Good morning, and thank you for attending today's MultiPlan Corporation second quarter 2022 earnings conference Call. My name is Austin, and I will be your moderator for today. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. If you'd like to ask a question, please press star one on your telephone keypad. I would now like to hand the conference over to your speaker today, Shawna Gasik, AVP of Investor Relations. Thank you, and please go ahead.
Thank you, Austin. Good morning, and welcome to MultiPlan second quarter 2022 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 second quarter 2022 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 31st, 2021, and our quarterly report on Form 10-Q for the quarter ended March 31st, 2022, 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. With that, I would now like to turn the call over to our Chief Executive Officer, Dale White. Dale?
Thank you, Shawna. Good morning, everyone, and welcome to the MultiPlan second quarter 2022 earnings call. On the call with me today is our CFO, Jim Head. The second quarter was an important one in which MultiPlan achieved several new milestones. Among these, we continue to help our payer customers navigate the complexity of the No Surprises Act. With these customers increasing their use of our NSA compliance services, and we expanded our pipeline of completed or in-process NSA-related implementations. We continue to make investments in our platform and in new markets to drive long-term growth, including an investment in a new and promising partnership with Abacus Insights, a leading data management and interoperability platform that offers a number of opportunities to enhance our technology and customer reach.
Importantly, we are pleased to announce that we have completed a multiyear contract renewal with one of our larger customers, further underpinning our confidence in our base business. In light of these milestones, we remain confident in our ability to achieve our long-term strategic goals. Once again, MultiPlan delivered strong results with revenues and adjusted EBITDA squarely in the range of the guidance we set for the quarter. Second quarter revenues were $290.1 million, growing 5% from the prior-year quarter, driven by an 8% increase in savings identified for healthcare system stakeholders to $5.5 billion. Excluding the impact of COVID, revenues in the quarter grew 3.1% from the prior-year quarter. Second quarter revenues declined 2.7% sequentially.
As we communicated previously, the first quarter benefited from a variety of factors, including claim volumes related to Q4 2021 dates of service, heightened COVID testing and treatment-related revenues, which normalized in Q2, and little impact from the NSA in the quarter. Adjusted EBITDA was $209.6 million, up 2.1% from the prior year quarter and down 7% from the first quarter. The sequential decline was driven by the aforementioned revenue dynamics and by anticipated investments in our platform and structural cost increases consistent with guidance and the adjusted EBITDA margin bridge outlined in February. In the second quarter, we generated $40.7 million in cash flow from operations and free cash flow of $21.8 million.
Underpinning our results is the value we provide to our payer customers, the more than 100,000 employers and other health plan sponsors that use our services either through these payers or directly, and the more than 60 million health plan members those payers and plan sponsors serve. In the second quarter, we generated $5.5 billion in potential identified savings, up 3.5% from the prior year on bill charges of $32 billion as shown on page eight of our supplemental deck. Customer demand for our services remains very strong and notably is distinct from the ebb and flow of healthcare utilization trends. Last quarter, we discussed how the breadth of MultiPlan's medical cost management and payment accuracy solutions meets the wide range of plan design preferences across the broad base of employers that use our services.
In the context of an extremely tight labor market, how our service breadth provides flexibility as employers' plan design preferences shift between benefit cost efficiency and benefit attractiveness. Since at least mid-April, there have been rising expectations that the U.S. economy could be headed towards recession this year or next. The signals remain mixed as the labor market remains tight despite other recessionary warnings. Only time will tell whether the U.S. will slip into recession or avert it, and how strongly this might be expressed in labor market conditions. It remains the case that the breadth of our solutions will continue to provide flexibility in how our services are accessed and in what configurations, helping employers adjust their health plan strategy as they navigate economic and labor cyclicality. Simply put, we are an all-weather service provider to all types of health plans.
That position continued to be demonstrated during the second quarter. For example, we added 143 opportunities to our pipeline for a current estimated $39 million in annual contract value, bringing the total active pipeline to 582 opportunities and $242 million in estimated annual revenues. The 10 largest of these comprise about 37% of the total and average just under $8 million in annual revenues each. We closed 157 deals during the quarter for an estimated $16 million in annual revenues. Five of these have estimated annual revenues over $1 million. New wins span all market segments and include 87 new customer relationships.
Notably, about 2/3 of the new revenues are attributed to our regional health plan segment, reflecting continued momentum in this very important market segment, which is a key target of our Extend Growth Strategy component and furthers our goal of diversifying our customer base. Other business highlights during the quarter include a large blue plan expanding use of Data iSight for its ASO customers. Just five months in, this plan has more than a third of its ASO lives accessing the program. Continued momentum in building our post-payment and revenue integrity services pipeline. At the quarter's end, we had 192 active opportunities that together are estimated to deliver $110 million in annual contract value. The successful launch of a campaign promoting our prepayment itemized bill review service with nine customers already requesting contracts.
Our product team also has an exciting roadmap for this service that used advanced analytics to significantly expand the solution's impact. We had strong growth in our property and casualty segment after months of COVID-driven volume lags, aided by the deployment of one of three new customers in this segment. We continued to roll out our No Surprises Act to more payers, and in the second quarter, we saw a meaningful ramp in claims processed through our NSA services. At the end of the second quarter, we had 126 implementations completed and 29 implementations for a total of 155, up from a total of 124 as of the end of the first quarter. Notably, one of our key customers that adopted our end-to-end NSA compliance service is expected to double revenues with us by year-end.
NSA-related activity continues to track to our expectations, with NSA-related claims volumes approaching what appears to be a full run rate by the end of the quarter. We are seeing meaningful medical cost reductions when claims are priced using our QPA-based pricing service, signifying this objective of the NSA is being achieved. Meanwhile, the Federal Surprise Bill regulatory backdrop remains in flux. On June fifteenth, the Office of Management and Budget began reviewing the anxiously anticipated final rule from CMS, which is expected to clarify requirements for the independent dispute resolution process. At issue is the status of earlier language directing IDR entities to treat the qualifying payment amount, or QPA, as the presumed appropriate reimbursement. Ensuing lawsuits challenging this interpretation of the role of the QPA caused CMS to retrench it until it publishes the final rule. The plot continues to thicken.
In late July, in a new ruling pertaining specifically to air ambulance services, a federal judge in Texas once again vacated the portions of the NSA's interim final rule that had given primacy to the QPA in the IDR process. In addition, other parts of the administration of the IDR process all remain vaguely prescribed or challenging to fulfill. Compounding the problem, CMS was late in releasing functionality needed for providers and payers to initiate the IDR process. As a consequence, and not unexpected, as payers and providers operationalize the IDR process, we are seeing process missteps in the early stages of the rollout. In fact, MultiPlan offers submitted on behalf of our payers have been accepted 80% of the time since the IDR process began early in the quarter, and provider missteps have contributed significantly to that outcome.
It is still early, and we expect providers and payers to gain more familiarity with the process. We are reluctant to extrapolate our experience thus far. I'm encouraged that the significant data and data science resources we've invested in this part of the service positions us well in supporting our customers. In June 2022, we acquired a minority interest of Abacus Insights for a $15 million cash consideration. Abacus is a leading data management and interoperability platform that enables health plans and their providers to standardize data across the healthcare ecosystem. This is a terrific company with unique capabilities, and we see interesting commercial opportunities to pursue jointly. Our strengths are very complementary. Their enterprise data capabilities will help us accelerate our time to market for data offerings, and they find our analytic expertise and strong distribution channel very attractive.
As I mentioned at the beginning of the call, we have concluded a multi-year contract renewal with one of our larger customers. As a policy, and in accordance with the terms of our customer agreements, we do not disclose specific terms of our customer contracts. Further, we are not providing 2023 guidance at this time. However, with the increased visibility this extension provides, we anticipate our 2023 revenue growth will be muted, subject to market conditions and the implementation of our other growth initiatives. Despite the near-term financial impact, we believe this renewal demonstrates the strength of MultiPlan's value proposition, the importance of the services we provide to customers, and the depth of our long-standing customer relationships. Additionally, this customer commitment further underpins our confidence in our base business and enhances our ability to execute on our long-term growth strategy.
I would like to take a moment to speak to the operating environment and how that is shaping our outlook for the remainder of 2022. As reported by a number of hospital and health services groups, and as evidenced in the lower medical loss ratios of some major health insurers, utilization of healthcare in the second quarter was sluggish and below expectations as a significant decline in COVID-related patient volume was not offset by higher non-COVID-related patient volumes. Our recent claim volume, while still strong, reflects some of these sequential declines, albeit with our typical lag. Additionally, non-COVID healthcare utilization and non-COVID claim volume remain below 2019 levels. From where we sit today, it is a bit difficult to foresee whether those will recover in Q3 or come back more slowly.
Despite this uncertainty, we continue to track against our 2022 plan, and at this time, we are maintaining our full year 2022 guidance ranges for revenue of $1.16 billion-$1.20 billion and for adjusted EBITDA of $850 million-$875 million. That said, if the current utilization trends persist into Q3 and Q4, and accounting for some customer adjustments, full year 2022 results could fall in the lower half of our guidance ranges. In summary, our second quarter results were once again strong. We are making meaningful progress on multiple fronts of our business with the pace of new business wins and the strength of our pipeline indicating robust demand for our services.
We remain on track to achieve our 2022 plan despite the recent subdued rebound in non-COVID volumes. We continue to expand our No Surprises Act services footprint and activity and help our customers navigate the significant complexities of achieving compliance with the new regulations. We are investing in our business to drive growth and maintain our high levels of customer service. We now have even more visibility into our base business with the renewal of our contract with one of our larger customers. We continue to work to bring the external perception of our risks in line with the realities of the business, an objective that Jim and I have made a priority since assuming leadership of the company.
As I look forward, I remain confident that our unique value proposition to the U.S. healthcare system, together with the investments we are making in the platform, will drive our long-term growth and deepen our industry-leading position with our payer customers. Before I turn the call over to Jim, I want to extend my gratitude to our more than 2,500 MultiPlan colleagues. The past few years have presented all manner of disruptions and potential distractions, and yet you have soldiered on with tireless dedication to our mission to deliver affordability, efficiency, and fairness to the U.S. healthcare system and an unyielding focus on operational excellence and outstanding customer service. Thank you. With that, I'll turn the call over to Jim to discuss our financial results in more detail.
Thank you, Dale, and good morning, everyone. I'm pleased to have the opportunity to discuss our second quarter financial results and update you on the outlook for the remainder of the year. As Dale noted earlier, we once again delivered another strong quarter of earnings in Q2 2022, with revenues and adjusted EBITDA squarely in line with guidance we set for the quarter. As shown on page four of the supplemental deck, Q2 revenue was $290.1 million, up 5% over Q2 2021, and down 2.7% from an abnormally strong first quarter, which as Dale mentioned, benefited from a variety of factors, including strong claims activity related to Q4 dates of service, heightened COVID testing and treatment-related revenues, and very little impact related to the No Surprises Act.
Organic revenue growth remained solid in the second quarter, albeit a bit slower than we've experienced over the last few quarters. As shown on page five of the supplemental deck, excluding the net impact of COVID-19 on our results, revenues in Q2 2022 were up $9 million or 3.1% over Q1 2021 and down 2.4% sequentially. Turning to our performance by service line, as shown on page six of the supplemental deck, Q2 2022 growth over prior year quarter was attributable to 13.2% growth in analytics-based services, while payment and revenue integrity services was flat, and network-based services declined 12%. Our payment integrity results were affected by modest weakness in our legacy prepayment business, driven largely by programmatic changes at our clients and slower to implement customer contracts in our data mining services.
This was offset by growth in services acquired with BST. Network-based revenues were lower as a result of lower COVID-related volumes, some shift of NSA volumes to QPA price-based pricing service in our analytic line, and some client attrition. As detailed on page seven of the supplemental deck, we estimate the COVID-related revenue impact in Q2 2022 was approximately $4 million-$6 million, up from an estimated $3 million-$ 5 million in Q1 2022, and down from $9 million-$11 million in the prior year quarter. As noted, we experienced a significant decrease in COVID testing and treatment related claims from Q1 as Omicron variant cases abated, while non-COVID healthcare utilization has been a bit slow to recover and remains suppressed relative to 2019.
Turning to expenses, second quarter 2022 adjusted EBITDA expenses were $80.5 million, up from $78.9 million in the prior year quarter and up from $72.6 million in Q1 2022, and in line with our guidance. These increases were consistent with our plan for expenses and driven predominantly by higher personnel costs due to increases in employee headcount and annual merit increases. Adjusted EBITDA was $209.6 million in Q2 2022, up 2.1% from $205.3 million in the prior year quarter, and down 7.0% from $225.4 million in Q1 2022. The estimated COVID-related impact on adjusted EBITDA in the second quarter was approximately $3 million-$5 million.
As shown on page five of the supplemental deck, normalizing for the impact of the COVID-19 pandemic, adjusted EBITDA for Q2 2022 was essentially flat versus the prior year quarter and down 6.3% sequentially. With second quarter revenues and adjusted EBITDA both in line with our expectations, adjusted EBITDA margin came in at 72.3% in Q2 2022, down from 74.3% in Q2 2021, and down from 75.6% sequentially, reflecting the revenue and adjusted EBITDA expense trends discussed previously. In the second quarter, net cash provided by operating activities was $40.7 million. As a reminder, our cash flow tends to be lower in the second and fourth quarters given the timing of our debt interest and tax payments.
On the balance sheet, we had a $15.8 million increase in our accounts receivable at the end of the second quarter as compared with the end of the first quarter, which was attributable to timing of a few customer receivables and should correct within the quarter. Turning to our outlook on page 11 of the supplemental deck, we are maintaining our guidance ranges for revenue and adjusted EBITDA. As Dale mentioned, if current healthcare utilization trends persist into Q3 and Q4, accounting for some customer adjustments, full year 2022 results could fall in the lower half of our guidance ranges. Regarding the volume environment, multiple data points are currently indicating a listless rebound in utilization and volumes post-peak Omicron. However, the ebb and the flow of volumes represent a marginal effect on our revenues. In essence, the last few percent of our revenues in any given quarter.
Even if the prevailing volume environment impacts our growth on the margin in the second half, I want to be clear that our core business remains very much intact. In the bigger picture, we are encouraged by the underlying demand for our service that remains very strong, that we are performing against our plan, and that our investments in the business will help drive long-term growth. We expect COVID to continue to be a modest drag on our results, and we are maintaining our estimate of COVID-related revenue impact to approximately $15 million-$20 million for the full year 2022, which is consistent with our first half estimates. Our guidance implies an adjusted EBITDA margin of 72%-73% for full year 2022.
As outlined by the guidance and expense bridges provided in February, we expect margin compression in 2022 to be driven by a combination of structural cost pressures, investments in our platform to customize and enhance our solutions and support our NSA-related solutions, and targeted investments in our products and capabilities to support our growth initiatives. Investments in our platform and growth are largely focused on the second half of this year. Moving to our third quarter guidance as outlined on page 12 of the supplemental deck. Our forecast is $280 million-$290 million in revenues and $200 million-$210 million in adjusted EBITDA. These ranges reflect an assumption that there will be some incremental volume softness on the margin in Q3 relative to Q2.
Turning to balance sheet and capital, our total and operating leverage ratios net of cash were 5.3x and 3.8x, respectively, effectively unchanged from the prior quarter. We ended the second quarter with $354 million of cash on the balance sheet. As we look to the second half of 2022 and beyond, we continue to be encouraged that our strong cash generation will enable us to strike a balance between investing to grow the business and reducing our leverage ratios over time. As we have discussed previously, we will continue to take an opportunistic, but balanced and disciplined approach to deploying our cash. That wraps up my comments. I'd like to turn it back over to Dale. Thanks, Jim. Operator, would you please kindly open it up for Q&A?
Thank you. If you'd like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one. If you're using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly as questions are registered. Our first question is with Joshua Raskin from Nephron Research. Joshua, your line is open.
Thanks, good morning. I'll start with the first question of, you know, the growth at about 3% when excluding the COVID impact. First, did we annualize all the acquisitions or, was there some, impact from HST in there? Second, how should we think about sort of that macro trend relative to the history? Obviously, the growth rates this year are now, you know, organically showing noticeably lower than where they've been in the past. Is there, you know, something in the environment? I understand slower claims, I understand the impact of the NSA, but just, you know, is there something more we should be thinking about?
Josh, I think at this point, we have annualized our acquisitions into the mix. You're right to point out that our organic growth in the quarter year over year was about 3% when you kind of take out some of the COVID adjustment. I would also note at the beginning of the year, there was a couple things that were gonna be headwinds. The overall NSA impact, which, you know, we seem to be navigating quite well, but it doesn't mean we're not necessarily avoiding that. I do think we are seeing a little bit of volume softness.
You're clearly seeing it in the MCOs and some of the, you know, hospitals and providers side of things, which is impacting us on the margin, in terms of those, you know, that last extra, you know, 1% or 2% in the quarter. You're right to point out that it's a little bit slower than our long-term trend, but, you know, we haven't seen any material shifts in kind of the, I'll call it the membership volume, you know, kind of client contracts, et c, you know, within this year that are demonstrated. It's a little bit more about volumes than NSA.
Okay. If you could just give us a little bit more color. I understand you can't disclose specifics around individual customers, but, you know, assuming this, is this your largest customer that you've renewed? Is that sort of the relief? As you think about that impact on 2023, maybe help us understand contractual changes. Again, not specifics, but just directionally, what would cause, you know, sort of a big enough headwind to impact the overall revenues of the company next year?
Yeah, Josh. Thank you for the question. As you know, our key contact, our key contracts have mutual confidentiality provisions, and we have to respect customer confidentiality, and we honor those provisions. What we can tell you is that we've signed a multi-year contract with one of our larger customers. As we've noted, it will have an impact on our 2023 revenues. With that comes increased visibility. For us, I can also tell you that inside the company, it's business as usual. We're focused on executing and delivering for our customers. You know, the contract itself is a multi-year contract, typical with our other contracts that we negotiate.
Yeah, Dale, I guess my question is just the headwind. Did they carve out? Are they doing less business with you, or is it really just around the pricing and your percentage of savings?
It's really business as usual. We expect as we said, Josh. You know, we can't go into the details of the specific contracts, but we said that the growth would be muted and what we mean by muted is that it could be pretty limited off of 2022 nominal. You know, but in that way, it depends on a number of factors. It depends on volume, environment at that time, whether it's, you know, all the client puts and takes, impact of COVID, if anything. But at the end, you know, at the end of 2023, we expect to resume normal growth thereafter.
Okay. Gotcha. Thanks.
Our next question is with Daniel Grosslight from Citi. Daniel, your line is open. You may proceed.
Oh, sorry. I was on mute. Hey, guys. Thanks for taking the question. Just have a few questions on guidance for 2022. If we just look at the midpoint for both 3Q guidance and in fiscal year 2022 guidance, it implies around a 2% sequential decline in 3Q revenue, and then almost an 8% sequential increase in 4Q, which would be seasonally odd. Similarly, literally, it implies around a 30 basis points sequential margin contraction in 3Q and then 50 basis points of expansion in 4Q. I kind of get that volume dynamic, but I was wondering if you can dig into that variability between 3Q and 4Q for the remainder of the year. What gets you kind of to the midpoint of guidance in terms of your assumptions?
Any qualitative guidance you can provide on how we should think about each segment, networks, analytics, payment integrity, revenue integrity for the remainder of the year. Should we expect analytics to be driving some of this growth and still seeing some attrition in networks and flat payment integrity?
Yeah. Okay. Thanks, Daniel. Let's break it into two pieces. First is, I'll call it the guidance for 2022, and then, what we expect. It's a fair observation on Q4, and I think it's worth a little bit of context. You know, in our guidance at the beginning of the year, we came out with a relatively narrow band on the overall range. You know, if you think about it's less than 2% on either side of the midpoint. As we explained last little bit of revenue each quarter, it's hard to predict on the margin because it's you know, it can be COVID revenues, it can be you know, utilization environment, it can be client activity, et c.
You know, in the first quarter, it went our way, and we outperformed. We didn't adjust our guidance. The second quarter ended up, as we're saying, on track. Third quarter could have a little softness. You know, at this point, we're keeping our guidance range intact. I mean, you make the point around pressure to achieve that midpoint in Q4, but we're not talking about a massive swing one way or the other. I think, you know, from our, I'll call it a little bit more of a policy perspective, we think what makes sense to maintain our guidance in revisiting Q3. I would just say it.
Listen, inside that broader range, I think just based on what we're seeing, you know, in the outside world, in the leading indicators, you know, whether it's some of the results that we're seeing in hospitals, etc , and their activity, we think it's prudent to be a little bit more cautious on the second half and obviously get sharper in Q3. That's just a little bit on guidance. Then I do think it is fair to say that there is network and payment integrity are not gonna drive the growth here. I would note that, you know, some of the softness in network was a substitution effect as we ramp up our NSA QPA services, and some of that volume that was typically done in network shifted over into the analytics side.
I think that is gonna be a little bit of an extra driver here. You're right, the network and payment integrity are not gonna be the big driver. I think the big driver is gonna be, you know, kind of that incremental volume in the analytics side in Q3, Q4.
Got it. That's very helpful. On the NSA, you know, it seems like the acceptance rates are a little bit challenged, just given some process missteps, at least according to your prepared remarks. I'm wondering if you still expect the NSA to have less than -2% impact on revenue this year. If you can speak a little bit about the potential for the final rules to be a little more favorable, limiting the primacy of the QPA in arbitration, and how that may impact your NSA products and your business overall.
Yeah, Daniel, obviously volumes are tracking, they're in line with projections. It's still obviously very fluid and evolving, and there have been lots of puts and takes on the margin. Net of it has shaped up very much like we anticipated. You know, in the prior quarters, we shared the color on the loss of a few client programs, some wins of a few new programs, and then less visibility as you go down in market. All of that sort of rolled up, as you pointed out, up to a 2% headwind that we communicated. Since then, we've had some new NSA-related wins. The savings identified, as I mentioned, with QPA-based pricing have been meaningful, perhaps slightly more than what we were projecting.
On the other hand, the overall volume picture, you know, as we said, has been slightly weaker. When you factor in all the original color we provided and how it's evolved since then, it's very much tracking to the expectations of that, you know, up to 2% headwind. Relative to your question about the final ruling, it's still very much up in the air, right? You know, the latest addition was the Texas ruling, which was for air ambulance claims and made the QPA, you know, no longer the primary factor or variable, but put it on equal footing with the other variables.
We would expect that you know, we're anticipating that when the final rule comes out, it will likely mirror what's there. But if not, we're prepared either way. I mean, with our data, with our data science, we're in a great position to support our clients throughout the entire end-to-end you know, process of surprise billing, from the start in terms of identifying surprise bill, repricing them either at QPA or some other methodology, performing all the analytics, performing the post-pay negotiation, and then ultimately working with them on the IDR process. No matter which way the rules go, and we think they'll come out more balanced, we're ready.
Got it. Last one for me. A little bit of a longer-term question. I get that the contract renewal is gonna lead to some headwinds in 2023, so little growth in 2023 on top line. What gets you to a mid-single-digit growth rate after 2023? Are there any other large contract renewals coming up within the next year that might weigh on 2024 and beyond?
Yeah. Sure. I think, but let's talk a little bit about 2023, the starting point, and then kind of, you know, resuming growth thereafter, 'cause I think that's a smart question. I guess I'm thinking about 2023, Dale, you know, kind of talked about nominal growth in the year. You know, realistically, it's very early to tell, just given, you know, six months out and a lot of, you know, changes in the environment. Could that be nominal growth? Yes. Could it be flattish? Yes.
I think what's important to understand here is that, you know, we feel like we've got a really good ability to resume the course of growth, I should say, in 2024 and 2025 off that base. That is everything about enhance, extend, and expand. You know, enhancing our offerings, etc , we feel like there's always gonna be a strong tailwind on volume growth and our, you know, the expanding our scope of services, which gives us some confidence. We are working hard to continue to build out the, you know, the other customer markets that we serve, which will be tailwinds.
We think that we've got a good line of sight for the next couple years. It, you know, Dale, I'll turn it over to you as to, you know, I don't know if we're gonna say much about any, you know, things down the road. You know, it is part of our normal course of business that we have, you know, these contractual negotiations. We've navigated that in the past, and we feel like we're gonna be in good shape to do that in the future.
Absolutely. As Jim said, and Daniel, as you know, we can't speak to the details of specific customer contracts and when they renew. We have said in the past that our larger contracts typically have a multi-year term, and that, in this case, the length of this extension was consistent with what we typically come out on contracts terms. They automatically, you know, they typically come up, you know, every few years. For us, what's important specifically about this extension is it provides a fairly long line of sight. That visibility for us, as it is with all multi-year contracts, is very helpful to planning, and to resource allocation as we execute on our growth strategy.
Thanks for taking all my questions, guys. Really appreciate it.
Thanks.
Our next question is with Steven Valiquette from Barclays. Steven, your line is open.
Hi, this is Tiffany on for Steve. Just one quick one from me. I was wondering if you can maybe offer a bit more color, either quantitatively or qualitatively on the softer claims volume observations you cited. How much would you attribute to softer utilization trends versus the NSA impact? I understand there's a bit of a lag in the claims flow, but just any other more color you can add there would be helpful. Thanks.
Yeah. I'll just kind of give you a big picture view. With our revenues coming down a little bit in the quarter, we're not talking, you know, tens of millions of dollars. We're talking about, you know, 1%, you know, 2%-3% in total. You know, that's pretty darn important in terms of dropping to the bottom line. I would say it's probably equal measure of, you know, volume. In Q2 is a little bit of volume softness. It was a little bit of COVID. We had some excess COVID revenues, COVID testing revenues because of Omicron in Q1, so that was a little bit of a tough compare.
Generally speaking, those were kind of two of the big drivers. I think the challenge here is we're seeing a little bit of incremental softness on the margin going in, you know, into June, exiting June and going into July. That does explain, I think, the marginal shift a little bit in guidance. You know, we are dependent on the, you know, that kind of that last little bit to, you know, to deliver our margins. I'll go back to what I said in the call, very importantly, you know, the core large majority of our revenues are very highly visible, very well spoken for. It's just that last couple percent in the quarter that's always tough to predict.
Okay. Got it. Thanks so much.
Our next question is with Cindy Motz from Goldman Sachs. Cindy, your line is open.
Oh, thanks. Thanks for taking my questions. Yeah, a lot of my questions were answered, but I just in general, the quarter, you guys pretty much, you know, did what you said you were gonna do in this quarter, I mean, especially, you know, counting the COVID impacts and everything. I appreciate the caution, you know, obviously the macro comments. Overall, I mean, relative, you know, to what we see with other companies, wouldn't you think that you are, you know, you say to people, you know, money, you know, more recession resistant, you know, in general? Like you know, even, Jim, what you were saying next year, I mean, we wanna see a shift more to ABS, correct?
I mean, you are ahead of expectations slightly there, and that's what I would think that in Payment Integrity, the higher, you know, margin part of the business. To that end, in terms of, you know, obviously revenue growth, you're talking about in 2023, but how do you see EBITDA margins going in 2023? Do they? I mean, is there declines or they stay up, or any color you could give us there would be great. Thanks.
Yeah. I'll just come back to that visibility. It feels like it's two questions. Number one, you know, there is a high degree of visibility in our business, and we keep chugging along, and as Dale commented, we're kind of an all-weather solution. You know, we kind of like our chances, you know, in terms of being ready for any economic shifts. The reality is that incremental revenue, as I stated previously, is really kind of what's at stake, that last, you know, $10 million-$20 million of the year, et c, is pretty important.
Turning to 2023, it is fair to say that we have a platform that the costs are largely fixed. It's people, it's the technology, you know, the external spend for technology, et c. We're not making a dramatic shift in terms of what we see in terms of the demand from clients next year. We are gonna see some softness as some of that marginal revenue from lack of growth drops down. I don't think we're ready to do any predictions yet, but you should just assume that this is not a highly variable cost base. It just isn't. In fact, our clients, you know, we make commitments to our clients and we wanna deliver.
On the margin, we're the most cost-conscious company I've ever encountered. The reality is that we are beholden a little bit to that incremental volume. Oh, okay. I understand. But I don't think, yeah, we should expect to see any dramatic shifts necessarily there 'cause you are very cost conscious. Overall it feels like.
Yeah.
You know, the momentum is still pretty good with the customers, you know, even in new areas as well.
Yeah. I think, we've said this before, you know, and I've been coming in from the outside, I've been really pleased. You know, we do have intriguing prospects. We've got a really good, you know, kind of competitive position in the market, and it doesn't mean there's not competition, et c. We've got a really privileged position in this marketplace, and we've got a right to win. We need to invest in the business. We need to expand our products and services.
You know, that's one of the reasons why we think we've got an opportunity now that we've got a little bit of runway here, post NSA and kind of a, you know, new management team in place and getting some of these contract renewals behind us, you know, gives us some opportunity to kind of go after it and grow.
Great. Thanks for taking my question.
At this time, there are no further questions. As a reminder, to ask a question, it is star one on your telephone keypad. There are no further questions, so I'd like to pass the conference back to the management team for any closing remarks.
Thank you, operator. Listen, we appreciate everyone's time today. Thank you for your continued support and confidence and enjoy the rest of your summer. Thank you.
That concludes today's call. Thank you for your participation. You may now disconnect your line.