Welcome to today's MultiPlan Corporation Fourth Quarter 2021 Earnings Conference Call. My name is Jordan, and I'll be coordinating your call today. If you'd like to register a question, you may do so by pressing star, followed by one on your telephone keypad. I'm now gonna hand over to Shawna Gasik, AVP of Investor Relations, to begin. Shawna, please go ahead.
Thank you, Jordan. Good morning, and welcome to MultiPlan's fourth quarter 2021 earnings call. Joining me today is Dale White, Chief Executive Officer, and Jim Head, Chief Financial Officer. The call is being webcast and can be accessed through the Investor Relations section of our website at www.multiplan.com. During our call, we will refer to the supplemental slide deck that is available on the Investor Relations portion of our website, along with the fourth quarter 2021 earnings press release issued earlier this morning. Before we begin, I'd like to remind you that our remarks and responses to questions may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
Actual results may differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with our business, which are discussed in the Risk Factors included in our annual report on Form 10-K for the fiscal year ended December 31, 2020, and our quarterly report on Form 10-Q for the fiscal quarter ended September 30, 2021, and other documents filed or to be filed with the SEC. Any such forward-looking statements represent management's expectations, beliefs, and forecasts based on assumptions and information available as of the date of this call. While we may elect to update such forward-looking statements at some point in the future, please note that we assume no obligation to do so. Certain financial measures we will discuss on this call are non-GAAP financial measures.
We believe that providing these measures help investors gain a better and more complete understanding of our financial results and is consistent with how management views our financial results. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measure to the extent available without unreasonable effort is available in the earnings press release and in the slides included in the Investor Relations portion of our company's website. I would now like to turn the call over to our Chief Executive Officer, Dale White. Dale?
Shawna, thank you. Good morning, everyone, and welcome to our fourth quarter 2021 earnings call. Before we get into the business at hand, on behalf of my 2,400 colleagues at MultiPlan, I'd like to extend my congratulations and gratitude to Mark Tabak. In accordance with the company's previously announced executive transition plan, at the end of January, Mark moved to Chairman of the Board, and I have moved into the Chief Executive role. Mark's vision, leadership, and untiring dedication has had immeasurable impact on the MultiPlan's success. On a personal level, it has been my distinct privilege to work under Mark's leadership for the past 18 years. I look forward to working in partnership with him as he settles into the role of Chairman.
I would also like to extend my sincere appreciation to our former CFO, Dave Redmond, who retired at the end of last year, and welcome our new CFO, Jim Head, who is on the call with me today. From the moment Dave assumed the role of CFO in 2010, he was a tremendous steward of the company's financial position and helped us steer MultiPlan's growth. He instills a mindset of cost control deep into MultiPlan's DNA, perpetuating our capacity to invest in the company's operating and intellectual capital and to seize on entrepreneurial opportunities. We wish Dave all the best in retirement. Jim Head assumed the CFO post in November after a 30-year career in investment banking. He's a proven leader with the right combination of financial expertise and a firm grasp of the unique dynamics in the healthcare industry.
He has hit the ground running, and I'm confident that he will build on the incredible legacy that Dave left behind. Okay, moving on to the business at hand. The fourth quarter of 2021 was a capstone of one of the most successful years in this company's history. A year in which, despite numerous challenges in the external environment, we set new records and savings for our customers and in revenues and Adjusted EBITDA for the company. Let me start by saying that we are very proud of the critical role we play in the healthcare ecosystem, generating savings for payers, employers, and consumers. In 2021 alone, we identified nearly $22 billion in potential savings on over $110 billion of medical charges processed.
Our operating assets and platform, deep domain knowledge, our independence, extensive connectivity, and customizable capabilities reinforce our unique value in the marketplace and offer significant competitive advantages and established a foundation that has enabled us to achieve our strong results. Our fourth quarter results yet again illustrate our strong momentum, marking a sixth consecutive quarter of solid performance as a public company. Revenues were $298.3 million, up 3.5% sequentially and up nearly 17% from the prior year quarter. Adjusted EBITDA was $223.6 million, up 2.4% sequentially and nearly 15% from the prior year quarter.
Both revenues and Adjusted EBITDA for the quarter were the highest in our company's history and at the top end of the guidance ranges we provided last November. For full year 2021, we grew revenues over 19% and we grew Adjusted EBITDA over 18%. If you control for acquisitions, the declining impact of COVID-19 and public company costs, our organic growth was over 7% for revenues and over 11% for Adjusted EBITDA. We delivered a best in class 75% Adjusted EBITDA margin, reflecting the scale of our business and our relentless focus on operational excellence.
We generated over $400 million of operating cash flow in 2021, and our levered free cash flow, fully burdened by taxes and interest expense, was over $320 million, bringing the three-year total to roughly $845 million and underscoring our strong capital generation and the financial flexibility we have to invest in and grow the business. We achieve these strong results by single-mindedly pursuing our vision to promote affordability, efficiency, and fairness in healthcare for all stakeholders in the U.S. healthcare system. In 2021, we helped our payer customers serve more than 45 million unique plan members and more than 100,000 employers, representing a wide range of plan sponsors using MultiPlan's comprehensive suite of services based on their preferences for health plan design.
Our services helped over 25 million unique patients, their health plan sponsors, and the payers that serve them saved nearly $22 billion on over 175 million healthcare claims. As shown on page five of our supplemental deck, we identified savings for these stakeholders by over $3 billion in 2021 or 17%. Excluding savings contributed by the acquisition of HST, we grew savings by $1.5 billion or 9% by capturing additional claim volume and by more efficiently leveraging our services to deliver high rates of identified savings per dollar of billed charges. We were able to accomplish this even as COVID-19 pandemic continued to weigh on our claim mix by reducing volumes of higher charge claims for medical services like elective surgeries.
Growth in identified savings is key to how we think about measuring the performance of our business because it represents the value we deliver to our customers, shows the value of enhancing the platform, and drives our revenues. Our results are the direct consequence of providing solutions that delivered value to all stakeholders in a very complex U.S. healthcare system. MultiPlan provides an independent means to adjudicating fair reimbursements between the providers of health services and the payers, plan sponsors, and consumers. We do this by seeking to identify rates that are acceptable to all stakeholders with solutions that contractually preclude or significantly diminish the potential for health plan members to suffer the financial hardship of receiving a balanced bill. In fact, because of our independence and our unique relationships with over 1.2 million providers, our services have always been a solution to mitigate the balanced bill problem.
We also play a critical role in helping contain the rapid and disproportionate growth of U.S. medical spend, of which roughly a third, or $1.2 trillion, is attributed to some form of waste or abuse that leads to overcharges. We do this by ensuring billing and payment accuracy with solutions that identify and remove improper and unnecessary charges before and after claims are paid, or that identify and help restore and preserve underpaid premium dollars. Let me turn now to some of the business highlights for 2021. To say we had a busy year is putting it mildly. We grew the business. We integrated two acquisitions. We issued our single biggest software release to introduce new services to support our payers' compliance with the No Surprises Act.
In our Analytics-Based Services category, we grew identified savings by over 15% versus 2020, not counting the savings delivered by the Value-Driven Health Plan services of HST, which we acquired in late 2020. Some notable highlights include. Starting in April, we implemented a program to bundle our prepayment integrity edits into the Data iSight pricing methodology to improve payment accuracy and savings, increasing savings in 2021 by nearly $15 million on behalf of over 80 customers. Over the year, we more than doubled the savings lift from our operational initiatives to improve negotiation performance, generating over $265 million in new savings for our customers. We had significant customer wins. For example, a plan administrator added 1 million new health plan members to its Data iSight driven cost management program.
A large payer expanded its use of Data iSight, and a number of regional health plans added or expanded Data iSight or other non-contracted pricing methodologies. We are very pleased with the adoption of our Value-Driven Health Plan services, which we believe represent the future of reference-based pricing. In 2021, we added 132 new employers and other health plan sponsors that together added over 163,000 new members to the program, bringing the total number of members to 1 million. The majority of these new plans, about 90%, are using the version of the program that integrates our professional provider network. We're the only reference-based pricing company that also owns a national independent provider network, and that network is accredited for credentialing quality by the National Committee for Quality Assurance.
We believe the combination of our network, our pricing technology, our engagement tools deliver, we believe, the best reference-based pricing program in the market by a long shot. In our Network-Based Services category, we grew identified savings in 2021 by about 6% through initiatives such as a regional Blue Cross plan added network access to improve cost management inside its service area. A new property and casualty bill review company added access to our network for medical bills stemming from injuries on the job. We added another two property and casualty payers in 2021, so expect to see network usage increase in this market segment. Not included in that 6% savings growth are a number of other 2021 network initiatives worthy of note.
On the heels of last year's successful completion of a custom Medicare Advantage network build, we were awarded three build projects for 2023 enrollment comprising as many as 100 counties in nine states. We deployed proprietary network pricing for a customer in support of its compliance with state surprise billing regulations in two states. Within our Payment and Revenue Integrity Services category, we grew identified savings by 9% over 2020, again, not counting the services added with the acquisition in early 2021 of Discovery Health Partners. This includes a 40% increase in savings identified through our secondary editing service. We had significant new implementations for this service, which is particularly suited to a payer's in-network claims.
In fact, we have two additional in-network editing implementations planned for this year with a large customer, reflecting our ability to deepen our penetration in this important target market segment. We also had a number of significant client wins within our new post-Payment and Revenue Integrity services. We were awarded expansion data mining business with an existing top 10 customer. We sold and implemented data mining with a national payer and are now piloting a custom data mining expansion program for another payer. We implemented pre- and post-Payment Integrity Services for a Blue Cross plan with a total contract value of about $5 million. We added post-payment and/or revenue integrity services with a number of other regional health plans, notably a regional health plan implementing coordination and benefits business expected to deliver $1 million in revenues over three years.
Of course, we launched a new end-to-end service and separate components to meet our customers' varying approaches and needs in complying with the No Surprises Act, which went into effect January 1 of this year. As we've mentioned previously, clients have relied heavily on us to help guide them through the complexities introduced by this new legislation, and we spent a great deal of this year, last year, deep in the trenches helping our customers identify strategies and implement operational solutions to comply with the new rules. As of today, we have completed or are in process of implementing 94 NSA programs and have over 60 customer opportunities in the sales pipeline. With the regulation now live and the operational lift in both the customer environments and our platform well underway, the No Surprises Act dust has begun to settle.
To date, our larger customers have implemented their compliance approaches, and based on our current 2022 client commitments, we estimate up to a 2% net headwind to identified savings and revenues related to the NSA. The majority of that relates to just a few programs with customers who, for various reasons, have opted for different approaches to fulfill their compliance to the regulation. We believe there is potential for some of these customers to reconsider their decisions as the year progresses, in which event we would recoup those revenues. Stepping back to the big picture, based on client adoption thus far, we are confident that the NSA will not significantly impact our claim volumes, our pay-for-performance fee structure, or our calculation of identified savings. Before I turn it over to Jim, there are a couple of other topics to cover off.
First, we have received questions from investors about the status of the stockholder litigation brought against us and the defendants affiliated with our major investor, Churchill Capital. While we generally do not comment on litigation and are no longer a party to the case, we want to emphasize that we continue to believe this case is completely without merit and should be dismissed, and we will continue to work with Churchill and the other defendants to present a vigorous defense against these misleading claims. Second, I would like to acknowledge our 2,400 MultiPlan colleagues whose dedication and hard work enable us to maintain our highest levels of customer service and operational excellence. They deserve the credit for delivering yet another year of great results. I'd like to hand the call over to Jim. Jim will discuss our results and provide our outlook for 2022. Jim?
Thanks, Dale, and good morning, everyone. I'm excited to be part of the MultiPlan team and look forward to meeting and working with the investor community. Today I'll be updating you on a successful year for the company and our outlook for 2022. As Dale mentioned, Q4 2021 was an outstanding quarter for MultiPlan, with exceptional revenues and Adjusted EBITDA. As shown on page six of the supplemental deck, Q4 revenue of $298.3 million was the highest ever quarter in MultiPlan's history, increasing 16.8% over Q4 2020, and increasing 3.5% from Q3 2021. Organic revenue growth remains strong.
As shown on page seven of the supplemental deck, excluding the revenue contributions from our acquisitions of HST and Discovery, and normalizing for the decline in the impact of the COVID-19 pandemic during the quarter, revenues in Q4 2021 were up approximately $24 million or nearly 8.9% over Q4 2020, and up about $6 million or 2.2% sequentially. Our total revenues for the full year 2021 were $1.176 billion, up 19.2% over 2020, and our highest annual revenues ever. As shown on page eight of the supplemental deck, in 2021 we experienced growth across all our service lines, with Analytics-Based Services and Payment and Revenue Integrity Services each growing in excess of 25% over 2020, and Network-Based Services growing a more modest 2.7%.
As detailed on page nine of the supplemental deck, we estimate the COVID-related revenue impact in Q4 2021 was approximately $5 million-$7 million, down from an estimated $8 million-$10 million in Q3 2021, and approximately half of the estimated COVID-related revenue impact of Q4 2020. For full year 2021, the COVID-related revenue impact was $40 million-$50 million. Turning to expenses, fourth quarter Adjusted EBITDA expenses were $74.7 million. The increase of $14.5 million over Q4 2020 is predominantly attributable to the addition of operating expenses of HST and Discovery, which combined were approximately $10.2 million in Q4 2021, as well as increased support function costs associated with being a public company. As we have indicated, our annual run rate of public company cost is approximately $20 million.
Our Adjusted EBITDA, total Adjusted EBITDA expenses for the year were $279.3 million. The combination of increased revenues and controlled expenses resulted in Adjusted EBITDA of $223.6 million in Q4 2021, our highest quarter in the history of the company. Q4 2021 Adjusted EBITDA grew 14.6% from $195.1 million in Q4 2020, and 2.4% from $218.4 million in Q3 2021. We estimate the COVID-related impact on Adjusted EBITDA in the fourth quarter was approximately $4 million-$6 million. Full- year Adjusted EBITDA of $838.3 million grew 18.7% and included an estimated $32 million-$40 million of COVID-related impact.
As shown on page seven, excluding the Adjusted EBITDA contributions from HST and Discovery, and normalizing for the impact of COVID-19 pandemic during the quarter, Adjusted EBITDA for Q4 2021 was up 9.3% over Q4 2020, and up 1.3% from Q3 2021. On that same basis, Adjusted EBITDA was up 11.1% for the year. Turning to our margins, Adjusted EBITDA margin was 75.0% in Q4 2021 versus 76.4% in Q4 2020 and 75.8% in Q3 2021, reflecting the revenue and expense dynamics discussed earlier. Our full year 2021 Adjusted EBITDA margin was also 75.0%, down 30 basis points from 75.3% for full- year 2020.
As Dale mentioned, we continue to generate significant operating cash flow, which totaled approximately $405 million for full year 2021, and our full year 2021 [levered] free cash flow was approximately $320 million. Moving on to our 2022 outlook. On page 13 of the supplemental deck, I'd like to frame our guidance by highlighting some of the key assumptions for our underlying business trends in the operating environment. Starting with the revenue side, our expectations include strong underlying revenue growth driven by net growth in our core services and our growth initiatives. We expect our underlying momentum to help us grow through some modest revenue headwinds this year. Specifically, we expect the effects of the COVID-19 pandemic on our claim mix and revenues to persist, though moderated from those in 2021.
It is difficult to predict how COVID-related pressures might evolve over the remainder of the year, given the December and January surge in Omicron cases, which remain elevated today in certain geographies. Factoring in a six to eight-week average lag between the date of medical service and our receipt of a claim, and the potential delay in the uptick of medical utilization like elective surgeries, we believe COVID-related revenue effects are likely to increase in the first quarter of 2022 relative to the fourth quarter of 2021, and those effects could extend into the second quarter.
Page nine of our supplemental deck details some of the effects of the Omicron case surge on our claims mix through mid-January. In addition, as Dale mentioned earlier, we also expect a modest net revenue headwind up to 2% related to the NSA, as a handful of customers have decided to pursue other options for implementing and operationalizing the new rules for this subset of their claims. With these known losses offset by some new NSA related wins, our estimate of up to 2% is a conservative view. As Dale mentioned earlier, we see potential for some recoupment of this headwind later in 2022. I would further add that all of these clients continue to use MultiPlan solutions for out-of-network claims not in the scope of the NSA, which of course make up the vast majority of our total out-of-network claims.
On the expense side, we expect our Adjusted EBITDA margins to remain best in class as we continue the highly disciplined focus on cost control that has been a signature of MultiPlan's culture. At the same time, we expect margins to be slightly lower in 2022, driven by three primary factors. First, we expect some structural cost pressures largely related to inflationary dynamics. Second, we anticipate investments in our platform to customize and enhance our solutions for the benefit of our customers and to support our NSA related solutions. Additionally, we are focused on supporting our growth initiatives through targeted investments in our products and capabilities. These investments are targeted in large part to support new contracts in our Payment Integrity segment and Value-Driven Health Plan.
As shown on page 14 of the supplemental deck, based on the confluence of expected revenue and cost drivers, we are guiding to a full- year 2022 revenue between $1.16 billion-$2 billion, and full- year Adjusted EBITDA between $850 million-$875 million. We also provide the other key components of P&L and cash flow to help you calculate our anticipated free cash flow generation for 2022. On page 15 of the supplemental deck, we bridge our revenue guidance. Overall, we anticipate 4%-7% revenue growth in 2022, but more specifically, we expect approximately 4%-6% net growth related to our core services based on a bottom-up client-by-client approach and incorporating recent utilization trends.
This includes both underlying growth as we enhance our services and some abatement of COVID impacts in 2022 relative to 2021, even as we expect COVID to continue to be a net drag of approximately $25 million-$30 million this year. We further expect growth initiatives to contribute approximately 2%-4% to our revenue growth as we extend into contiguous client segments, including the TPA, broker, and consultant channels with our Value-Driven Health Plan services, and expand our activity in-network and Medicare Advantage claims with our post-pay payment integrity and revenue integrity offerings. The combination of growth in core services and growth initiatives imply approximately 6%-9% underlying growth in revenues, partially offset by the aforementioned up to 2% net headwind related to the NSA.
To put that in dollars, we think that the net NSA headwind will be roughly $10 million-$20 million. On page 16 of the supplemental deck, we discuss our expense and margin expectations for 2022. From a starting point of 75.0% Adjusted EBITDA margin for full year 2021, we expect roughly 200 basis points of Adjusted EBITDA margin compression in 2022, driven by the three primary factors I mentioned earlier. First, we expect about 75 basis points of compression related to structural costs in 2022, which includes inflationary pressures on wages and other external spend like insurance premiums. Second, activity levels and business momentum in the second half of 2021 was very strong, and we need to make platform investments in 2022 to support that business.
That bucket is expected to drive about 75 basis points of Adjusted EBITDA margin compression in 2022, among other things, includes investments in IT and operations to support customizations for clients, as well as deliver our surprise bill solutions. Finally, we are focused on supporting revenue growth through our Extend strategy and are making investments in our prepayment, post-payment, and revenue integrity offerings, and in our Value-Driven Health Plan services to support client contracts. As noted earlier, we expect our recently acquired businesses to contribute meaningfully to our revenue growth in 2022, and these investments are aimed at supporting this growth, as well as driving the products and solutions of those businesses to scale over the long term. We expect this investment spending to drive about 50 basis points of Adjusted EBITDA margin compression in 2022.
The combination of our Adjusted EBITDA revenue and Adjusted EBITDA guidance ranges imply an Adjusted EBITDA margin of approximately 73% for full year 2022, still best in class by any benchmark. I will also note that we will continue to maintain our cost discipline as a key tenet of our management philosophy. At the same time, when we see attractive growth opportunities, we will invest in the business to pursue them. Turning to other guidance items, we expect interest expense of $280 million-$290 million, intangible amortization of $335 million-$345 million, CapEx of $90 million-$100 million, and depreciation of $65 million-$70 million. We expect a tax rate between 25% and 28%.
Finally, we expect operating cash flow to be between $380 million and $420 million. As outlined on page 17 of the supplemental deck and in the press release this morning for Q1 2022. We anticipate revenues of $280 million-$295 million and Adjusted EBITDA of $210 million-$220 million. I would note our Q1 2022 guidance incorporates our view that COVID effects could be weighted more to the front end of the year given the surge in Omicron. I would like to finish up my remarks by touching on our capital priorities, which are detailed on slide 18 of the supplemental deck. One of the things that differentiates MultiPlan is its phenomenal free cash flow generation.
Over the last three years, we've generated roughly $845 million in free cash flow, including $320 million in 2021. Our 2021 free cash flow fully burdened by interest expense, taxes, and capital expenditures was 29% of our 2021 revenues, which is an impressive attribute of our business and provides significant financial flexibility. How we allocate that capital we generate is a key area of focus for me as the new CFO of MultiPlan. Now, as I've indicated in the past, our highest priority is to invest in the business and to drive organic growth and long-term value. To that end, we've invested in the platform as part of our enhanced strategy and will continue to do so as we believe it has improved the savings performance of the platform and made us more valuable to customers.
Next, in terms of priority is to pursue growth through strategically and financially attractive M&A, like we accomplished with our HST and Discovery acquisitions. Our next priority is reducing our leverage. We have the flexibility to do that through a combination of EBITDA growth and debt reduction, even as we focus on our first two capital priorities. Finally, share buybacks. Generally, that is a lower priority for us in the near term, although we will continue to look at it opportunistically. Finally, as to how we allocate between these priorities relative to our overall capital generation, we ask that you measure us on a year-to-year basis versus a quarter-to-quarter basis. Thanks very much. Again, I look forward to working with all of you in the investor community. With that, I'd like to turn it over to Dale.
Thanks, Jim. Operator, would you kindly open it up for Q&A?
Of course. As a reminder, if you'd like to register a question, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your phone is unmuted locally. Our first question comes from Joshua Raskin of Nephron Research. Joshua, the line is yours.
Thanks. Good morning, guys. My question just on helping understand the assumptions that went into that 200 basis point headwind from existing claims activity, et cetera. You think that, you know, the totality of the rest of your business is unchanged. Is that the way to think about it?
Yes, it is, Josh. It's Dale. Yes, it is. Look, when we talk about the 2%, right, it includes known attrition, it includes new wins, and honestly, it, you know, some visibility around smaller customers that are in our pipeline but haven't yet made a decision.
Okay.
That's right when you think about it.
It's, you know, six to eight-week claims. Like, so it's not like you've got any data points yet, right? This is just based on sort of client activity to date.
Yeah. You're absolutely right. We're 45 days into the new legislation, and we're only starting to see claims with dates of service on or after the first of the year.
Yeah. Gotcha. Then can you talk just broadly expectations? I know you talk about your customer concentration and your filings, so I'm sure we'll see it in the 10-K. As you move into 2022, the totality of your top 10 payer contracts, any material changes to? You know, again, I don't want. I know you don't give customer specific, but in the, in your top 10 payers, any major change, any material change in that group?
No. Josh, this is Jim. We will be filing our 10-K and, as typical, we'll give you visibility on that. I think we can tell you there's no material changes in that composition.
Okay. I meant more into 2022.
Yeah. We feel comfortable with that statement as well.
Gotcha. Okay. I'm sorry for one last one. The 200 basis points of margin compression in 2022, you know, 75 basis points is coming from, you know, what you're calling structural cost increases, and then the other, another 75 from investments to support growth initiatives. I would assume those are pretty. You know, those are buckets that are kinda every year, right? So that 150 basis points is sort of incremental, maybe $17 million-$18 million above and beyond the growth that you typically see. That just seems as relatively large. Is it just, you know, wage inflation is a lot worse? Is it, you know, the integration of the new products or, you know, new things that should. How do we think about that?
You know, I'm just thinking longer term, right, in terms of the next couple of years. Should we be thinking about margin pressures going forward as well?
It's a good question, Josh. I think, you know, the starting point is our best in class margins, which, you know, from the outside coming in is still pretty amazing to me. So we're gonna be on the podium every year in this regard, and we don't see that changing dramatically. We have seen some structural cost increases, and it's hard to hide when your expenses are 25%, you know. It's personnel, and it's 25% of your revenues. We will see a little bit of that this year. The investments in the platform this year are a little bit of catch up from last year.
I'm not so sure we're going to, you know, we're gonna see that going forward. Last but not least, the investments to support the growth initiatives, it's a little bit of a mismatch as we ramp up some client contracts and, you know, some of these have more labor intensity to them in the Payment Integrity and Subrogation arenas. We see a little bit of expense pressure there. I don't view these as a step down that we anticipate every year. We may see, you know, we may see a drift downwards by basis points, not percentage points over time by a mix, but we don't see this as a long-term trend.
Okay, perfect.
Our next question comes from Daniel Grosslight of Citi. Daniel, please go ahead.
Hi guys. Thanks for taking the question and, congrats on a strong quarter, and, congrats Dale on the promotion, and Jim on joining the team. You know, the COVID impact for 2022 is a bit higher than we anticipated if you listen to the managed care organizations or provider anticipating the return of non-COVID utilization this year. Can you just break out a little, in a little more detail where you expect to see the most impact from COVID? It sounds like it's mostly first half weighted. Should we anticipate any COVID impact in the second half of this year? Thanks.
Thanks, Daniel. Listen, this is our crystal ball of today. You know, we exited the fourth quarter, which was, you know, seemingly a pretty good environment with still a little bit of COVID impact, which was largely in our network businesses. A little bit, quite frankly, we still see suppressed, you know, kind of non-COVID activity vis-à-vis where we were in 2019 on, you know, roughly the same, you know, kind of the same store concept. So we still will see that. I will agree with you that we are anticipating a heavier weight in at the end of the first quarter and maybe going into second quarter of this year. So think about the entire year, more front half weighted.
Again, I think we're all gonna have a better sense of where we are probably at the end of the second quarter as to whether or not COVID abates or whether we're, you know, gonna see some persistence. There's just a lag in particular on elective surgeries that's gonna occur, and I think that's the, you know, that's the big question mark for us.
Okay. It again, like last quarter, it's mostly being felt in the networks business and you expect that dynamic to continue into this year?
Said differently, we haven't seen it be removed yet.
Yeah.
And so, um-
Okay.
You know, I think we admit that this is a little bit of crystal ball given the fact that we just don't know where COVID's going. We just see the claims popping up on the Omicron side.
Daniel, you know this. It's we have that six-to-eight- week lag in claims. The claims we've seen now in January and February thus far are really for dates of service back to, you know, where services were provided in November and December. That, as you well know, was the height of the Omicron variant. We're definitely feeling it in the early in Q1.
Yeah. Makes sense. Okay. It sounds like you're making some very good progress in Payment Integrity, and you're investing a lot in that space for 2022. If I just look at the quarter, it was a little bit lighter than we anticipated, down around 7.5% sequentially. Can you break out the reasons for the sequential decline in Payment Integrity and how we should think about the growth in that segment specifically in 2022?
Yeah. Daniel, I would separate 2021 versus 2022. In 2021, we had a little bit of softness in our clinical negotiations in fourth quarter, but not something we think is a long-term issue. What's really going on in the Payment Integrity side is new customer wins and those ramping up, particularly in the second half of 2022. We are starting to get some momentum and a shift in the business in Payment Integrity in 2022, and obviously seeing some good pipeline across those lines of business.
Got it. Okay. One last one for me on the capital deployment slide. You know, you're currently levered around 5.7 x, and it seems like M&A is taking priority over debt, at least in the near term. Were you comfortable operating on a leverage basis? And if you make an acquisition, can you flex up much on your leverage? Thanks.
Yeah. Maybe we can look in the rearview mirror and talk about the balancing act that we achieved because we don't have a target, but I do think we do believe that we need to migrate the leverage ratio down, and we were actually successful doing that in 2021. We took it down a turn despite the fact that we actually, you know, made some acquisitions. Discovery was funded in 2021, HST was funded in 2020. We've been able to use that free cash flow to continue to do acquisitions and using growth to delever. I think the emphasis that I'd like to give, you know, the audience here is.
We are trying to balance growth and deleveraging, but we absolutely understand from the investor community that leverage is an issue, and we're working to migrate that down over time.
Got it. Thanks, guys.
Thanks, Daniel.
Our next question comes from Franklin Jarman with Goldman Sachs. Franklin, please go ahead.
Great. Thanks for taking my questions, guys. I guess just first to follow up on the NSA impact of 0%-2% for the year. How do we think about sort of longer term implications? As you think about your discussions with customers and their implementations, what percent are you sort of, you know, fully complete on? Should we think about any follow-on effects in 2023? Thank you.
Frank, thanks for the question. Look, I think, you know, NSA, we're 45 days into it, and we have a good sense of how our larger customers are approaching compliance with NSA. We're continuing to move forward with our larger customers. As you heard me say, we have over 90 implementations and over 50 implementations in the pipeline. We feel, you know, there's going to be. It's not, you know, our solutions as you think about it, you know, up to 2% that we mentioned, that Jim and I mentioned. It's all.
You know, look, it's known attrition, it's new wins, it's some lack of visibility around our smaller customers that we have yet to make a decision. We think it's a modest step down. It's not a recurring incremental headwind. We don't view our offering at all as a stopgap measure for our customers. We think there'll be persistence, continued persistence, in fact, in the use of our NSA solution for a couple of reasons. We're an independent, and we're independent NSA compliance solution. We have the back-end negotiation, post-pay negotiation and arbitration management capabilities that many of our payers don't possess and will need in the NSA world. This is really complex.
It's a really complex piece of legislation for our payers to implement, and you need the agility and the operational excellence that MultiPlan brings to the equation for a payer to fully comply, and to do this really well. That's what we do and have always done and will continue to do going forward.
Great. Thank you for color. Just to follow up on the balance sheet. You know, as you think about the debt pay down appetite and balance against M&A, you know, this year your bonds have drifted below par. Just curious, as you think about, you know, deploying capital and looking at your bond prices, you know, roughly 10 points below par, how do you think about the appetite to buy back bonds in the open market versus other opportunities for growth?
I'd start with the balancing act that we're talking about, which is, you know, how to deploy capital as between, you know, M&A opportunities and debt reduction. If we're in the debt reduction arena, I do think we will look at all options to optimize that, Frank. I think, you know, in some ways, I don't want to speak to specific tools that we may use, but I think all those tools are available.
Okay, great. Thanks so much, guys. Congrats on the results.
Our next question comes from David Common with JP Morgan. David, the line is yours.
Very good. Thank you. Good morning, all. It's very helpful that you could put a best guess on the NSA impact and also frame it as not a stopgap measure. I had a couple of follow-ons, though. To what extent does the tussle over the mechanics of arbitration affect you? And are you able to give us any more color on, just so even lay people could understand, when you said it was the single biggest software release, I think, what's involved in that to the extent that we might understand it?
Yeah, if our CTO was on the phone today, he would attest to it being the single biggest release and effort that we've ever had, you know, in the history of the company. By that we mean it touched all of our operating platforms. We spent the better part of 12 months going, you know, doing what we needed to do in terms of understanding the legislation, listening to our customers, understanding their needs, wants, and desires as they interpreted and implemented the No Surprises Act.
We're sitting here today, you know, on January first, we were ready and with to implement the act, you know, on behalf of our customers. It touched most of our operating platforms and it was a heavy IT lift. Our again, our agility, our nimbleness, our expertise, our understanding of our customers' needs and the requirements of the law, we were ready and on January first to do it. Sort of the newness of the law, the law was arbitration. That was probably, you know, arbitration services was a new service for the company.
Everything else in terms of, you know, claims, mechanics, repricing of claims, data analytics, post-pay negotiation, those were all things in, you know, that are in our wheelhouse. Those are the things we do every day, and that's why our customers turn to us to help them implement the law. Arbitration management was a new service for us, but we had the benefit of Discovery Health Partners and their years of experience with subrogation. We asked Liz Longo, who is a longtime, long-tenured Discovery executive, to take over that service and be ready and build our arbitration support service on behalf of our customers, and we're ready today.
You know in the event there is a claim that goes through the, you know, that is disputed and we aren't able to negotiate successfully, we're ready if it goes to arbitration and work with our customers.
Okay. If I interpreted this right, it sounds like the great majority of surprise bill claims volume will be staying with you in one way, shape, or form, arbitration, processing, what have you.
Yes.
Thank you.
Mm-hmm.
Our next question comes from Steven Valiquette with Barclays. Steven, please go ahead.
Great. Thanks. Good morning, everybody. So yeah, Dale, you've been with the company for a while, but obviously with the change to the CEO role now official, I guess I'm curious if you're able to share any preliminary thoughts just around any potential strategic changes in product or service offerings or just any other operational expansions or other adjustments that may take place following your transition to the CEO, or should we just assume kinda more of the same for MultiPlan? Just curious to hear your thoughts around that. Thanks.
No, that's a great question. I appreciate it. You're absolutely right. Jim and I, we inherited a very successful company with a 40-year track record of growth, in particular in the last 20 years, you know, since Mark and I were operating partners, you know, at the company. You know, we have been and we will continue to be effective in achieving our mission to deliver affordability, efficiency, and fairness to the U.S. healthcare system. There's not a lot that needs to change as we continue to execute on our enhanced and extend elements of our growth strategy.
We're now more deliberately focusing efforts on the expand element, and we're starting to look out to a longer-term horizon to determine the best way to leverage our data, our extensive data, services, and connectivity to bring new value to the healthcare delivery system.
Okay. All right. Secondly-
I think if I said it, you know, simply said, we're just investing in our growth. We wanna invest in our growth.
Okay. Got it. Speaking of that, you touched on this a little bit, but as far as the operating cash flow, we got a couple inbound questions just on the operating cash flow guidance going down a little bit in 2022 versus 2021 despite the guidance for EBITDA to be up a little bit in 2022. My guess is that's related to the investment spending you alluded to on slide 18. Just looking for more color or just some confirmation around that. Thanks.
In some ways, our guidance on cash flow is pretty consistent with last year, and we had a little bit of a last year's 2021 guidance. It's a little bit softer for two or three reasons. Number one, on one hand, we have more EBITDA, on the other hand, we have more interest expense because of the refinance that was terming it out. We've got a slightly higher burden on the interest expense side. We are taking capital expenditures up a bit, and there's just some working capital and other stuff that is taking that down a little bit. Over the course of the year, we'll have a better sense of how some of those elements will play out.
We were a little bit light on taxes last year with respect to where we thought we'd be in terms of cash taxes. I don't think it's a fundamental change, but you rightly point out we're slightly relative to our EBITDA, we're a little bit below where we might have been for those reasons.
Okay. I also got a couple questions on the 2% headwind around NSA, but I'll just follow up with you guys offline later on that. Thanks.
Sounds good. Thank you.
Our final question comes from Rishi Parekh with Barclays. Rishi, please go ahead.
Hi. Thanks for taking my questions. You know, with the litigation that's going on surrounding the NSA, if there were any changes to the QPA, how does that change your plan offering? Does that 2% headwind, do you feel that headwind will decline if the QPA is not the primary focus or the presumptive default rate? I have a follow-up.
That's a great question. You're right, we're 45 days into the No Surprises Act with two sets of interim regulations. As you know, there's been two lawsuits filed, one by the Texas Medical Association, and I think the other by an emergency room physician group. Since then, I think there's been four additional suits that have been filed by providers, all raising complaints similar to the Texas one, and about the provisions of NSA and the IDR process and the ban on balance billing. I think, you know, we hope to get clarity around the legislation as the year unfolds.
I think the federal government is expected to issue a final IDR by May of this year. But I don't think in either direction, we're well-positioned. If they move away from QPA, if they allow greater flexibility by the provider in demanding higher, you know, in getting higher rates of reimbursement because of the complexity or the severity of the treatment or illness that they're doing, all of our services will be applicable in that regard, no matter which way it goes. So we feel we're well-positioned, and of course, we'll pay attention to the law and to any changes in the law. Again, we'll adjust, we'll course-correct if needed, but we're not concerned.
Earlier, you highlighted a number of customer wins, and I believe 69% growth in revenue. I know there's a startup cost before you actually start to realize those wins. I assume a lot of that growth is gonna be second half-weighted. I was hoping that you could confirm that. You also noted that you have some wins for 2023. Can you quantify the expected revenue around those wins?
Well, I don't think we're gonna give too much specifics on the wins, but just to clarify on the growth, we have some contracted wins that are gonna ramp up in the second half of the year and will not achieve run rate. So we are gonna get some additional benefit going into 2023. Those contract wins are in spots where we have to stand up the service for important clients and have the, you know, kind of have the teams ready in subrogation and some of the more labor-intensive data mining opportunities.
As we go into 2023, you'll see some benefit of that, and we can be more explicit in terms of how we see the growth going. Again, these investments are against contracted business, so it's all a positive from our perspective.
Yep. Thank you.
That was our final question, so I'll hand back for any closing remarks.
Listen, we appreciate your time and support and continued confidence in the business. We look forward to working with you, and thank you for today.
This concludes today's call. Thank you for joining. You may now disconnect your lines.