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Financial report summary
?Risks
- Our success is dependent on retaining our key customers, as well as the success of those customers, as we depend on a core group of customers for a significant portion of our revenues.
- We may be unable to achieve some or all of the operational, growth and other benefits that we expect to realize through our strategic plans, including our growth strategy.
- We may not successfully enter new lines of business, launch new products or broaden the scope of our services. Conversely, entering new lines of business, launching new products and broadening the scope of our services may result in expenditures we cannot recoup, divert management's attention or otherwise strain our business.
- If we are unable to identify, complete and successfully integrate acquisitions, including BST, our ability to grow our business may be limited and our business, financial position and results of operations may be adversely impacted.
- If we do not continue to attract, motivate and retain members of our senior management team and qualified employees, or if we are unable to maintain sufficient qualified personnel, we may not be able to support our operations.
- The market for our products and services is fragmented and competitive and we may not be able to maintain our competitive position in the market.
- If competition or pricing pressures increase, our growth and profits may decline.
- Changes in the healthcare industry could adversely affect us.
- Evolving industry standards and rapid technological changes could result in reduced demand for our products and services.
- We operate in a litigious environment which may adversely affect our financial results.
- We depend on our providers and our PPO networks to maintain the profitability of our network-based and analytics-based services, as well as the future expansion of our operations.
- Our PPO networks may experience decreases in discounts from providers, thereby adversely affecting our competitive position and revenue.
- Pressure from healthcare providers, and/or changes in state laws, regarding access to preferred provider networks may adversely affect our profitability and ability to expand our operations.
- The inability of our customers to pay for our products and services could decrease our revenue.
- Security breaches, loss of data and other cyber incidents or disruptions could compromise sensitive business or patient information and negatively impact our business and reputation, harm both us and our customers and create liability.
- We depend on uninterrupted computer access for our customers and the reliable operation of our information technology systems; any prolonged delays due to data interruptions or revocation of our software licenses could adversely affect our ability to operate our business and cause our customers to seek alternative service providers.
- Failure to adequately protect the confidentiality of our trade secrets, know-how, proprietary applications, business processes and other proprietary information could adversely affect the value of our technology and products.
- We employ third-party and open source licensed software for use in our business, and the inability to maintain these licenses, errors in the software we license or the terms of open source licenses could result in increased costs, or reduced service levels, which would adversely affect our business.
- If our ability to expand our network and technology infrastructure is constrained, we could lose customers and that loss could adversely affect our operating results.
- We may be sued by third parties for alleged infringement of their proprietary rights.
- If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
- Changes in accounting principles may negatively affect our results of operations.
- We may need to recognize impairment charges related to goodwill, identified intangible assets and fixed assets.
- Changes in laws, regulations or rules, or a failure to comply with any laws, regulations or rules, may adversely affect our business, investments and results of operations.
- Changes in tax may negatively affect our results of operations.
- Inflation could adversely affect our financial results.
- There is a rapidly evolving awareness and focus from stakeholders with respect to environmental, social and governance practices, which could affect our business.
- Our business is subject to evolving corporate governance and public disclosure regulations and expectations, including with respect to environmental, social and governance matters that could expose us to numerous risks.
- Increased focus on sustainability issues, including those related to climate change, may adversely affect our business and financial results and damage our reputation.
- We operate in an industry that is subject to extensive federal, state and local regulation. Changes in existing healthcare laws and regulatory interpretations on a state or federal level may adversely affect us.
- New federal and state laws and regulations could: force us to change the conduct of our business or operations; affect our ability to expand our operations into other geographic markets; increase costs or delay or prevent the introduction of new or enhanced solutions and products; or impair the function or value of our existing solutions and products, which could have a material adverse effect on our business, financial condition and results of operations.
- Our use and disclosure of certain types of protected information, in particular individually identifiable information and health information, is subject to federal and state privacy and security regulations, and our failure to comply with those regulations or adequately secure the information we hold could result in significant liability or reputational harm.
- Heightened enforcement activity by federal and state agencies may increase our potential exposure to damaging lawsuits, investigations and other enforcement actions.
- We may not be able to generate sufficient cash to service all of our indebtedness, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.
- Our debt agreements contain restrictions that limit our flexibility in operating our business.
- Despite our current leverage, we and our subsidiaries may still be able to incur substantially more indebtedness, including secured indebtedness. This could further exacerbate the risks that we and our subsidiaries face.
- A lowering or withdrawal of the ratings assigned to our debt instruments by rating agencies may increase our future borrowing costs and reduce our access to capital.
- Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly notwithstanding our use of interest rate swaps.
- H&F and the Sponsor beneficially own a significant equity interest in us and their interests may conflict with us or other shareholders' interests.
- We have previously been, and may in the future be, subject to securities or other stockholder litigation, which is expensive and could divert management attention.
- Our charter designates a state court within the State of Delaware, to the fullest extent permitted by law, as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit the
- ability of our stockholders to obtain a favorable judicial forum for disputes with us or with our directors, officers or employees and may discourage stockholders from bringing such claims.
- Provisions in our organizational documents, debt agreements and instruments and stockholders agreement could delay or prevent a change of control.
- We currently do not intend to declare dividends on our common stock in the foreseeable future and, as a result, your only opportunity to achieve a return on your investment is if the price of our common stock appreciates.
- Our Private Placement Warrants and Unvested Founder Shares are accounted for as derivative liabilities and changes in fair value for each period are reported in earnings, which may have an adverse effect on the market price of our Class A common stock.
Management Discussion
- Revenues decreased $118.2 million, or 10.9%, for the year ended December 31, 2023, as compared to the year ended December 31, 2022. This decrease in revenues was due to decreases in Network-Based Services revenues of $21.9 million, Analytics-Based Services revenues of $88.0 million, and Payment and Revenue Integrity Services of $8.3 million.
- Network-Based Services revenues decreased $21.9 million, or 8.9%, in the year ended December 31, 2023, as compared to the year ended December 31, 2022. This decrease in revenues was primarily related to lower identified potential medical cost savings on PSAV claims received from customers and contractual rate changes with customers contributing to decreases in Network-Based Services PSAV revenues of $24.8 million, partially offset by increases in PEPM and other network revenues of $2.9 million.
- Analytics-Based Services revenues decreased $88.0 million, or 12.3%, for the year ended December 31, 2023, as compared to the year ended December 31, 2022. This decrease in revenues was primarily due to contractual rate changes with customers contributing to decreases in Analytics-Based Services PSAV revenues of $99.9 million, partially offset by increases in Analytics-Based Services PEPM and other revenues of $12.0 million including revenues of $9.5 million from the acquisition of BST.