Claritev Corp (CTEV) May 13, 2026 Conference Transcript

Thanks, everyone. Thanks for joining. We have with us Todd Feeney, Vice President of Investorations, and Doug Garris, Chief Financial Officer, declared that first and foremost, just want to thank you guys for joining us, as always. But more importantly, and I know we were just talking, but I thought it'd be helpful. You've been with the company, you know, nearly two years. Now, Travis has been on two years. puts and takes, your thoughts, puts and takes, before we kind of get into some of the discussions on verticals and opportunities and so forth.

Yeah, great. Thanks for the question and a great conference this week. You know, when I think about the puts and takes, the significant opportunity we have to positively impact healthcare with 3,000 dedicated associates was an extremely pleasant surprise coming in, especially having worked at, you know, kind of large larger organizations most recently we have an incredible base of people who are dedicated with clarity clarity alignment focus and purpose um and man alive you know we had we set a foundation here in 24 uh we build 2025 the turn and expectations now have reached a fever pitch and so the management team our team is executing our associates um are dedicated to the mission but it's just that we keep telling our team it just gets harder and so it's on a day-to-day basis it's been uh it's been a grind but that's what we signed up to do and we're having a we're having a great time and and and to that end maybe in some ways taking a step back can you talk about the durability of the core business and you've talked about how to stabilize the top 10 clients x one client which we've talked about i think you said organically up 10 11 percent that can you talk about that just as fun it comes from a core competency respect yeah you know i think maybe one of the more underappreciated aspects of coming into the organization was how um how sticky our core business is when we refinance the company it was without fully understanding uh but kind of betting on the future of being able to sell into an already mature and penetrated customer base And so when I think about the opportunity for us to continue to grow the business, we say a clarity of all of our businesses are growth business. Our core business is a growth business. And we look at Q1, our claims intelligence business, our largest core business was up 8.4% year over year. And so we like the prospects of each of our lines of business, our service lines between claims intelligence. We think the out-of-network market is stable on a dollar perspective. Our network business is our crown jewel, and it's a very strategic asset that we're going to more aggressively pursue the TPA space with. And then finally, our payment and revenue integrity, I think from a medium to long-term perspective, we see significant compounding growth in products like our claims advanced code editing, where we're catching on a prepayment basis issues on claims on a second pass. And so all three of those businesses are core to what we do. And the medium to long-term prospects for those businesses are good too. Okay, great.

And more, you know, yesterday you shared about the kind of the 2030 vision and so forth. Can you, maybe I'm trying to put two thoughts together here, But at the end of the day, can you talk about some of those verticals that are merged and then tie it to, you know, how you're thinking about that as we roll out, you know, pushing towards 2030 and generating cash flow?

Yeah, that's a great question. So I think we, I think the main thing will be the main thing. So the payer and TPA space is a majority of our revenue. And PSave is 85-ish percent of our business. We expect it to be, you know, approximately two-thirds of our business in those markets. are where we're actually winning white space and even net new logos. And so the core business affixed to the payer and TPA space, we like the prospects and the opportunities. When you think about providers, we recently signed a top three health system. The provider opportunity is not just a U.S. opportunity, it's a global opportunity. And so we're looking at ways to get more sticky with new market verticals. We started with a couple of pilot clients. So we have two large clients, one in the UAE and then one in the U.S., and it's a perfect ventricle for us to learn and build additional case studies to more broadly serve the provider markets. We would expect, you know, meaningful revenue contribution as those mature. And then finally, when we think about the public sector, our core products fit very well, state, local, and federal agency bids like the World Trade Center business that we want. We expect, again, these to augment and help us elevate our growth story in the medium to long term, where we're managing against ultimately our rule of 70 financial algorithm through the 2030 timeframe. right okay and you and as far as the goals you had laid out revenue goals kind of the one 128 and the one three yeah one got 30 yep so at least at least a billion one of revenue uh through 2028 at 675 million of ebita and then at least 1.3 billion on at least 800 million of ebita by 2030. the important thing to note is our business um gets a little bit more growth in scale it starts to spit out free cash flow. And so the investments that we've purposefully made over the last year and change that we'll continue to make in our technology modernization efforts, we think make our business much more capital efficient over time. And when you look at kind of the midpoint 28, it's kind of like a mid single digit levered free cash flow yield. When we get to 2030, we're spitting out a couple hundred million dollars a year of levered free cash flow. And it's a mid teen free cash flow yield, which is a very attractive business.

Okay, great. And to that And then can you speak to just the ACV?

And obviously, you have some pretty, I would argue, big aggressive goals this year, but seem to be tracking well against those goals. Our CEO set a very aggressive target for our sales team and our team delivered in Q1. So when I look at our Q4 exiting 2025, we had a $23.1 million bookings quarter. It was our largest bookings quarter. We turned around and delivered 44.1 million bookings. The important thing to highlight is that the mix of what is organic, so what we're selling into the current install base versus what's net new, is about a 70-30 mix. And when you look at the last five or six quarters, we've added 36 net new logos. And so the market is mature, yes. Our ability to penetrate these markets and build substantial funnel and pipeline coverage is something that, as we're talking to both new and existing investors, we think the message on acv bookings and the conversion to revenue against our financial algorithm is something we'll continue to provide additional color as we go forward and you're saying that transition six six six to twelve about a six to twelve months depending on the type of booking correct and within those opportunities the does how much does the public market you know the the world trade center contract how how much of an opportunity is that kind of a one-off because that's clearly the unique vertical from what we've seen yeah so that that deal was in partnership with gdit they were the prime on the bid from the cdc and that um that business alone was about a five million dollar acb booking for us and so we are the primary uh network for world trade center uh first responders and survivors i think it's about 130 or 40 000 members that business was sold as a pepm business and that is our core business that is our primary network our network business is about a 200 million dollar business and as state local and federal opportunities come up whether they're in claims intelligence whether they're in our network or payment revenue integrity or in some of our new technology domains you have to kind of build a funnel plan a flag and start to show progress and i think q1 was meaningful progress in both the provider space and public sector we expect to continue to chase sizable opportunities like that in the future how would you weigh those who's the provider opportunity the better opportunity the public opportunity is it or is that a fair question yeah i think it's probably early it's probably early to tell so as we're kind of finalizing our provider strategy which we'll share it at some point in the future um the public sector opportunities you know from my past life you won one big deal and it's like a multi-billion dollar deal and so um i think in large i wouldn't be surprised if they were rateable. I think longer term, a stable recurring revenue provider business is a really great space for us to be in because we're trying to embed to be a critical piece of technology infrastructure within the healthcare ecosystem, which is an important role that we play today. And we're looking to continue to expand. And to that end, can you speak your pipeline?

I knew you had talked about a little bit earlier today, touching the pipeline. And I'm Look at yours, how, you know, having followed the company for quite some time, you know, there was a, there was a, obviously there was a core organic business, but be kind of the vertical element of this, the growth opportunity here is, is, is unique to the story, quite frankly. And I'm wondering how you positioned yourself from the sales infrastructure and how you're, you know, what you're seeing relative to what your original expectations.

Yeah, so that's a great question. So over the last 18 months, we've hired a new chief growth officer. I think we hired her a few months after I joined, Tiffany Masenchik. She's built an incredible segment leadership team. So when you look at our payer, our TPA, our provider, our public sector, and then we have an international leader as well. We have end-to-end client management from new logo acquisition all the way through client success. And that kind of vertical alignment was new to the claritive story. When you kind of take a step back, we've been trying to simplify the way we talk about the business. when we roll out of bed every year our gross revenue retention is 93 to 95 percent having you know technology background that is a really good sticky business i think for us on the pipeline the organic opportunities we've created you know almost two and a half to three times as much funnel so when you look at our coverage now we put a hundred million dollar bookings target out there 80 to 100 i know that i know i can acquire that funnel because i have a few hundred million dollars as a pipeline, you win 25 to 40% of your deals and the math actually becomes pretty easy over time.

And to that end, how does, another question I get is, can you speak to AI? I mean, kind of jumping around here a little bit of time, but AI is always the question, the landscape, the discussion. How does, can you speak to your value proposition? What, your relationship with your clients, What, I guess, does that landscape, is it creating, is it concern about penetration of AI, you know, and does that, does your client relation, your value proposition offset that?

Yeah, that's a great question. It evolves every day, but I think we covered this a little bit at Investor Day, and what we would say is it starts with trust. We have deep client relationships over multiple decades, and we have a near-perfect say-do ratio. We have large customers who trust us, and we've embedded these relationships over the course of multiple decades. Two is we have data rights and data access to large organizations. That is a high hurdle when you're dealing with confidential and private information with PHI and PII. You can't just go into a large organization and get access to all their data. And so that's kind of point number two. And then point number three is we are embedded inside of the workflows with highly customizable applications, and that when you put those three things together, our customers trust us, we have data rights, and we're embedded inside of workflows with massive customizations. the value proposition we think is an offensive opportunity from ai because as a for instance um we generated 53 of our code to make our products work better using ai and q1 and so we're thinking about ai in terms of practical use cases how do we better serve our clients and when you think about the amount of you know unlevered free cash flow we deliver it allows us to invest in those things that are going to meaningfully drive positive revenue positive client retention or in some cases help us take costs out of the business what and to that is essentially what are you hearing from what are your client what are your clients saying to you like what they in terms of how they want to facilitate that transition yeah i would i would point to a um a product like our nsa product right we are the market leader we think in nsa we are looking at automating the nsa process further to make it a much better experience for our client through a service cloud through real-time insights and analytics and of course by continuing to enjoy a pretty substantial win rate versus our competition and so I think the proof is when we do business reviews with our large clients we'll bring our chief AI officer we'll bring software engineers we'll bring our technology organization we'll even bring members of the leadership team and we'll very clearly explain what the strategy is and how it benefits our clients and i think nsa is a is a fantastic example for us and the the clients will come to you and be looking for a solution around nsa is that's part of your you bring that value proposition yeah absolutely and i think the big psychological change for us maybe relating back to the puts and takes we are a product and technology organization we have a published roadmap so now i can go on a quarterly basis i can go to my customers and say hey do you know in q3 of 26 i'm releasing this thing for nsa and you should we should be planning for it so when you think about activating a sales motion building a funnel and then connecting to that product technology and innovation investment it's a much better and much more organic conversation with our client because they trust us and we have dedicated relationships and sales reps devoted to them okay thank you all right fast and furious thank you guys thanks for joining us