Company Overview

Claritev is a leading provider of data-driven cost management solutions for the U.S. healthcare industry. The company offers a range of services to help payors, such as health insurers and self-insured employers, reduce medical costs and promote fairness, quality and affordability.

Claritev’s services include:

• Analytics-Based Services that use data and algorithms to detect and negotiate fair reimbursement for out-of-network medical costs. This also includes services that enable lower-cost health plans with reference-based pricing.

• Network-Based Services that provide access to contracted discounts with healthcare providers that payors don’t have direct relationships with, through Claritev’s large provider network.

• Payment and Revenue Integrity Services that use data, technology and clinical expertise to identify and remove improper or unnecessary charges before or after claims are paid.

• Data and Decision Science Services that apply data science to produce analytics to help customers optimize plan design, network configurations, and improve clinical outcomes and performance.

Claritev believes its solutions provide strong value by reducing healthcare costs in an efficient and fair manner. The company’s revenue model is aligned with customer interests, as fees are often linked to the savings identified.

Financial Performance

Claritev’s revenues decreased by 1.4% in the first quarter of 2025 compared to the same period in 2024, primarily due to a decline in Analytics-Based Services revenues. However, the company saw increases in its Network-Based Services (1.6%) and Payment and Revenue Integrity Services (9.7%) revenues.

The decrease in Analytics-Based Services revenues was mainly due to a drop in the percentage of savings achieved for these services. In contrast, the increase in Network-Based Services was driven by growth in the Workers Comp product line, while the Payment and Revenue Integrity Services increase was due to higher PSAV revenues.

Costs of services remained relatively stable in Q1 2025 compared to Q1 2024. However, general and administrative expenses increased by 45.3%, primarily due to $7.7 million in transformation costs and $3.7 million in losses on asset disposals.

Claritev recorded a net loss of $71.3 million in Q1 2025, an improvement from the $539.7 million net loss in the prior-year period. This was largely due to a $519.1 million impairment charge on goodwill and intangible assets that was recognized in Q1 2024, which did not recur in 2025.

Liquidity and Capital Resources

As of March 31, 2025, Claritev had $33.9 million in cash and cash equivalents, including $10.8 million in restricted cash. The company also had $264.8 million of available borrowing capacity under its revolving credit facility.

Claritev’s primary sources of liquidity are internally generated funds and its revolving credit facility. Management believes these sources will provide sufficient liquidity to meet the company’s needs over the next 12 months.

In January 2025, Claritev completed a refinancing transaction that resulted in the issuance of new term loans and notes. The new debt includes:

• $325 million of New First-Out First Lien Term Loans
• $1.14 billion of New Second-Out First Lien Term Loans
• $600.2 million of New Second-Out First Lien A Notes
• $763.1 million of New Second-Out First Lien B Notes
• $752.5 million of New Third-Out First Lien A Notes
• $969.4 million of New Third-Out First Lien B Notes

The refinancing also resulted in the cancellation of $1.04 billion of 5.50% Notes, $974.5 million of 5.750% Notes, and $1.25 billion of Senior Convertible PIK Notes.

Claritev is subject to certain debt covenants under its credit agreements, including a financial covenant on its revolving credit facility. As of March 31, 2025, the company was in compliance with all debt covenants.

Strengths and Weaknesses

Strengths:

• Diversified service offerings that address multiple aspects of healthcare cost management
• Alignment of revenue model with customer interests through fee-for-savings pricing
• Extensive provider network that supplements payor networks
• Data-driven, technology-enabled solutions that leverage analytics and clinical expertise

Weaknesses:

• Concentration of revenues from a few large customers
• Increasing general and administrative expenses, including transformation and integration costs
• Significant debt load and interest expense following recent refinancing

Outlook

Claritev operates in a highly regulated industry where new laws and regulations can impact healthcare providers and payors, potentially leading to increased litigation risk for the company. The company is currently involved in several lawsuits, including antitrust claims, which could have a material adverse effect on its financial results if the litigation proliferates or the outcomes are unfavorable.

Additionally, healthcare providers have become more resistant to cost management techniques, which could affect customer use of Claritev’s products and services, especially its cost management offerings.

To mitigate these risks, Claritev will need to continue investing in its technology, data analytics capabilities, and clinical expertise to deliver innovative solutions that provide clear value to its payor customers. The company will also need to carefully manage its debt load and interest expenses to maintain financial flexibility.

Overall, Claritev appears to be navigating a challenging regulatory and competitive environment, but its diversified service offerings, data-driven approach, and alignment with customer interests provide a solid foundation for future growth, if the company can successfully execute its strategy and manage the risks it faces.