the principal amount of the outstanding Senior Convertible PIK Notes or through the issuance of additional Senior Convertible PIK Notes;

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"PIPE Warrants" are to the warrants to purchase Churchill's Class A common stock issued in connection with the Common PIPE Investment, on terms identical to the terms of the Private Placement Warrants, other than the exercise period that started on November 7, 2020, the exercise price which is $12.50 per share and the redemption feature that exists for all holders of the PIPE warrants;

"Private Placement Warrants" are to warrants issued to the Sponsor in a private placement simultaneously with the closing of the Churchill IPO and the Working Capital Warrants whose terms are identical to the Private Placement Warrants;

"Public Warrants" are to the Company's warrants sold as part of the units in the Churchill IPO (whether they were purchased in the Churchill IPO or thereafter in the open market);

"Revolver B" are to the revolving credit facility in conjunction with Term Loan B and maturing on August 24, 2026;

"revolving credit facility" are to MPH's $450.0 million senior secured revolving credit facility;

"SEC" are to the United States Securities and Exchange Commission;

"Second Merger Sub" are to Music Merger Sub II, LLC, a Delaware limited liability company and direct, wholly owned subsidiary of the Company;

"Senior Convertible PIK Notes" are the 6.00% / 7.00% Convertible Senior PIK Toggle Notes due 2027;

"senior secured credit facilities" are to MPH's senior secured credit facilities which consist of (a) a $1,325.0 million term loan facility maturing on September 1, 2028 and (b) a $450.0 million revolving credit facility maturing on August 24, 2026;

"Sponsor" are to Churchill Sponsor III, LLC, a Delaware limited liability company and an affiliate of M. Klein and Company, LLC, a Delaware limited liability company, and its affiliates, in which certain of Churchill's directors and officers hold membership interests;

"Sponsor Note" are to the unsecured promissory note issued by the Company to the Sponsor in an aggregate principal amount of $1,500,000. The Sponsor converted the unpaid balance of the Sponsor Note into Working Capital Warrants in connection with the Closing;

"Term Loan B" are to a term loan payable borrowed on August 24, 2021 in the amount of $1,325.0 million with a group of lenders due and payable on September 1, 2028;

"Term SOFR" are to the Secured Overnight Financing Rate;

"Transactions" are to the Mergers, together with the other transactions contemplated by the Merger Agreement and the related agreements;

"Transaction-related expenses" represents transaction costs, including those related to the Transactions and litigation related thereto as well as those related to any other acquisitions, whether consummated or not;

"Unvested Founder Shares" represents 12,404,080 of the Sponsor founder shares that were unvested as of October 8, 2020 in connection with the Merger Agreement and will re-vest at such time as, during the period starting on October 8, 2021 and ending on October 8, 2025, the closing price of our Class A common stock exceeds $12.50 per share for any forty (40) trading days in a sixty (60) consecutive day period. Such founder shares that do not re-vest on or before October 8, 2025 will be forfeited and cancelled;

"warrants" are to the Public Warrants, the Private Placement Warrants, the PIPE Warrants and the Working Capital Warrants;

"we," "our" or "us" are to MultiPlan and its consolidated subsidiaries; and

"Working Capital Warrants" are to the warrants to purchase Churchill's Class A common stock pursuant to the terms of the Sponsor Note, on terms identical to the terms of the Private Placement Warrants.

Part I. Financial Information

Item 1. Financial Statements

MULTIPLAN CORPORATION

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)


	March 31, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	58,695	$	71,547
Restricted cash	10,483		9,947
Trade accounts receivable, net	82,443		76,558
Prepaid expenses	24,377		23,432
Prepaid taxes	—		1,364
Other current assets, net	13,512		10,745
Total current assets	189,510		193,593
Property and equipment, net	277,921		267,429
Operating lease right-of-use assets	18,416		19,680
Goodwill	3,312,652		3,829,002
Other intangibles, net	2,544,536		2,633,207
Other assets, net	23,660		21,776
Total assets	$	6,366,695	$	6,964,687
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	18,038	$	19,590
Accrued interest	75,358		56,827
Accrued taxes	31,627		—
Operating lease obligation, short-term	4,718		4,792
Current portion of long-term debt	13,250		13,250
Accrued compensation	22,683		44,720
Accrued legal contingencies	13,123		12,123
Other accrued expenses	15,315		15,437
Total current liabilities	194,112		166,739
Long-term debt	4,511,297		4,532,733
Operating lease obligation, long-term	15,902		17,124
Private Placement Warrants and Unvested Founder Shares	347		477
Deferred income taxes	467,543		521,707
Other liabilities	7,112		16,783
Total liabilities	5,196,313		5,255,563
Commitments and contingencies (Note 7)
Shareholders’ equity:
Shareholder interests
Preferred stock, $0.0001 par value — 10,000,000 shares authorized; no shares issued	—		—
Common stock, $0.0001 par value — 1,500,000,000 shares authorized; 673,899,672 and 667,808,296 issued; 644,185,300 and 648,319,379 shares outstanding	67		67
Additional paid-in capital	2,351,280		2,348,505
Accumulated other comprehensive loss	(3,236)		(11,778)
Retained deficit	(1,038,996)		(499,307)
Treasury stock — 29,714,372 and 19,488,917 shares	(138,733)		(128,363)
Total shareholders’ equity	1,170,382		1,709,124
Total liabilities and shareholders’ equity	$	6,366,695	$	6,964,687

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

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MULTIPLAN CORPORATION

Unaudited Condensed Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income

(in thousands, except share and per share data)


	Three Months Ended March 31,
		2024		2023
Revenues		$	234,508	$	236,594
Costs of services (exclusive of depreciation and amortization of intangible assets shown below)		60,077		54,850
General and administrative expenses		34,857		31,467
Depreciation		20,989		18,206
Amortization of intangible assets		85,971		85,127
Loss on impairment of goodwill and intangible assets		519,050		—
Total expenses		720,944		189,650
Operating (loss) income		(486,436)		46,944
Interest expense		82,198		83,428
Interest income		(926)		(3,239)
Gain on extinguishment of debt		(5,913)		(36,778)

(Gain) loss on change in fair value of Private Placement Warrants and Unvested Founder Shares		(130)		1,631
Net (loss) income before taxes		(561,665)		1,902
(Benefit) provision for income taxes		(21,976)		1,693
Net (loss) income		$	(539,689)	$	209

Weighted average shares outstanding – Basic		646,334,247		638,721,991
Weighted average shares outstanding – Diluted		646,334,247		640,901,289

Net (loss) income per share – Basic		$	(0.83)	$	0.00
Net (loss) income per share – Diluted		$	(0.83)	$	0.00

Net (loss) income		(539,689)		209
Other comprehensive income:
Change in unrealized losses on interest rate swaps, net of tax		8,542		—
Comprehensive (loss) income		$	(531,147)	$	209

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

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MULTIPLAN CORPORATION

Unaudited Condensed Consolidated Statements of Shareholders' Equity

(in thousands, except share data)


	Three Months Ended March 31, 2024

	Common Stock Issued			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Deficit		Treasury stock			Total Shareholders’ Equity
	Shares	Amount								Shares	Amount

Balance at beginning of period	667,808,296	$	67	$	2,348,505	$	(11,778)	$	(499,307)	(19,488,917)	$	(128,363)	$	1,709,124

Stock Incentive Plans	5,464,292	—		5,619		—		—		—	—		5,619
Tax withholding related to vesting of equity awards	—	—		(3,352)		—		—		—	—		(3,352)
Gains arising during the period on Interest rate swaps	—	—		—		6,963		—		—	—		6,963
Reclassification adjustments for gains included in net income (interest expense)						1,579							1,579
Repurchase of common stock	—	—		—		—		—		(10,225,455)	(10,370)		(10,370)
Issuance of common stock in connection with employee stock purchase plan	627,084			508		—		—		—	—		508
Net loss	—	—		—		—		(539,689)		—	—		(539,689)
Balance at end of period	673,899,672	$	67	$	2,351,280	$	(3,236)	$	(1,038,996)	(29,714,372)	$	(138,733)	$	1,170,382

	Three Months Ended March 31, 2023

	Common Stock Issued			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Treasury stock			Total Shareholders’ Equity
	Shares	Amount								Shares	Amount

Balance at beginning of period	666,290,344	$	67	$	2,330,444	$	—	$	(347,800)	(27,117,406)	$	(192,169)	$	1,790,542

2020 Omnibus Incentive Plan	951,825	—		3,695		—		—		—	—		3,695
Tax withholding related to vesting of equity awards	—	—		(452)		—		—		—	—		(452)
Repurchase of common stock	—	—		—		—		—		(5,248,247)	(5,718)		(5,718)
Net income	—	—		—		—		209		—	—		209
Balance at end of period	667,242,169	$	67	$	2,333,687	$	—	$	(347,591)	(32,365,653)	$	(197,887)	$	1,788,276

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

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MULTIPLAN CORPORATION

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)


	Three Months Ended March 31,
	2024		2023
Operating activities:
Net (loss) income	$	(539,689)	$	209
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	20,989		18,206
Amortization of intangible assets	85,971		85,127
Amortization of the right-of-use asset	1,264		1,403
Loss on impairment of goodwill and intangible assets	519,050		—
Stock-based compensation	5,694		3,695
Deferred income taxes	(56,874)		3,438
Amortization of debt issuance costs and discounts	2,885		2,603
Gain on extinguishment of debt	(5,913)		(36,778)

Loss on disposal of property and equipment	106		172
(Gain) loss on change in fair value of Private Placement Warrants and Unvested Founder Shares	(130)		1,631
Changes in assets and liabilities:
Accounts receivable, net	(5,885)		11,875
Prepaid expenses and other assets	(4,223)		(144)
Prepaid taxes	1,364		(4,566)
Operating lease obligation	(1,296)		(1,737)
Accounts payable, accrued taxes, accrued expenses, legal contingencies and other	26,403		(20,919)
Net cash provided by operating activities	49,716		64,215
Investing activities:
Purchases of property and equipment	(30,544)		(23,101)





Net cash used in investing activities	(30,544)		(23,101)
Financing activities:
Repurchase of 5.750% Notes	—		(99,954)

Repayments of Term Loan B	(3,313)		(3,313)



Repurchase of Senior Convertible PIK Notes	(14,886)		—

Taxes paid on settlement of vested share awards	(3,352)		(452)



Purchase of treasury stock	(10,370)		(5,718)


Proceeds from issuance of common stock under Employee Stock Purchase Plan	433		—
Net cash used in financing activities	(31,488)		(109,437)
Net decrease in cash, cash equivalents and restricted cash	(12,316)		(68,323)
Cash, cash equivalents and restricted cash at beginning of period	81,494		340,559
Cash, cash equivalents and restricted cash at end of period	$	69,178	$	272,236

Cash and cash equivalents	$	58,695	$	265,728
Restricted cash	10,483		6,508
Cash, cash equivalents and restricted cash at end of period	$	69,178	$	272,236

Noncash investing and financing activities:
Purchases of property and equipment not yet paid	$	9,692	$	6,105

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	(60,742)	$	(61,717)
Income taxes, net of refunds	$	(2,260)	$	(3,133)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

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MULTIPLAN CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

1.General Information and Basis of Accounting

General Information

We are a market leading provider of data analytics and technology-enabled solutions designed to bring affordability, efficiency and fairness to the U.S. healthcare industry. Through our proprietary data and technology platform, we provide out-of-network cost management, payment and revenue integrity data and decision science, business-to-business healthcare payments and other services to the payors of healthcare, which are primarily health insurers and their administrative-services-only platforms, self-insured employers, federal and state government-sponsored health plans (collectively "Payors") and other health plan sponsors (typically through their health plan administrators), and, indirectly, the plan members who are the consumers of healthcare services.

Throughout the notes to the unaudited condensed consolidated financial statements, unless otherwise noted, "we," "us," "our", "MultiPlan", and the "Company" and similar terms refer to MultiPlan and its subsidiaries.

Basis of Presentation and Consolidation

The accompanying unaudited condensed consolidated financial statements of MultiPlan Corporation have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Certain information and disclosures required by accounting principles generally accepted in the United States (GAAP) for complete consolidated financial statements have been condensed or omitted pursuant to the SEC’s rules and regulations, although management believes that the disclosures are adequate and make the information presented not misleading. The unaudited condensed consolidated financial statements and notes herein should be read in conjunction with the audited consolidated financial statements of MultiPlan Corporation and the notes thereto, included in the Company’s 2023 Annual Report. In the opinion of management, all adjustments, which are of a normal and recurring nature, necessary for a fair statement of the Company’s financial position as of March 31, 2024 and December 31, 2023, and its results of operations and cash flows for the three months ended March 31, 2024 and 2023 have been included.

Summary of Significant Accounting Policies

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from the Company's estimates. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Significant estimates and assumptions reflected in these unaudited condensed consolidated financial statements include, but are not limited to, revenue recognition, recoverability of long-lived assets, goodwill, valuation of Private Placement Warrants and Unvested Founder Shares, valuation of stock-based compensation awards and income taxes.

Segment Reporting

Operating segments are defined as components of an entity for which separate financial information is available and regularly reviewed by the chief operating decision maker. The Company manages its operations as a single segment for the purposes of assessing performance and making decisions. The Company's singular focus is being 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.

In addition, all of the Company's revenues and long-lived assets are attributable to operations in the United States for all periods presented.

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MULTIPLAN CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

Revenue Recognition

Disaggregation of Revenue

The following table presents revenues disaggregated by services and contract types:


	Three Months Ended March 31,
(in thousands)		2024			2023
Revenues
Network-Based Services		$	46,155		$	57,195
PSAV		31,222			40,950
PEPM		13,053			14,898
Other		1,880			1,347
Analytics-Based Services		160,092			152,420
PSAV		148,615			147,340
PEPM		9,401			5,080
Other		2,076			—
Payment and Revenue Integrity Services		28,261			26,979
PSAV		28,152			26,872
PEPM		109			107
Total Revenues		$	234,508		$	236,594
Percent of PSAV revenues		88.7		%	90.9		%
Percent of PEPM revenues		9.6		%	8.5		%
Percent of other revenues		1.7		%	0.6		%

Due to the nature of our arrangements, certain estimates may be constrained if it is probable that a significant reversal of revenue will occur when the uncertainty is resolved. For our percentage of savings contracts, portions of revenue that are recognized and collected in a reporting period may be returned or credited in subsequent periods. These credits are the result of Payors not utilizing the discounts that were initially calculated, or differences between the Company’s estimates of savings achieved for a customer and the amounts self-reported in the following month by that same customer. Significant judgment is used in constraining estimates of variable consideration, and is based upon both customer-specific and aggregated factors that include historical billing and adjustment data, customer contractual terms, and performance guarantees. We update our estimates at the end of each reporting period as additional information becomes available. There have not been any material changes to estimates of variable consideration for performance obligations satisfied prior to the three months ended March 31, 2024.

The timing of payments from customers from time to time generates contract assets or contract liabilities, however these amounts are immaterial in all periods presented.

Derivatives

Interest Rate Swap Agreements

The Company is exposed to interest rate risk on its floating-rate debt. In September 2023, the Company entered into interest rate swap agreements to effectively convert some of its floating-rate debt to a fixed-rate basis. The Company entered into these agreements to reduce the variability of the cash flows in interest payments associated with the Company’s floating-rate debt, thus reducing the impact of interest rate changes on future interest payment cash flows.

The Company has elected to apply the hedge accounting rules in accordance with authoritative guidance for the agreements entered into during the three months ended March 31, 2024. Changes in the fair value of interest rate swap agreements designated as cash flow hedges are recorded as a component of accumulated other comprehensive income within stockholders’ equity and are subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects "Earnings".

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MULTIPLAN CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

Stock-Based Compensation

In 2024, the Company began granting a new type of award via the 2020 Omnibus Incentive Plan, in the form of employee performance stock units ("PSUs"). The PSUs vest approximately three years after grant if certain performance metrics are met, as follows: 50% of the PSUs may be earned based on the Company’s relative total stockholder return (“RTSR”) over the measurement period from January 1, 2024 to December 31, 2026 compared to the Russel 2000, and 50% of the PSUs may be earned based on the cumulative revenue from January 1, 2024 to December 31, 2025.

The fair value assigned to PSUs is determined using the market price of the Company’s stock on the grant date for the performance based awards, i.e. the revenue PSUs, and by using a Monte Carlo simulation for the market based awards, i.e. the RTSR PSUs. Stock-based compensation costs associated with awards with a performance condition are re-assessed each reporting period based upon the estimated performance attainment on the reporting date until the performance conditions are met. The ultimate number of shares of common stock that are issued to an employee is the result of the actual performance of the Company at the end of the performance period compared to the performance targets and ranges from 0% to 150% of the initial PSU grant.

The Monte Carlo simulation model uses the same input assumptions as the Black-Scholes model to determine the expected potential ranking of the Company against the Russel 2000, i.e. the probability of satisfying the market condition defined in the award. Expected volatility in the model was estimated based on the volatility of historical stock prices over a period matching the expected term of the award. The risk-free interest rate is based on U.S. Treasury yield constant maturities for a term matching the expected term of the award.

Stock-based compensation is measured at the grant date based on the fair value of the award and is recognized as compensation expense for employee awards, net of forfeitures, over the applicable requisite service period of the stock award using the straight-line method for awards with only service conditions. The Company recognizes forfeitures as they occur.

Certain assumptions used are subjective and require significant management judgment, and include (i) the risk-free rate, (ii) volatility, (iii) the expected term, and (iv) our assessment of actual performance in comparison to the targets set in the awards. Changes in these assumptions can materially affect the estimate of the grant date fair value of the PSUs and ultimately compensation expenses.

New Accounting Pronouncements Issued but Not Yet Adopted

ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280), which provides enhanced disclosures about significant segment expenses. The standard also enhances interim disclosure requirements and provides new segment disclosure requirements for entities with a single reportable segment. The standard is effective for public companies for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Retrospective adoption is required for all prior periods presented. Early adoption is permitted. The Company is currently evaluating the effect that implementation of this standard will have on the Company’s consolidated operating results, cash flows, financial condition and related disclosures.

ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740). In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). This standard requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid. The standard is effective for public business entities for annual periods beginning after December 15, 2024, with early adoption permitted, and may be applied either prospectively or retrospectively for all prior periods presented. The Company is currently evaluating the impact of this disclosure.

Table of Contents

MULTIPLAN CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

2. Goodwill and Other Intangible Assets

As of each balance sheet date, other intangible assets consisted of the following:

March 31, 2024

December 31, 2023

(in thousands)

Weighted-average amortization period

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Value

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Value

Customer relationships

SEC Form 10-Q filed by MultiPlan Corporation