424B3 1 tm2031592-7_424b3.htm FORM 424(B)(3) tm2031592-7_424b3 - none - 48.3885768s
 Filed Pursuant to Rule 424(b)(3)
 Registration No. 333-249779
Prospectus
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633,750,000 Shares of Class A Common Stock
24,500,000 Warrants to Purchase Class A Common Stock
This prospectus relates to (a) 415,700,000 shares of Class A common stock, par value $0.0001 per share (“Class A common stock”), issued in connection with the Business Combination (as defined below), (b) 132,050,000 shares of Class A common stock issued in connection with the Common PIPE Investment (as defined below), (c) 27,500,000 shares of Class A common stock issued upon the conversion of Churchill’s Class B common stock in connection with the Transactions (as defined below) and (d) 58,500,000 shares of our Class A common stock that may be issued upon exercise of warrants to purchase Class A common stock at exercise prices ranging from $11.50 to $12.50 per share of Class A common stock, including the Public Warrants, Private Placement Warrants, Working Capital Warrants and PIPE Warrants (each as defined below).
The prospectus also relates to the offer and sale from time to time by the selling securityholders named in this prospectus (the “Selling Securityholders”), or their permitted transferees, of (a) up to 633,750,000 shares of our Class A common stock (which includes up to 58,500,000 shares of Class A common stock issuable upon the exercise of outstanding warrants) and (b) up to 24,500,000 warrants representing the Private Placement Warrants and Working Capital Warrants. We will not receive any proceeds from the sale of shares of Class A common stock or warrants by the Selling Securityholders pursuant to this prospectus, except with respect to amounts received by us upon exercise of the warrants to the extent such warrants are exercised for cash. However, we will pay the expenses, other than underwriting discounts and commissions and expenses incurred by the Selling Securityholders for brokerage, accounting, tax or legal services or any other expenses incurred by the Selling Securityholders in disposing of the securities, associated with the sale of securities pursuant to this prospectus.
Our registration of the securities covered by this prospectus does not mean that either we or the Selling Securityholders will issue, offer or sell, as applicable, any of the securities. The Selling Securityholders may offer and sell the securities covered by this prospectus in a number of different ways and at varying prices. We provide more information about how the Selling Securityholders may sell the shares in the section entitled “Plan of Distribution.” In addition, certain of the securities being registered hereby are subject to vesting and/or transfer restrictions that may prevent the Selling Securityholders from offering or selling such securities upon the effectiveness of the registration statement of which this prospectus is a part. See “Description of Securities’’ for more information.
You should read this prospectus and any prospectus supplement or amendment carefully before you invest in our securities. Our Class A common stock is listed on The New York Stock Exchange under the symbol “MPLN.” On November 16, 2020, the last reported sale price of our Class A common stock on The New York Stock Exchange was $6.91 per share.
Investing in our Class A common stock involves a high degree of risk. See the section titled “Risk Factors” beginning on page 22.
Neither the Securities and Exchange Commission nor any other state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
November 16, 2020

 
       
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F-1
 
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About this Prospectus
This prospectus is part of a registration statement on Form S-1 that we filed with the SEC using a “shelf” registration process. Under this shelf registration process, we and the Selling Securityholders may, from time to time, issue, offer and sell, as applicable, any combination of the securities described in this prospectus in one or more offerings. We may use the shelf registration statement to issue up to an aggregate of 58,500,000 shares of Class A common stock upon exercise of the Public Warrants, Private Placement Warrants, Working Capital Warrants and PIPE Warrants. The Selling Securityholders may use the shelf registration statement to sell up to an aggregate of 633,750,00 shares of Class A common stock (which includes up to 58,500,000 shares of Class A common stock issuable upon the exercise of outstanding warrants) and up to 24,500,000 warrants from time to time through any means described in the section entitled “Plan of Distribution.” More specific terms of any securities that the Selling Securityholders offer and sell may be provided in a prospectus supplement that describes, among other things, the specific amounts and prices of the Class A common stock and/or warrants being offered and the terms of the offering.
A prospectus supplement may also add, update or change information included in this prospectus. Any statement contained in this prospectus will be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in such prospectus supplement modifies or supersedes such statement. Any statement so modified will be deemed to constitute a part of this prospectus only as so modified, and any statement so superseded will be deemed not to constitute a part of this prospectus. You should rely only on the information contained in this prospectus, any applicable prospectus supplement or any related free writing prospectus. See “Where You Can Find More Information.”
Neither we nor the Selling Securityholders have authorized anyone to provide any information or to make any representations other than those contained in this prospectus, any accompanying prospectus supplement or any free writing prospectus we have prepared. We and the Selling Securityholders take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the securities offered hereby and only under circumstances and in jurisdictions where it is lawful to do so. No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus, any applicable prospectus supplement or any related free writing prospectus. This prospectus is not an offer to sell securities, and it is not soliciting an offer to buy securities, in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus or any prospectus supplement is accurate only as of the date on the front of those documents only, regardless of the time of delivery of this prospectus or any applicable prospectus supplement, or any sale of a security. Our business, financial condition, results of operations and prospects may have changed since those dates.
This prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed, will be filed or will be incorporated by reference as exhibits to the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described below under “Where You Can Find More Information.”
On October 8, 2020, Churchill consummated the Transactions, including the previously announced business combination (the “Business Combination”) pursuant to the terms of the Merger Agreement, which, among other things, provided for (i) First Merger Sub to be merged with and into Polaris Parent Corp. with Polaris Parent Corp. being the surviving company in the First Merger and (ii) immediately following the First Merger and as part of the same overall transaction as the First Merger, Polaris Parent Corp. to be merged with and into Second Merger Sub, with Second Merger Sub surviving the Second Merger as a wholly owned subsidiary of Churchill. In connection with the Transactions, Churchill changed its name to MultiPlan Corporation and the New York Stock Exchange ticker symbols for its Class A common stock and warrants to “MPLN” and “MPLN.WS,” respectively.
 
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Frequently Used Terms
Unless otherwise stated in this prospectus or the context otherwise requires, references to:
2020 Omnibus Incentive Plan” are to our 2020 Omnibus Incentive Plan, as it may be amended and/or restated from time to time;
5.750% Notes” are to the $1,300,000,000 in aggregate principal amount of 5.750% Senior Notes due 2028 issued by MPH;
7.125% Notes” are to the 7.125% Senior Notes due 2024 issued by MPH. All of the outstanding 7.125% Notes were redeemed on October 29, 2020;
Board” are to the board of directors of the Company;
Churchill” are to Churchill Capital Corp III, a Delaware corporation, which changed its name to MultiPlan Corporation following the consummation of the Transactions;
Churchill IPO” are to the initial public offering by Churchill which closed on February 19, 2020;
Churchill’s Class A common stock” are, prior to consummation of the Transactions, to Churchill’s Class A common stock, par value $0.0001 per share and, following consummation of the Transactions, to our Class A common stock, par value $0.0001 per share;
Churchill’s Class B common stock” are to Churchill’s Class B common stock, par value $0.0001 per share;
Class A common stock” are to MultiPlan’s Class A common stock, par value $0.0001 per share;
Closing” are to the consummation of the Mergers;
Closing Date” are to October 8, 2020, the date on which the Transactions were consummated;
Common PIPE Investment” are to the private placement pursuant to which Churchill entered into subscription agreements with certain investors whereby such investors subscribed for (a) 130,000,000 shares of Churchill’s Class A common stock at a purchase price of $10.00 per share for an aggregate commitment of $1,300,000,000 and (b) warrants to purchase 6,500,000 shares of Churchill’s Class A Common Stock (for each share of Churchill’s Class A common stock subscribed, the investor received 1/20th of a warrant to purchase one share of Churchill’s Class A common stock, with each whole warrant having a strike price of $12.50 per share and a maturity date of October 8, 2025). The Common PIPE Investment was subject to an original issue discount (which was paid in additional shares of Churchill’s Class A common stock) of 1% for subscriptions of $250,000,000 or less and 2.5% for subscriptions of more than $250,000,000, which resulted in an additional 2,050,000 shares of Churchill’s Class A common stock being issued. The Common PIPE Investment was consummated on the Closing Date;
Common PIPE Investors” are to the investors participating in the Common PIPE Investment;
Common PIPE Subscription Agreements” are to the common stock subscription agreements entered into (a) by and between Churchill and the PIF (the “PIF Common Subscription Agreement”) and (b) by and among Churchill, Holdings and MultiPlan Parent, on the one hand, and certain investment funds, on the other hand (the “Other Common Subscription Agreements”), in each case, dated as of July 12, 2020 and entered into in connection with the Common PIPE Investment;
common stock” are, prior to the consummation of the Transactions, to Churchill’s Class A common stock and Churchill’s Class B common stock and, following consummation of the Transactions, to the Class A common stock;
Company” are, prior to the consummation of the Transactions, to Churchill and, following consummation of the Transactions, to MultiPlan Corporation;
Convertible Notes” are to the $1.3 billion aggregate principal amount of 6.00% / 7.00% Convertible Senior PIK Toggle Notes due 2027 issued by the Company in connection with the Convertible PIPE Investment;
 
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Convertible PIPE Investment” are to the private placement pursuant to which the Company entered into subscription agreements with certain investors whereby such Convertible PIPE Investors agreed to buy $1,300,000,000 in aggregate principal amount of Convertible Notes. The Convertible PIPE Investment was consummated on the Closing Date;
Convertible PIPE Investors” are to the investors participating in the Convertible PIPE Investment;
Convertible Subscription Agreement” are to the subscription agreements, dated as of July 12, 2020, entered into in connection with the Convertible PIPE Investment;
certificate of incorporation” are to the Company’s second amended and restated certificate of incorporation in effect as of the date of this prospectus;
DGCL” are to the Delaware General Corporation Law, as amended;
Exchange Act” are to the Securities Exchange Act of 1934, as amended;
First Merger Sub” are to Music Merger Sub I, Inc.;
founder shares” are to shares of Churchill’s Class B common stock and Churchill’s Class A common stock issued upon the automatic conversion thereof in connection with the closing;
H&F” are to Hellman & Friedman Capital Partners VIII, L.P.;
Holdings” are to Polaris Investment Holdings, L.P.;
Insiders” are to Michael Klein, Jay Taragin, Jeremy Paul Abson, Glenn R. August, Mark Klein, Malcolm S. McDermid, and Karen G. Mills;
Investor Rights Agreement” are to the Investor Rights Agreement, dated as of July 12, 2020, by and among the Company, the Sponsor, Holdings, H&F, the PIF and certain other parties thereto;
KG” are to The Klein Group, LLC, an affiliate of Michael Klein and the Sponsor and an affiliate and wholly owned subsidiary of M. Klein and Company. KG (and not the Sponsor) was engaged by Churchill to act as Churchill’s financial advisor in connection with the Transactions, and as a placement agent in connection with the PIPE Investment as more fully described herein;
M. Klein and Company” are to M. Klein and Company, LLC, a Delaware limited liability company, and its affiliates;
Merger Agreement” are to that certain Agreement and Plan of Merger, dated as of July 12, 2020, by and among Churchill, MultiPlan Parent, Holdings, First Merger Sub and Second Merger Sub, as the same has been or may be amended, modified, supplemented or waived from time to time;
Mergers” are to, together, (a) the merger of First Merger Sub with and into MultiPlan Parent with MultiPlan Parent being the surviving company in the merger (the “First Merger”) and (b) immediately following and as part of the same transaction as the First Merger, the merger of MultiPlan Parent with and into Second Merger Sub, with Second Merger Sub surviving the merger as a wholly owned subsidiary of Churchill (the “Second Merger”);
MPH” are to MPH Acquisition Holdings LLC;
MultiPlan” are, prior to consummation of the Transactions, to MultiPlan Parent and its consolidated subsidiaries and, following consummation of the Transactions, to MultiPlan Corporation and its consolidated subsidiaries;
MultiPlan Parent” are to Polaris Parent Corp., a Delaware corporation;
Non-Employee Director” are to each member of our Board that is not an employee of the Company or any parent or subsidiary of the Company;
PIF” are to The Public Investment Fund of The Kingdom of Saudi Arabia;
 
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PIPE Investment” are to, collectively, the Common PIPE Investment and the Convertible PIPE Investment;
PIPE Warrants” are to the warrants to purchase Churchill’s Class A common stock issued in connection with the Common PIPE Investment, on terms identical to the terms of the Private Placement Warrants;
Plan of Liquidation” are to the Plan of Liquidation and Dissolution and Distribution Agreement of Holdings, dated as of July 12, 2020, by and among Holdings, Polaris Investment Holdings GP, LLC and certain other parties hereto;
Private Placement Warrants” are to the Company’s warrants issued to the Sponsor in a private placement simultaneously with the closing of the Churchill IPO;
public shares” are to shares of Churchill’s Class A common stock sold as part of the units in the Churchill IPO (whether they were purchased in the Churchill IPO or thereafter in the open market);
public shareholders” are to the holders of the Company’s public shares, including the Sponsor and Churchill’s officers and directors to the extent the Sponsor and Churchill’s officers or directors purchase public shares, provided that each of their status as a “public shareholder” shall only exist with respect to such public shares;
Public Warrants” are to the Company’s warrants sold as part of the units in the Churchill IPO (whether they were purchased in the Churchill IPO or thereafter in the open market);
Refinancing” are to (a) the consummation of the 5.750% Notes offering by MPH and the increase of the revolving credit facility under the senior secured credit facilities from $100.0 million to $450.0 million and (b) the repayment of all outstanding 7.125% Notes and $369.0 million of indebtedness under MPH’s term loan facility with the net proceeds of the 5.750% Notes offering, together with cash on hand, which occurred on October 29, 2020;
SEC” are to the United States Securities and Exchange Commission;
Second Merger Sub” are to Music Merger Sub II LLC;
Securities Act” are to the Securities Act of 1933, as amended;
Senior PIK Notes” are to the 8.500% / 9.250% Senior PIK Toggle Notes due 2022 issued by Polaris Intermediate Corp. on November 21, 2017. All of the outstanding Senior PIK Notes were redeemed on October 8, 2020;
senior secured credit facilities” are to MPH’s senior secured credit facilities which consist of (a) a $2,341.0 million term loan facility maturing on June 7, 2023 and (b) a $450.0 million revolving credit facility maturing on June 7, 2023;
Sponsor” are to Churchill Sponsor III, LLC, a Delaware limited liability company and an affiliate of M. Klein and Company in which certain of Churchill’s directors and officers hold membership interests;
Sponsor Agreement” are to the Amended and Restated Sponsor Agreement, dated as of July 12, 2020, by and among the Company, the Sponsor and the Insiders;
Sponsor Note” are to the unsecured promissory note issued by the Company to the Sponsor in an aggregate principal amount of $1,500,000. The Sponsor converted the unpaid balance of the Sponsor Note into Working Capital Warrants in connection with the Closing;
Subscription Agreements” are to, collectively, the Common PIPE Subscription Agreements and the Convertible PIPE Subscription Agreements;
Transactions” are to the Mergers, together with the other transactions contemplated by the Merger Agreement and the related agreements;
trust account” are to the Churchill trust account that held the proceeds from the Churchill IPO prior to the consummation of the Transactions;
 
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warrants” are to the Public Warrants, the Private Placement Warrants, the PIPE Warrants and the Working Capital Warrants;
we,” “our” or “us” are to MultiPlan and its consolidated subsidiaries; and
Working Capital Warrants” are to the warrants to purchase Churchill’s Class A common stock pursuant to the terms of the Sponsor Note, on terms identical to the terms of the Private Placement Warrants.
 
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Cautionary Note Regarding Forward-Looking Statements
This prospectus includes statements that express our and our subsidiaries’ opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements.” These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “seeks,” “projects,” “intends,” “plans,” “may,” “will” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this prospectus and these forward-looking statements reflect management’s expectations regarding our future growth, results of operations, operational and financial performance and business prospects and opportunities. Such forward-looking statements are based on available current market material and management’s expectations, beliefs and forecasts concerning future events impacting our business. Factors that may impact such forward-looking statements include:

loss of our customers, particularly our largest customers;

decreases in our existing market share or the size of our Preferred Provider Organization (“PPO”) networks;

effects of competition;

effects of pricing pressure;

the inability of our customers to pay for our services;

decreases in discounts from providers;

the loss of our existing relationships with providers;

the loss of key members of our management team;

changes in our regulatory environment, including healthcare law and regulations;

the inability to implement information systems or expand our workforce;

changes in our industry;

providers’ increasing resistance to application of certain healthcare cost management techniques;

pressure to limit access to preferred provider networks;

heightened enforcement activity by government agencies;

the possibility that regulatory authorities may assert we engage in unlawful fee splitting or corporate practice of medicine;

interruptions or security breaches of our information technology systems;

the expansion of privacy and security laws;

our inability to expand our network infrastructure;

our ability to protect proprietary applications;

our ability to identify, complete and successfully integrate future acquisitions;

our ability to pay interest and principal on our notes and other indebtedness;

our ability to remediate any material weaknesses or maintain effective internal controls over financial reporting;

the ability to continue to meet applicable listing standards;

the ability to recognize the anticipated benefits of the business combination, which may be affected by, among other things, competition, our ability to grow and manage growth profitably, maintain relationships with customers and suppliers and retain our management and key employees;

changes in applicable laws or regulations;
 
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the possibility that we may be adversely affected by other political, economic, business, and/or competitive factors;

the impact of COVID-19 and its related effects on our projected results of operations, financial performance or other financial metrics;

the ability to achieve the goals of our Short-Term Execution Plan (as defined below) and recognize the anticipated strategic, operational, growth and efficiency benefits when expected;

pending or potential litigation associated with the business combination;

other factors disclosed in this prospectus; and

other factors beyond our control.
The forward-looking statements contained in this prospectus are based on our current expectations and beliefs concerning future developments and their potential effects on our business. There can be no assurance that future developments affecting our business will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
 
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Prospectus Summary
This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before investing in our Class A common stock or warrants. You should read this entire prospectus carefully, including the matters discussed under the sections titled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Unaudited Pro Forma Condensed Combined Financial Information,” “Business” and the consolidated financial statements and related notes included elsewhere in this prospectus before making an investment decision.
MultiPlan Corporation
MultiPlan is a leading value-added provider of data analytics and technology-enabled end-to-end cost management solutions to the U.S. healthcare industry as measured by revenue and claims processed. We believe our primary mission is to make healthcare in the United States affordable, accessible, efficient and fair to all parties, and we believe that our products, services and business processes are aligned with this goal. MultiPlan delivers these critical solutions through the following offerings:

Analytics-Based Services, which reduce medical costs for consumers and payors via data-driven algorithms which detect claims anomalies;

Network-Based Services, which reduce medical costs through contracted discounts with healthcare providers and include one of the largest independent preferred provider organizations in the United States; and

Payment Integrity Services, which reduce medical costs by identifying and removing improper and unnecessary charges before claims are paid.
Multiplan is a technology and analytics-driven processor of medical claims data and does not deliver health care services, bear insurance risk, underwrite risk, provide or manage healthcare services, provide care or care management or adjudicate or pay claims.
Our customers include large national insurance companies, Blue Cross and Blue Shield plans, provider-sponsored health plans, third party administrators (“TPAs”), bill review companies, Taft-Hartley plans and other entities that pay medical bills in the commercial healthcare, government, workers’ compensation, auto medical and dental markets (collectively, “payors”). We offer these payors a single electronic gateway to a tightly-integrated and comprehensive set of services in each of the three categories (Analytics-Based Services, Network-Based Services and Payment Integrity Services, as discussed below) which are used in combination or individually to reduce the medical cost burden on healthcare payors and patients while fostering efficient payments to the providers. These offerings have enabled us to maintain long-term relationships with a number of our customers, including relationships of over 25 years with some of the nation’s largest commercial payors. For the year ended December 31, 2019, our expansive network included access to over 1,200,000 healthcare providers and our comprehensive services identified approximately $19 billion in potential medical cost savings. We generated revenues of $982.9 million and $682.4 million, net income (loss) of $9.7 million and $(347.2) million and Adjusted EBITDA of $750.4 and $511.3 million, respectively, for the year ended December 31, 2019 and the nine months ended September 30, 2020, respectively. For a reconciliation of Adjusted EBITDA to net income (loss), see “—MultiPlan Parent’s Summary Historical Financial Information.’’
Payors generally aim to pay provider claims at a discount to reduce cost, and to eliminate any improperly billed charges before payment is made. Our Analytics-Based Services discount claims using data-driven negotiation and/or re-pricing methodologies to support payments to providers with whom contractual discounts are not possible and are generally priced based on a percentage of savings achieved. Our Network-Based Services offer payors a broad network of discounted rates for providers with whom payors do not have a contractual relationship, and are priced based on either a percentage of savings achieved or at a per employee/member per month fee. Our Payment Integrity Services use data, technology and clinical expertise to assist payors in identifying improper, unnecessary and excessive charges before claims are paid. Payment Integrity Services are generally priced based on a percentage of savings achieved.
 
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MultiPlan was founded in 1980. Since our inception, we have demonstrated our ability to expand and diversify offerings through core business growth as well as disciplined mergers and acquisitions.
We believe that our solutions provide a strong value proposition to payors and their insureds, policyholders or health plan members (collectively, “consumers”), as well as to providers. Overall, our service offerings aim to reduce healthcare costs for payors and consumers in a manner that is orderly, efficient and fair to all parties. In addition, because the fee for our services is in most instances directly linked to the savings realized by our customers, our interests are aligned with the interests of our customers.
Our Strategy
Our Growth Initiatives
According to the Centers for Medicare and Medicaid Services (“CMS”), healthcare expenditures will grow from $3.8 trillion, or 17.8% of U.S. GDP, in 2019 to represent 19.7% of U.S. GDP by 2028, representing a compounded annual growth rate of 5.5%. MultiPlan operates in this large market, which continues to grow each year as a result of aging, growth in services and technology. Already, MultiPlan works on the front lines of these trends, working to reduce healthcare costs, and has established itself as a leader in the Payor Out-of-Network segment. With our decades-long strategic relationships with payors, we believe that we can further deepen our relationships with payors by providing new products and services that address additional cost savings opportunities. Further, with our proprietary data and algorithms, we have a growth opportunity to expand into services that support our payors, providers and consumers to service the healthcare market more completely. We intend to seize the opportunity to address a larger market by executing our enhance, extend, and expand strategy.
The first part of our strategy is enhancing the platform by refining existing products. By improving and innovating upon our existing core products through combining proprietary data with third party data, further deploying artificial intelligence and machine learning, and increasing cross selling activity with our payor customers, we believe the enhance strategy will help us grow revenues significantly over the next five years.
The second element of the strategy is extending the platform by building out new customer segments. This will be accomplished by extending into the in-network cost management product segment, further penetrating core offerings into customer segments including government, Property & Casualty (“P&C”), and dental. We believe the extend strategy will help us further grow revenues significantly over the next five years.
The third element of the strategy is to expand the platform by adding new business models to deliver value-added services for our payors, providers and consumers. This final element of our strategy is a natural progression given the 1.2 million providers under contract and the more than 60 million consumers who have access to MultiPlan’s services. Our data, algorithms and service components can be leveraged by MultiPlan, our payor customers, and partner software companies to tackle providers’ and consumers’ biggest pain points. The expand strategy is expected to unlock opportunities to work through payors to service consumers and providers, with potential services such as provider tools and automation for administrative services, streamlined patient interfaces with the provider and payor, transparency of patient medical bills, and tools and data for consumer financing of medical expenses, among other concepts. We believe the expand strategy will enable us to further grow revenues significantly over the next five years.
Short-Term Execution Plan
2020 is a year of execution for MultiPlan as we lay the foundation to enhance, extend, and expand our platform. In support of our strategy, we have developed a short-term implementation plan, including actions across sales and marketing, product and technology, and M&A that are currently being operationalized. In addition to actions to lay the groundwork for future growth, we are executing several efficiency measures to help self-fund some of the necessary investments.

Sales and Marketing initiatives include:

deploying additional sales and marketing professionals to deepen relationships with customers;

intensifying our sales efforts for TPAs and regional payors; and
 
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developing new, dedicated sales teams focused on Government, Property & Casualty / Auto insurance to increase sales from relatively untapped markets.

Product Development initiatives include:

defining cloud and API architecture to better leverage strength of artificial intelligence (“AI”) and machine learning;

modernizing algorithms from rules-based to dynamic to identify additional savings for payors;

developing more powerful savings algorithms by combining our proprietary data with 3rd party data;

upgrading product interfaces and offerings to better support Government, Property & Casualty / Auto insurance customers;

upgrading existing algorithms to drive savings for the in-network utilization of commercial payors;

evaluate the potential to expand our footprint with new international customers, developing
payment integrity, provider contracting and network management solutions abroad; and

deepening our partnerships with our customers on data initiatives to further drive affordability of healthcare.

M&A initiatives include:

expanding corporate and business development team and leveraging the Sponsor for opportunity sourcing;

driving disciplined and active process to pursue accretive tuck-in acquisitions; and

pursuing accretive, large-scale transformational merger and acquisition opportunities.

Efficiency initiatives include:

automating few remaining existing manual processes on the platform to further lower marginal cost;

leveraging AI and machine learning to further lower costs; and

focusing operations expansion in best-cost geographic locations and review opportunity to rationalize facility locations over the next three years.
We provide the following services:
Analytics-Based Services.
The Company leverages its leading and proprietary information technology (“IT”) platform to offer customers Analytics-Based Services to reduce medical costs. Our proprietary algorithms allow claims to be quickly and accurately compared against a library of the most updated and relevant pricing data. Our extensive nationwide network of providers and our list of payor customers provides us with deep insights into the latest pricing trends. Customers of our Analytics-Based Services are primarily large commercial insurers, Blue Cross and Blue Shield plans, provider-sponsored health plans and TPAs, and property and casualty carriers through their bill review companies. Fees are generally based on a percentage of savings achieved. Analytics-based solutions contributed 59.6% of revenues for the nine months ended September 30, 2020 and 57.1%, 56.2% and 54.8% of revenues for the years ended December 31, 2019, 2018 and 2017, respectively.
Medical Reimbursement Analysis (“MRA”). MRA provides payors with a recommended payment amount on claims. The Company relies on data from public and private sources on a national and local level which are then analyzed using proprietary automated algorithms that deliver consistency and defensibility. The recommendations factor in key variables such as the provider’s location, type and size; the severity and resource intensity of the procedures performed; and costs/accepted reimbursements of other providers under the same circumstances. Two approaches are used to arrive at these recommendations, which are then
 
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used by the payor during the adjudication and payment process. The first approach is a cost-based (facilities) or reimbursement-based (professionals) approach which determines a fair reimbursement by calculating the median cost incurred or payment amount accepted by a benchmark group of like providers to deliver the same service. The second approach is charge-based and arrives at the recommended amount based on analysis of charges from comparable facilities for a specific procedure. All methodologies adjust for geographic differences.
Financial Negotiation.    Our Financial Negotiation services assist payors with claims from providers with whom neither they nor MultiPlan have been able to secure a contractual discount. The Company handles these claims on an individual basis and attempts to negotiate with the provider an acceptable payment amount for a specific claim. Approximately half of the successfully negotiated claims are completed in a fully automated manner. The claims include those in which the proposed negotiated amount is generated by algorithms and automatically transmitted to the provider’s office. Certain providers also choose to set up an arrangement with MultiPlan for pre-determined levels of discount to be automatically deducted on claims that would otherwise be individually negotiated. For those claims that are not automatically negotiated, MultiPlan negotiates directly with the provider’s office through our negotiations staff that are aided by compiled statistics about the discounts typically received on these types of claims.
Network-Based Services
Network-Based Services includes MultiPlan’s Primary and Complementary Networks in which payors can utilize our extensive national network of over 1,200,000 contracted providers to process claims at a significant discount compared to billed fee-for-service rates, or increasingly, to build customized access for use by the customer’s health plan. This latter use is growing in popularity by Medicare Advantage plans that are seeking to expand to capitalize on membership growth. The establishment of a large and successful network of providers utilized by multiple payors creates a self-reinforcing network effect whereby, as more payors and their consumers access the network, participation in the network becomes more desirable to other providers. MultiPlan’s large provider network allows payors to share the prohibitive costs of maintaining a large and complex network. In addition, providers that join MultiPlan’s network gain access to a wide range of payors with the execution of a single contractual relationship. Network-Based services contributed 29.4% of revenues for the nine months ended September 30, 2020 and 32.0%, 34.9% and 39.0% of revenues for the years ended December 31, 2019, 2018 and 2017, respectively.
Primary Network.   For customers without their own direct contractual discount arrangements with providers, our Primary Network serves as the network for the payor’s commercial or government health plan in a given service area in exchange for a PEPM rate, or as the payor’s out-of-area extended primary network in exchange for a percentage of the savings achieved. Increasingly, the network is also being used to configure custom-built access for a payor’s Medicare Advantage plans. Membership in Medicare Advantage programs is growing by an estimated 10,000 consumers every day, so current and new market entrants are focused on expanding their network footprint to serve these members. The Primary Network is National Committee for Quality Assurance (“NCQA”) accredited, which we believe provides assurances to payors regarding provider credentials and network compliance and provides consumers additional confidence regarding the quality of the providers in our network. Customers mainly include provider-sponsored commercial health plans; Medicare Advantage, Medicaid and other government-sponsored health plans; Taft-Hartley plans and TPAs as it is more cost effective for these payors to outsource this function than to incur the expense of developing and maintaining their own network of thousands of doctors and hospitals.
Complementary Network.   Our Complementary Network provides payor customers with access to our national network of healthcare providers that offer discounts under the health plan’s out-of-network benefits, or otherwise can be accessed secondary to another network. Payors use the network to expand provider choice for consumers, and to achieve contracted reductions on more claims. Our customers pay us if they achieve savings from the Complementary Network; therefore, we believe that MultiPlan provides payors with an effective method to reduce costs. Our Complementary Network customers include large commercial insurers, property and casualty carriers via their bill review vendors, TPAs and provider-sponsored health plans.
 
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Payment Integrity Services
Our Payment Integrity Services use data, technology, and clinical expertise to identify improper, unnecessary and excessive charges before claims are paid. There are two services presently offered to payors. With Clinical Negotiation, payment integrity analytics score the claim, and then based on the score the claim is reviewed by a clinician and/or coder and routed to a negotiator to reach agreement for a lower reimbursement as a result of the identified billing issues. The payor reimburses under the negotiated agreement. With Claim Correction, payment integrity analytics and the clinician/coder review (if needed, based on the confidence level of the analytics findings) lead to a recommendation to remove certain charges which is factored into the payor’s final adjudication of the claim. Our Payment Integrity Services are integrated into network pricing, so are used by many of the customers of our primary and/or complementary networks. They also are used on non-contracted claims by large commercial and Medicare Advantage insurers, Blue Cross and Blue Shield plans, provider-sponsored commercial and Medicare Advantage health plans, property and casualty carriers via their bill review vendors, and TPAs. These Payment Integrity Solutions contributed 11.0% of revenues for the nine months ended September 30, 2020 and 10.9%, 8.9% and 6.2% of revenues for the years ended December 31, 2019, 2018 and 2017, respectively.
We also are entering the dental market with pre-payment integrity services that use clinical algorithms and a fully-automated process to identify improperly or questionably billed charges. The dental market is a low-dollar, high volume environment where automation is critical to the ROI of any payment accuracy program. We believe our program is unique in that it also offers an optional provider communication service designed to eliminate improper billing over time through education of proper billing practices/codes and degrees of escalation for continued questionable billing.
Our Industry
Healthcare Industry
According to CMS, healthcare expenditures will grow from $3.8 trillion, or 17.8% of U.S. GDP, in 2019 to represent 19.7% of U.S. GDP by 2028, representing a compounded annual growth rate of 5.5%. There are a multitude of factors driving this expected growth, including recent regulations and ongoing secular trends, such as the aging population and other demographic factors, which are driving expanded healthcare coverage and increased utilization. Additional growth in healthcare costs are driven by availability of new medical technologies, therapies and modalities. As expenditures continue to rise, stakeholders and especially payors are becoming increasingly focused on solutions that reduce medical costs and improve payment accuracy.
We believe cost management and payment integrity solutions will continue to be highly valuable to payors. We expect that growth in demand for these services will be driven by two major trends: (i) increasing costs per claim from medical inflation and technology enhancements and (ii) increasing treatment volume from an aging population and increases in the insured population. As medical activity rises as a result of an aging population and a focus on preventative healthcare and technological advances, medical claims volume and value are expected to increase significantly, which we believe will further increase utilization of our solutions. Furthermore, we benefit from medical cost inflation since the access fee we charge for use of our services is primarily based on a percentage of the savings achieved. We see opportunity in trying to counter the accelerating pace of medical cost inflation, leading to more savings for our customers, and associated revenues for us. For example, if the average charge per claim increases by 10%, we will have a 10% greater dollar value of claims from which to capture savings and revenue.
 
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Cost Management Solutions
Payors of medical claims include large national insurance companies, Blue Cross and Blue Shield plans, provider-sponsored health plans, TPAs, Taft-Hartley plans, property and casualty bill review vendors, and other entities that pay medical bills in the commercial healthcare, government, workers’ compensation, auto medical and dental markets. The government market comprises state and federal government programs such as Medicare Advantage, Medicaid, TRICARE and Veterans Administration. These payors attempt to manage and control the medical costs they face by addressing the price and the quantity of the procedures and products utilized. The chart below demonstrates the way in which payors employ several solutions and services to control medical costs.
[MISSING IMAGE: tm2031592d1-tbl_cost4c.jpg]
Markets
Group Health
The rising cost of healthcare to employers and a focus on slowing the growth of healthcare expenditures are increasing the importance of cost management solutions such as those offered by MultiPlan. The demographic shifts caused by an aging population are expected to lead to more utilization while increased treatment sophistication will drive the cost of care. CMS estimates that medical cost inflation will remain at a premium to CPI.
Government Programs
Government health programs with growing member bases increasingly require cost management services, and we have recently developed businesses that leverage our network and payment integrity assets to compete in the Medicare Advantage, Managed Medicaid and other public sector markets. According to the CBO, Medicare average monthly enrollment is expected to rise from 61 million in 2019 to 78 million in 2030. The Affordable Care Act and an aging population are driving increased membership in state and federal government funded health insurance programs. Membership in Medicare Advantage programs is growing by an estimated 10,000 consumers every day, and as of September 30, 2020, 36 states and the District of Columbia have committed to Medicaid expansion under the Affordable Care Act. With approximately 67% of Medicaid enrollees receiving services through managed care as of July 1, 2017, Managed Medicaid penetration is also expected to increase as a result of Medicaid expansion.
 
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Workers’ Compensation
Workers’ compensation insurers must pay both the indemnity costs and the medical costs associated with an injured worker. Recent trends in medical cost inflation have become a major driver in the overall cost growth for workers’ compensation insurers. Medical services today constitute about 60% of workers’ compensation claims costs, up from 40% in the early 1980s. Despite the unfavorable cost trend, workers’ compensation insurers often must offer workers’ compensation insurance in order to offer other lines of insurance in a given state. This has increased focus on cost-containment measures for the medical portion of workers’ compensation insurance claims through network and analytics-based cost reductions and improved payment accuracy.
Auto Medical
Auto insurance carriers face both costs from auto damage and medical claims. Economic losses for bodily injury liability claims increased 10% annually from 2012 – 2017, well above the 3% annual medical inflation rate, with medical expenses accounting for 79% of claimed losses. Given anticipated medical cost inflation, this trend is expected to continue into the future. Similar to the aforementioned markets, the increasing costs are driving auto insurance carriers to seek out cost management and payment accuracy solutions for the medical cost portion of auto insurance claims.
Our Strengths
We believe the following competitive strengths have been instrumental to our success and position us for future growth.
Long-standing customer relationships.   We believe that we have strong relationships with our customers, which include substantially all of the largest health plans. We have a diversified customer base and longstanding relationships with our top customers. Our top ten customers have been customers for an average of 25 years. Our contracts with large customers generally have terms of three to five years while other contracts have terms of one year that include automatic renewals (although most contracts permit early termination without penalty and with short notice periods). Once a contract is signed with a payor, we have typically retained that customer for many years, and the volume of claims repriced typically continues to grow as we introduce new services or receive more claims by strengthening electronic data interchange (“EDI”) connectivity or deepening penetration. Our customer relationships are further strengthened by high switching costs for our customers as MultiPlan is both electronically linked to customers in their time-sensitive claims processing functions and its logo is often featured on commercial customers’ membership cards when networks are used.
Proprietary, scalable and secure IT platform.   We believe that our IT platform provides us with a substantial competitive advantage. Recently, we have made significant investments in upgrading our IT infrastructure which is certified under HITRUST, NIST and AICPA SOC programs and in May 2020, we were rated at the top of our peer group by BitSight, an IT security rating organization. This upgrade enables us to automatically process and store significantly more transactions and greatly improve our capacity to serve our customers. It is designed for high throughput: our proprietary network repricing application is capable of returning approximately 99% of network claims to our payor customers within one business day. We also have implemented connectivity via EDI (the sending and receiving of claims data between entities in an agreed upon electronic format) or direct web service integration with all of our top customers. In the year ended December 31, 2019, nearly all of the claims processed in our system were received via EDI or direct web service integration. As we process more claims through EDI and direct web service integration, our electronic integration with customers results in substantial back office interconnectivity and considerably reduces complexity and processing failures. As our IT platform is scalable, it is able to absorb significant increases in volume at minimal marginal costs. Today our platform accesses historical claims data for 1 billion claims and processes an average of 360,000 claims per day with the capacity to grow substantially within our current infrastructure.
Comprehensive Services.   We believe the combination of our Analytics-Based, Network-Based and Payment Integrity services is the most comprehensive in the industry. Our network of providers includes approximately 5,600 hospitals, 164,000 ancillary facilities, and 1,075,000 practitioners. We employ
 
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approximately 350 negotiators and support staff, 100 clinicians, medical coders, data scientists and others dedicated to creating payment integrity analytic algorithms, and over 450 IT and approximately 700 operations and service staff focused on MRA and the back-end services associated with all three solution areas. In 2019, these services identified approximately $19 billion in potential medical cost savings. Moreover, the solutions are highly customizable, so payors can use them in any combination and in any order to achieve the objectives each of their customers seek.
Strong cash flow generation.   We have historically been able to generate strong cash flow from operations less capital expenditures because of low capital expenditure requirements and minimal working capital needs. For example, MultiPlan’s capital expenditures as a percentage of revenues were less than 7% in each of the last three fiscal years. Our current strategy may require moderate additional capital investment in the near future as our internally developed IT platform is highly scalable. Our ability to generate strong and consistent cash flow has historically enabled us to invest in our operations, opportunistically reduce our debt and pursue attractive growth opportunities.
Proven and experienced management team.   Our chief executive officer, chief financial officer and chief revenue officer have over 100 years of combined experience managing and leading companies in the healthcare cost management industry. Despite significant payor consolidation over the past several years, our management team has continued to develop new revenue opportunities, expand our margins and strengthen our customer relationships. In addition, our management team has successfully grown our operations in size and profitability through a combination of focused network and product expansion, cost initiatives and acquisitions. Our management team also has a successful track record of acquiring, integrating and managing healthcare businesses.
Limited legal and regulatory risks.   We believe that each of MultiPlan’s service offerings bears less risk than other healthcare businesses that bear insurance risk and bill federal healthcare programs or directly provide care. While we support our customers that are regulated entities, we generally are not directly regulated or face significantly lower levels of regulatory complexity. We function as a transaction processor and we believe we have limited risk for services or billing.
Recent Developments
Business Combination Completed
On October 8, 2020, Churchill consummated the Transactions, including the previously announced business combination (the “Business Combination”) pursuant to the terms of the Merger Agreement, which, among other things, provided for (i) First Merger Sub to be merged with and into Polaris Parent Corp. with Polaris Parent Corp. being the surviving company in the First Merger and (ii) immediately following the First Merger and as part of the same overall transaction as the First Merger, Polaris Parent Corp. to be merged with and into Second Merger Sub, with Second Merger Sub surviving the Second Merger as a wholly owned subsidiary of Churchill. In addition, on the Closing Date, the Company issued $1,300.0 million in aggregate principal amount of Convertible Notes and all of the outstanding Senior PIK Notes were redeemed. In connection with the Transactions, Churchill changed its name to MultiPlan Corporation and The New York Stock Exchange ticker symbols for its Class A common stock and warrants to “MPLN” and “MPLN.WS,” respectively. For more information regarding the Transactions, see “Certain Relationships and Related Party Transactions — The Transactions.”
Refinancing
On October 29, 2020, MPH Acquisition Holdings LLC (“MPH”), a subsidiary of the Company, issued $1,300,000,000 aggregate principal amount of its 5.750% Notes. In addition, MPH increased the commitments under its revolving credit facility from $100.0 million to $450.0 million. MPH used the net proceeds from the 5.750% Notes, together with $715.0 million of cash on hand, to (i) redeem, satisfy and discharge all of the 7.125% Notes and repay $369.0 million of indebtedness under MPH’s term loan facility and (ii) pay fees and expenses in connection therewith.
 
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Acquisition of HSTechnology Solutions, Inc.
On November 9, 2020, we acquired 100 percent of HSTechnology Solutions, Inc. (“HST”) for $140 million in cash. The acquisition will be accounted for as a business combination in accordance with Accounting Standards Codification (‘‘ASC’’) 805. Due to the timing of the acquisition, our initial accounting for the HST acquisition is incomplete. In connection with this acquisition, we incurred approximately $4.3 million of transaction costs.
HST is a leading reference-based pricing growth company that uses sophisticated data analytics and tools to engage members and providers on the front and back end of healthcare. The acquisition increases the value that we offer to healthcare payors by adding complementary services to help them better manage cost, enhances our analytics products and services and further extends us into adjacent customer segments such as third party administrators and regional health plans.
Corporate Information
MultiPlan Corporation is a Delaware corporation. Our principal executive offices are located at 115 Fifth Avenue, New York, New York 10003 and our telephone number at that address is (212) 780-2000. Our website is located at www.multiplan.us. Our website and the information contained on, or accessed through, our website are not part of this prospectus, and you should rely only on the information contained in this prospectus when making an investment decision.
 
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The Offering
We are registering the issuance of (a) 415,700,000 shares of Class A common stock issued in connection with the Business Combination, (b) 132,050,000 shares of Class A common stock issued in connection with the Common PIPE Investment, (c) 27,500,000 shares of Class A common stock issued upon the conversion of Churchill Class B common stock in connection with the Transactions and (d) 58,500,000 shares of Class A common stock issuable by us upon exercise of the Public Warrants, Private Placement Warrants, Working Capital Warrants and PIPE Warrants.
We are also registering the offer and sale from time to time by the Selling Securityholders or their permitted transferees, of (a) up to 633,750,000 shares of our Class A common stock and (b) up to 24,500,000 warrants representing the Private Placement Warrants and the Working Capital Warrants.
Any investment in the securities offered hereby is speculative and involves a high degree of risk. You should carefully consider the information set forth under “Risk Factors” on page 22 of this prospectus.
Issuance of Class A Common Stock
The following information is as of November 11, 2020 and does not give effect to issuances of our Class A common stock, warrants or options to purchase shares of our Class A common after such date, or the exercise of warrants or options after such date.
Shares of our Class A common stock to be issued upon exercise of all Public Warrants, Private Placement Warrants, Working Capital Warrants and PIPE Warrants
58,500,000 shares.
Shares of our Class A common stock outstanding prior to exercise of all Public Warrants, Private Placement Warrants, Working Capital Warrants and PIPE Warrants
667,461,272 shares.
Use of proceeds
We will receive up to an aggregate of approximately $449,500,000 million from the exercise of all Public Warrants, Private Placement Warrants, Working Capital Warrants and PIPE Warrants, assuming the exercise in full of all such warrants for cash.
Unless we inform you otherwise in a prospectus supplement or free writing prospectus, we intend to use the net proceeds from the exercise of such warrants for general corporate purposes which may include acquisitions or other strategic investments or repayment of outstanding indebtedness.
Resale of Class A common stock and warrants
Shares of Class A common stock offered by the Selling Securityholders (including 58,500,000 shares of Class A common stock that may be issued upon exercise of the Public Warrants, Private Placement Warrants, Working Capital Warrants and PIPE Warrants)
633,750,000 shares.
 
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Warrants to purchase Class A common stock offered by the Selling Securityholders
24,500,000 warrants (representing the Private Placement Warrants and Working Capital Warrants).
Exercise price
$11.50 per share for each Private Placement Warrant and each Working Capital Warrant and $12.50 per share for each whole PIPE Warrant, in each case, subject to adjustment as described herein.
Use of proceeds
We will not receive any proceeds from the sale of the Class A common stock and warrants to be offered by the Selling Securityholders. With respect to shares of Class A common stock underlying the warrants, we will not receive any proceeds from such shares except with respect to amounts received by us upon exercise of such warrants to the extent such warrants are exercised for cash.
Lock-up agreements
Certain of our stockholders are subject to certain restrictions on transfer until the termination of applicable lock-up periods. See “Securities Act Restrictions on Resale of Securities — Lock-up Agreements” for further discussion.
NYSE Ticker symbols
“MPLN” and “MPLN.WS” for the Class A common stock and Public Warrants, respectively.
Unless we specifically state otherwise or the context otherwise requires, the number of shares of our Class A common stock that will be outstanding after this offering is based on 667,461,272 shares of our Class A common stock outstanding as of November 11, 2020 and excludes:

(i) 9,094,876 shares of Class A common stock purchased by a subsidiary of MultiPlan in August 2020, which shares are held by the Company as treasury shares and (ii) the 8,693,855 shares of Class A common stock that were validly redeemed in connection with the Transactions;

85,850,000 shares of Class A common stock available for future issuance under our 2020 Omnibus Incentive Plan; and

the shares of Class A common stock issuable upon conversion of the Convertible Notes.
Unless we specifically state otherwise or the context otherwise requires, this prospectus reflects and assumes no exercise of the outstanding stock options described above.
 
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Risk Factor Summary
Our business is subject to numerous risks and uncertainties, including those highlighted in the section titled “Risk Factors,” that represent challenges that we face in connection with the successful implementation of our strategy and growth of our business. The occurrence of one or more of the events or circumstances described in the section titled “Risk Factors,” alone or in combination with other events or circumstances, may adversely affect our ability realize the anticipated benefits of the Business Combination, and may have an adverse effect on our business, cash flows, financial condition and results of operations. Such risks include, but are not limited to:
Risks Related to Our Business and Operations

impact of COVID-19 and related risks;

retaining, and the success of, our customers;

our ability to preserve or increase our market share, and to maintain our PPO network;

our ability to effectively compete and maintain and grow our market share;

the continued ability of our customers to pay for our services;

our PPO networks experiencing decreased discounts from providers;

our ability to retain our existing providers and to attract additional providers to our network;

our ability to attract, motivate and retain members of our senior management team and qualified employees;

our ability to implement our operational and financial information systems and expand, train, manage and motivate our workforce;

changes in existing health care law and regulatory interpretations on a state or federal level;

changes in the healthcare industry;

resistance to the application of certain healthcare cost management techniques by healthcare providers;

changes that impact our access to preferred provider networks;

our ability achieve some or all of the strategic, operational, growth and other benefits that we expect to realize through our Short-Term Execution Plan;

successful remediation of the material weaknesses in our internal control over financial reporting;

increased costs and obligations as a result of being a public company;
Risks Related to the Healthcare Industry and other Legal Regulations

new federal and state laws and regulations that impact our business or our ability to expand our operations;
Risks Related to Our Indebtedness

our substantial level of indebtedness and significant leverage;

the incurrence of additional indebtedness;

interest rate risk relating to our variable rate indebtedness;

our ability to comply with, and the limitations imposed on our business by, the restrictions contained in the agreements governing our indebtedness;

our ability to generate sufficient cash to service all of our indebtedness;
 
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Risks Related to Our Common Stock

our ability to comply with the continued listing standards of NYSE;

future sales of our securities into the market, including the sale of securities pursuant to this prospectus; and

and the other risk factors described in the section titled “Risk Factors.”
 
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CHURCHILL’S SUMMARY HISTORICAL FINANCIAL INFORMATION
Churchill’s balance sheet data as of December 31, 2019 and statement of operations data for the period from October 30, 2019 (inception) through December 31, 2019 are derived from Churchill’s audited financial statements, included elsewhere in this prospectus. Such data as of and for the nine months ended September 30, 2020 are derived from Churchill’s unaudited financial statements, included elsewhere in this prospectus.
The information is only a summary and should be read in conjunction with Churchill’s financial statements and related notes. The historical results included below and elsewhere in this prospectus are not indicative of future performance.
Nine Months
Ended September 30,
2020
Period from October 30,
2019 (inception)
through December 31,
2019
(unaudited)
Statement of Operations Data:
Revenues
$ $
Loss from operations
$ (10,676,879) $ (1,450)
Interest earned on cash equivalents held in Trust Account
$ 4,375,998 $
Net (loss) income
$ (6,961,179) $ (1,450)
Weighted average shares outstanding, basic and diluted(1)
30,815,111 25,000,000
Basic and diluted net loss per common share(2)
$ (0.31) $ (0.00)
As of September 30, 2020
As of December 31, 2019
Balance Sheet Data:
Total assets
$ 1,107,513,145 $ 318,930
(1)
Excludes an aggregate of 105,003,860 shares subject to possible redemption at September 30, 2020.
(2)
Excludes interest income of $2,449,217 attributable to shares subject to possible redemption for the nine months ended September 30, 2020.
 
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MultiPlan Parent’s Summary Historical Financial Information
The following tables present summary historical consolidated financial data of MultiPlan Parent and MPH (the predecessor of Multiplan Parent) for the periods presented. The consolidated statement of income and comprehensive income data for the years ended December 31, 2017, 2018 and 2019 and the other financial data as of December 31, 2018 and 2019 have been derived from MultiPlan Parent’s audited consolidated financial statements included elsewhere in this prospectus. The consolidated statements of loss and comprehensive loss data for the nine months ended September 30, 2019 and 2020 and the other financial data as of September 30, 2020 have been derived from MultiPlan Parent’s unaudited condensed consolidated financial statements included elsewhere in this prospectus. The unaudited condensed consolidated financial statements of MultiPlan Parent have been prepared on the same basis as the audited consolidated financial statements of MultiPlan Parent. In the opinion of MultiPlan Parent’s management, the unaudited condensed consolidated interim financial data reflects all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the financial information in those statements. The summary historical consolidated financial data for the year ended December 31, 2015, the period from January 1, 2016 through June 6, 2016, the period from May 2, 2016 through December 31, 2016 and the three months ended March 31, 2019 and 2020, and the other financial data as of December 31, 2016 and September 30, 2019 has been derived from MultiPlan Parent’s (or its predecessor’s) unaudited financial statements not included in this prospectus.
On June 7, 2016, affiliates of Hellman & Friedman LLC, certain other investors and certain members of management acquired, indirectly, all of the capital stock of MultiPlan Parent. The following discussion includes references to the “successor” and “predecessor” of, and the related accounting periods resulting from, the consummation of such acquisition on June 7, 2016. In accordance with accounting principles generally accepted in the United States of America (“GAAP”), the accounting period for the successor began on May 2, 2016, the date the successor began accruing expenses related to such acquisition.
You should read the summary financial data presented below in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and MultiPlan Parent’s consolidated financial statements and the related notes included elsewhere in this prospectus. The financial information contained in this section relates to MultiPlan, prior to and without giving pro forma effect to the impact of the Transactions and the Refinancing and the results reflected in this section may not be indicative of our results going forward. See the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” included elsewhere in this prospectus.
Nine
Months
Ended
September 30,
2020
Nine
Months
Ended
September 30,
2019
Year
Ended
December 31,
2019
Year
Ended
December 31,
2018
Year
Ended
December 31,
2017
May 2 –
December 31,
2016
January 1 –
June 6,
2016
Year Ended
December 31,
2015
($ in thousands)
Successor
Successor
Successor
Successor
Successor
Successor
Predecessor
Predecessor
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Consolidated Statements of Income and Comprehensive
Income Data:
Revenues(1) $ 682,419 $ 736,497 $ 982,901 $ 1,040,883 $ 1,067,266 $ 575,889 $ 412,597 $ 865,094
Operating (loss) income
$ (99,400) $ 265,530 $ 368,209 $ 427,541 $ 363,636 $ 89,415 $ (50,607) $ 245,570
Net (loss) income
$ (347,242) $ (2,134) $ 9,710 $ 36,223 $ 648,132 $ (56,503) $ (247,598) $ 7,749
Basic and diluted net (loss) income per share:
$ (34,724,200) $ (213,400) $ 971 $ 3,622 $ 64,813 $ (5,650) $ (24,760) $ 775
Other Financial Data:
Medical charges processed(2)
$ 76,600,000 $ 79,600,000 $ 106,300,000 $ 101,600,000 $ 97,400,000 $ 88,600,000
Medical cost potential savings(3)
18.2% 17.5% 17.8% 18.3% 18.3% 17.2%
Capital expenditures(4)
$ 49,322 $ 48,020 $ 66,414 $ 63,556 $ 60,709 $ 31,055 $ 22,602 $ 49,714
Total assets(5)
$ 8,400,027 $ 8,503,894 $ 8,360,411 $ 8,642,973 $ 8,987,709 $ 9,285,126 $ 5,297,921
EBITDA(6) $ 197,378 $ 577,652 $ 778,463 $ 815,503 $ 731,953 $ 309,651 $ (77,656) $ 473,581
Adjusted EBITDA(6)
$ 511,261 $ 563,609 $ 750,350 $ 824,886 $ 812,086 $ 416,884 $ 298,653 $ 611,845
(1)
On January 1, 2018, MultiPlan Parent adopted ASC Topic 606, Revenue from Contracts with Customers. See Note 2 to MultiPlan Parent’s annual consolidated financial statements included elsewhere in this prospectus for additional information.
(2)
Medical charges processed represents the aggregate dollar amount of claims processed by our cost management solutions in the period presented. The dollar amount of the claim for purposes of this
 
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calculation is the dollar amount of the claim prior to any reductions that may be made as a result of the claim being processed by our cost management solutions.
(3)
Medical cost potential savings represents the aggregate amount of potential savings in dollars identified by our cost management solutions in the period presented expressed as a percentage of the aggregate amount of medical charges processed in the period presented. Since certain of our fees are based on the amount of savings achieved by our customers and our customers are the final adjudicator of the claims and may choose not to reduce claims or reduce claims by only a portion of the potential savings identified, medical cost potential savings may not directly correlate with the amount of fees earned in connection with the processing of such claims.
(4)
Capital expenditures includes purchases of property and equipment and capitalized software development costs.
(5)
On January 1, 2019, MultiPlan Parent adopted ASC Topic 842, Leases. See Note 2 to MultiPlan Parent’s consolidated financial statements included elsewhere in this prospectus for additional information.
(6)
EBITDA and Adjusted EBITDA are supplemental measures of our performance that are not required by or presented in accordance with GAAP. These measures are not measurements of our financial performance or liquidity under GAAP, have limitations as analytical tools and should not be considered in isolation or as an alternative to net income (loss), cash flows or any other measures of performance or liquidity prepared in accordance with GAAP.
MultiPlan Parent presents EBITDA and Adjusted EBITDA because certain covenants in our debt instruments are tied to ratios and baskets based on these measures. EBITDA represents net income before interest expense, interest income, income tax provision (benefit) and depreciation and amortization of intangible assets. Adjusted EBITDA is EBITDA as further adjusted by certain items as described in the table below. In addition, in evaluating EBITDA and Adjusted EBITDA, you should be aware that in the future, we may incur expenses similar to the adjustments in the presentation of EBITDA and Adjusted EBITDA. The presentation of EBITDA and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. The calculations of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. Based on our industry and debt financing experience, MultiPlan Parent believes that EBITDA and Adjusted EBITDA are customarily used by investors, analysts and other interested parties to provide useful information regarding a company’s ability to service and/or incur indebtedness.
MultiPlan Parent also believes that Adjusted EBITDA is useful to investors and analysts in assessing our operating performance during the periods these charges were incurred on a consistent basis with the periods during which these charges were not incurred. Both EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider either in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of the limitations are:

EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;

EBITDA and Adjusted EBITDA do not reflect interest expense, or the cash requirements necessary to service interest or principal payments on our debt;

EBITDA and Adjusted EBITDA do not reflect our tax expense or the cash requirements to pay our taxes; and

although depreciation and amortization are non-cash charges, the tangible assets being depreciated will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements.
 
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The following table reconciles net income to EBITDA and Adjusted EBITDA:
Nine Months
Ended
September 30,
2020
Nine Months
Ended
September 30,
2019
Year
Ended
December 31,
2019
Year
Ended
December 31,
2018
Year
Ended
December 31,
2017
May 2 —
December 31,
2016
January 1 —
June 6,
2016
Year
Ended
December 31,
2015
($ in thousands)
Successor
Successor
Successor
Successor
Successor
Successor
Predecessor
Predecessor
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Net (loss) income
$ (347,242) $ (2,134) $ 9,710 $ 36,223 $ 648,132 $ (56,503) $ (247,598) $ 7,749
Adjustments:
Interest expense(a)
259,290 286,438 $ 376,346 $ 383,261 $ 281,972 $ 155,140 $ 81,385 $ 152,127
Interest income
(229) (133) $ (196) $ (51) $ (9) $ (19) $ (12)
Income tax (benefit) provision
(11,219) (191) $ 799 $ 8,108 $ (586,512) $ (9,203) $ (11,701) $ 85,706
Depreciation
44,903 41,723 $ 55,807 $ 52,268 $ 53,002 $ 30,244 $ 19,818 $ 41,650
Amortization of intangible assets
250,540 250,540 $ 334,053 $ 334,053 $ 334,053 $ 189,297 $ 80,152 $ 184,967
Non-income taxes(b)
1,335 1,409 $ 1,944 $ 1,641 $ 1,315 $ 695 $ 288 $ 1,394
EBITDA
$ 197,378 $ 577,652 $ 778,463 $ 815,503 $ 731,953 $ 309,651 $ (77,656) $ 473,581
Adjustments:
Other expense (income)(c)
1,308 1,448 $ 1,947 $ 4,617 $ 5,857 $ 3,727 $ 3,144 $ 6,252
Transaction related expenses(d)
5,162 3,267 $ 3,270 $ 49 $ 3,435 $ 74,503 $ 14,907 $ 3
Loss on extinguishments and modification of
debt(e)
$ 20,053 $ 127,307
Loss on equity investments(f)
7,784
Gain on repurchase and cancellation of notes(g)
(18,450) $ (18,450)
Stock-based compensation(h)
299,629 (308) $ (14,880) $ 4,717 $ 50,788 $ 29,003 $ 230,951 $ 132,009
Adjusted EBITDA
$ 511,261 $ 563,609 $ 750,350 $ 824,886 $ 812,086 $ 416,884 $ 298,653 $ 611,845
(a)
In the years ended December 31, 2017, 2018 and 2019, MultiPlan Parent did not recognize expense for the portions of debt issuance costs related to the amounts of the principal loan prepayments of MPH’s term loan facility in each year, which resulted in an understatement of long-term debt of $2.3 million as of December 31, 2019. MultiPlan Parent corrected this error as an out-of-period adjustment resulting in an overstatement of interest expense of $2.3 million in the nine months ended September 30, 2020.
(b)
Non-income taxes includes personal property taxes, real estate taxes, sales and use taxes and franchise taxes which are included in cost of services and general and administrative expenses in MultiPlan Parent’s consolidated statements of income and comprehensive income.
(c)
Represents miscellaneous non-operating expenses, gain or loss on disposal of assets, management fees, and costs associated with the integration of acquired companies into MultiPlan.
(d)
Represents ordinary course transaction costs, including transaction costs related to the acquisition of MultiPlan by affiliates of Hellman & Friedman LLC, certain other investors and certain members of management on June 7, 2016, the issuance of the Senior PIK Notes on November 21, 2017 by Polaris Intermediate Corp. and the refinancing of MPH’s term loan facility effective June 12, 2017, and to the transactions contemplated by the Merger Agreement.
(e)
Includes expenses related to the refinancing of MPH’s term loan facility effective June 12, 2017 and expenses and early termination fees associated with MPH’s 6.625% Senior Notes due 2022 on June 7, 2016. See Note 9 to MultiPlan Parent’s audited consolidated financial statements included elsewhere in this prospectus for additional information.
(f)
Loss on equity investments reflects the change in value of 9,094,876 shares of Churchill’s Class A common stock that were purchased by a subsidiary of MultiPlan Parent in August 2020 for an aggregate purchase price (including commissions) of $101.0 million.
(g)
Represents the gain related to the repurchase and cancellation of $121.3 million in aggregate principal amount of Senior PIK Notes.
(h)
Includes the cost of an employee stock-based compensation plan. MultiPlan Parent changed its assumptions in computing the fair market value of the Holdings Class B Units (the “Units”) to incorporate a 19% discount for lack of marketability of the Units for the nine months ended September 30, 2019 and 20% discount for lack of marketability of the Units for the years ended December 31, 2019 and December 31, 2018, respectively. The valuation as of September 30, 2020 used the cumulative exit value of MultiPlan Parent, corresponding to the transaction value and prior distributions, and removed the discount for lack of marketability. See Note 14 to MultiPlan Parent’s audited consolidated financial statements included elsewhere in this prospectus for additional information.
 
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Market Price, Ticker Symbols and Dividend Information
Market Price and Ticker Symbols
Our Class A common stock and Public Warrants are currently listed on NYSE under the symbols “MPLN” and “MPLN.WS,” respectively.
The closing price of the Class A common stock and Public Warrants on November 16, 2020, was $6.91 and $1.30, respectively.
Holders
As of November 11, 2020, there were 108 holders of record of our Class A common stock. Such number does not include beneficial owners holding our securities through nominee names.
Dividend Policy
We have not paid any cash dividends on our Class A common stock to date. The payment of cash dividends in the future will be dependent upon, among other things, our revenues and earnings, capital requirements and general financial condition and the terms of any outstanding indebtedness. The payment of any cash dividends will be within the discretion of the Board at such time.
 
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Summary Unaudited Pro Forma Condensed Combined Financial Information
The following summary unaudited pro forma condensed combined financial data (the “summary pro forma data”) gives effect to the business combination and the other transactions contemplated by the Transactions and Refinancing as described in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.” The Transactions were accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with GAAP. Under this method of accounting, Churchill was treated as the acquired company for financial reporting purposes. Accordingly, for accounting purposes, the Transactions were treated as the equivalent of MultiPlan Parent issuing shares of common stock for the net assets of Churchill, accompanied by a recapitalization. The net assets of Churchill were recognized at fair value (which were consistent with carrying value), with no goodwill or other intangible assets recorded.
On October 8, 2020, the Transactions were consummated and, in accordance with the terms of the Merger Agreement, the aggregate consideration paid to Holdings, as agent on behalf of Holdings’ equityholders, was $5,678,000,000, which consisted of $1,521,000,000 in cash (the “Closing Cash Consideration”) and 415,700,000 shares of Churchill’s Class A common stock (the “Closing Share Consideration”).
In connection with the consummation of the Transactions:

$1,521,000,000 in cash was paid to Holdings on behalf of Holdings’ equityholders as the Closing Cash Consideration;

Churchill issued 415,700,000 shares of its Class A common stock as Closing Share Consideration;

8,693,855 shares of Churchill’s Class A common stock were redeemed for an aggregate of $87.2 million, or approximately $10.03 per share, paid from the Churchill trust account;

Churchill issued and sold to the Common PIPE Investors, (a) 130,000,000 shares of Churchill’s Class A common stock at a purchase price of $10.00 per share for aggregate proceeds of $1,300,000,000, (b) warrants to purchase 6,500,000 shares of Churchill’s Class A common stock and (c) an additional 2,050,000 shares of Churchill’s Class A common stock were issued in lieu of an original issue discount;

Churchill issued $1,300,000,000 in aggregate principal amount of Convertible Notes for aggregate proceeds of $1,267,500,000;

the Senior PIK notes were redeemed in full for a total redemption price of $1,237.6 million (which includes accrued interest through October 7, 2020);

all of Churchill’s 27,500,000 outstanding shares of Class B common stock were converted into shares of Churchill’s Class A common stock on a one-for-one basis;

Churchill paid KG a transaction fee of $15,000,000 and a placement fee of $15,500,000, all of which was paid in cash; and

The Sponsor elected to convert the full balance of the Note into 1,500,000 Working Capital Warrants.
On October 29, 2020, MPH issued $1,300,000,000 aggregate principal amount of its 5.750% Notes. In addition, MPH increased the commitments under its revolving credit facility from $100.0 million to $450.0 million. MPH used the net proceeds from the 5.750% Notes, together with $715.0 million of cash on hand, to (i) redeem, satisfy and discharge all of the 7.125% Notes and repay $369.0 million of indebtedness under MPH’s term loan facility and (ii) pay fees and expenses in connection therewith.
The summary unaudited pro forma condensed combined balance sheet data as of September 30, 2020 combines the unaudited condensed consolidated balance sheet of Churchill as of September 30, 2020 with the unaudited condensed consolidated balance sheet of MultiPlan Parent as of September 30, 2020, giving effect to the Transactions and Refinancing as if they had been consummated on that date.
The summary unaudited pro forma condensed combined statement of loss data for the nine months ended September 30, 2020 combines the unaudited condensed consolidated statements of operations of Churchill for the nine months ended September 30, 2020 with the unaudited condensed consolidated
 
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statements of (loss) income and comprehensive (loss) income of MultiPlan Parent for the nine months ended September 30, 2020. The summary unaudited pro forma condensed combined statements of loss data for the year ended December 31, 2019 combines the audited statements of operations for the period from October 30, 2019 (inception) through December 31, 2019 of Churchill with the audited consolidated statements of income and comprehensive income of MultiPlan Parent for the year ended December 31, 2019. The summary unaudited pro forma condensed combined statements of loss data for the nine months ended September 30, 2020 and the year ended December 31, 2019 give effect to the Transactions and Refinancing as if they had occurred as of January 1, 2019.
The summary unaudited pro forma condensed combined data have been derived from, and should be read in conjunction with, the more detailed unaudited pro forma condensed combined financial information and the accompanying notes in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.” The summary pro forma data is based upon, and should be read in conjunction with, the audited consolidated financial statements and related notes of Churchill and MultiPlan Parent for the applicable periods included elsewhere in this prospectus. The summary pro forma data is for illustrative purposes only and is based on information currently available and management’s assumptions and estimates. The pro forma combined financial information does not necessarily reflect what the combined company’s financial condition or results of operations would have been had the Transactions and Refinancing occurred on the dates indicated. The summary unaudited pro forma condensed combined financial information also may not be useful in predicting the future financial condition and results of operations of the combined company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.
($ in thousands, other than share and per share data)
Nine Months
Ended
September 30, 2020
Year Ended
December 31, 2019
Summary Unaudited Pro Forma Condensed Combined Statements of (Loss) Income Data
Pro Forma as adjusted net (loss) income attributable to shareholders
$ (327,130) $ 29,796
Weighted average shares outstanding, basic and diluted
676,556,145 676,556,145
Basic and diluted net (loss) income per share
$ (0.48) $ 0.04
Summary Unaudited Pro Forma Condensed Combined Balance Sheets Data
Total current assets
$ 226,167
Total assets
$ 8,228,351
Total current liabilities
$ 90,583
Total liabilities
$ 5,643,754
Shareholders’ equity
$ 2,584,597
 
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Summary Comparative Per Share Data
The following table sets forth selected historical comparative share information for Churchill and MultiPlan Parent, respectively, and unaudited pro forma condensed combined per share information of the Company on a pro forma as adjusted basis after giving effect to the Transactions and Refinancing.
The pro forma as adjusted book value information reflects the Transactions and Refinancing as if they had occurred on September 30, 2020.
This information is only a summary and should be read together with the selected historical financial information included elsewhere in this prospectus, and the audited and unaudited financial statements of Churchill and MultiPlan Parent and related notes that are included elsewhere in this prospectus. The unaudited Churchill and MultiPlan Parent pro forma combined per share information is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial statements and related notes included elsewhere in this prospectus.
The unaudited pro forma condensed combined loss per share information below does not purport to represent the earnings per share which would have occurred had the companies been combined during the periods presented, nor earnings per share for any future date or period. The unaudited pro forma condensed combined book value per share information below does not purport to represent what the value of Churchill and MultiPlan Parent would have been had the companies been combined during the period presented.
As of and for the
Nine Months Ended September 30, 2020
As of and for the
Year Ended December 31, 2019
Book value per
share – basic and
diluted(1)
Net loss per
share – basic and
diluted
Book value per
share – basic and
diluted(1)
Net income (loss)
per share – basic
and diluted
Churchill
Historical
$ 0.16 $ (0.31)(2) $ 0.00 $ (0.00)
Pro forma as adjusted
$ 3.82 $ (0.48) $ 0.04
Multiplan Parent
Historical
$ 193,760,400 $ (34,724,200) $ 198,521,800 $ 971,000
Equivalent pro forma as adjusted(3)
$ 158,797,400 $ (19,953,600) $ 1,662,800
(1)
Book value per share is equal to total shareholders’ equity divided by total basic and diluted outstanding shares.
(2)
Excludes interest income of $2,449,217 attributable to shares subject to possible redemption for the nine months ended September 30,2020.
(3)
Pro forma as adjusted amounts for Churchill, multiplied by 41,570,000 (the exchange ratio).
The earnings per share amounts exclude the anti-dilutive impact from shares of Churchill’s Class A common stock underlying the warrants and the Convertible Notes.
 
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Risk Factors
An investment in our securities involves a high degree of risk. You should carefully consider the following risk factors, together with all of the other information included in this prospectus, before making an investment decision. The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances, may adversely affect the anticipated benefits of the Transactions, and may have an adverse effect on our business, cash flows, financial condition and results of operations. You should also carefully consider the following risk factors in addition to the other information included in this prospectus, including matters addressed in the section entitled “Cautionary Note Regarding Forward-Looking Statements.” We may face additional risks and uncertainties that are not presently known to us or that we currently deem immaterial, which may also impair our business or financial condition. The following discussion should be read in conjunction with the financial statements and notes to the financial statements included herein.
Risks Related to Our Business and Operations
The impact of COVID-19 and related risks could materially affect our results of operations, financial position and/or liquidity.
In December 2019, a novel strain of coronavirus surfaced and has spread to many countries. The resulting disease, COVID-19, has been characterized as a pandemic by the World Health Organization. The global outbreak of COVID-19 has created significant volatility, uncertainty and economic disruption. The extent to which the COVID-19 pandemic impacts our business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the ultimate geographic spread and severity of the COVID-19 pandemic; the duration and severity of the pandemic; business closures, travel restrictions, social distancing and other actions taken to contain and treat COVID-19; the effectiveness of actions taken to contain and treat SARS-CoV-2, the virus that causes COVID-19; the impact of the pandemic on economic activity; the extent and duration of the effect on healthcare demand and treatment patterns; and any impairment in value of our tangible or intangible assets which could be recorded as a result of weaker economic conditions. For example, there has been a decrease in patient visits to hospitals and providers due to risk and fear of exposure to COVID-19, as well as decreases in, or temporary moratoriums on, elective procedures, which may be reimposed in the future. In addition, if the pandemic continues to create disruptions or turmoil in the credit or financial markets, or impacts our credit ratings, it could adversely affect our ability to access capital on favorable terms and continue to meet our liquidity and any acquisition financing needs, all of which are highly uncertain and cannot be predicted.
As the COVID-19 pandemic and any associated protective or preventative measures continue to spread in the United States and around the world, we may experience disruptions to our business. Risks and uncertainties presented by the ongoing effects of the COVID-19 pandemic include the following:

impact of the COVID-19 pandemic on our results and financial position due to the significant uncertainty in relation to the duration and challenges that the ongoing pandemic may have on the healthcare industry and us at this time, including increases in unemployment and reductions in participants covered by our customers’ plans and related services;

effects of new laws on our business;

loss of our customers, particularly our largest customers;

decreases in our existing market share or the size of our PPO networks;

effects of competition;

effects of pricing pressure;

the inability of our customers to pay for our services;

decreases in discounts from providers;

the loss of our existing relationships with providers;

the loss of key members of our management team;
 
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changes in our regulatory environment, including healthcare law and regulations;

the inability to implement information systems or expand our workforce;

changes in our industry;

providers’ increasing resistance to application of certain healthcare cost management techniques;

pressure to limit access to preferred provider networks;

heightened enforcement activity by government agencies;

the possibility that regulatory authorities may assert we engage in unlawful fee splitting or corporate practice of medicine;

interruptions or security breaches of our information technology systems;

the expansion of privacy and security laws;

our inability to expand our network infrastructure;

our ability to protect proprietary applications;

our ability to identify, complete and successfully integrate future acquisitions; and

our ability to pay interest and principal on our notes and other indebtedness.
These and other disruptions related to the COVID-19 pandemic could materially and adversely affect our business, financial condition and results of operations. In addition, the COVID-19 pandemic may exacerbate the other risks described in this “— Risks Related to OurBusiness and Operations” section.
Our success is dependent on retaining, and the success of, our customers as we depend on a core group of customers for a significant portion of our revenues.
If significant customers terminate or do not renew or extend their contracts with us, our business, financial condition and results of operations could be adversely affected. Our customer contracts generally permit our customers to terminate with relatively short notice, including without cause. Many organizations in the insurance industry are consolidating, which could also result in the loss of one or more of our significant customers. To the extent that these consolidation trends do not cause the loss of customers, we could nevertheless encounter greater customer concentration as our customers become parts of larger organizations. In addition, we could lose significant customers due to competitive pricing pressures or other reasons. Any of the foregoing factors could also result in us receiving a lower ranking in our customer’s claims matching process, which would reduce the number of claims we match and as a result would reduce our revenues. Due to the substantial fixed costs in our business, the loss of a significant customer or receiving a lower ranking in our customers’ claims matching process could cause a material decline in our profitability and operating performance.
Our success is also dependent on our customers’ ability to attract individuals to join their health plans. Many individuals receive their coverage through their employer, and thus employers play a large role in selecting which health plan their employees use. Our customers may also lose members due to competition or if businesses reduce headcount and thus the number of employees who receive health insurance. In addition, our customers may reduce the scope of the health coverage they provide, which may then result in us matching fewer claims. If our customers suffer a decline in the number of members of their health plans or reduce the scope of the insurance coverage they provide, fees from the number of claims we match and the amount of per employee per month (“PEPM”) fees we receive may decrease, which may have a material adverse effect on our business, financial condition and results of operations.
In addition, the majority of our contracts contain payment terms that are based on a percentage of savings to the customer or on the number of covered employees and most contain no minimum requirements for the amount of claims that the customer must process through us. As a result, the termination of customer contracts, the material reduction by our customers of claims processed through us or our inability to generate significant savings with respect to customer claims would adversely affect our business, financial condition and results of operations.
 
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The loss of any one of our largest customers could cause our business to suffer. Our two largest customers accounted for approximately 35% and 20%, respectively, of our revenues for the year ended December 31, 2019. If we lose any one of our largest customers, one of our largest customers reduces its use of our services, or if any one of our largest customers negotiates less favorable terms with us, then we will lose revenue, which would materially adversely affect our business, financial condition and results of operations. In addition, our contracts with these two largest customers are terminable without cause on relatively short notice. Revenue from customers that have accounted for significant revenue in past periods, individually or as a group, may not continue, or if continued, may not reach or exceed historical levels in any period.
If we are unable to preserve or increase our market share or maintain our PPO networks, our results may be adversely affected.
Our business strategy and future success in marketing our services depends in large part on our ability to capture market share as national and regional insurance carriers and large, self-funded employers look for ways to achieve cost savings. We cannot assure you that we will successfully market our services to these insurance carriers and employers or that they will not resort to other means to achieve cost savings, including by in-sourcing or expanding their in-sourcing of such services. Our customers may further disaggregate the services we provide for them generally or in certain geographical areas, such as individual states, and in doing so create more competitive pricing conditions for such services. Moreover, some of our customers have acquired or may acquire our competitors. If the demand for our services declines or does not increase, our business may be materially and adversely affected.
The market for our services is fragmented and competitive and may adversely impact our competitive position in the market.
We face competition from health maintenance organizations (“HMOs”), other independent PPOs, insurance companies and other managed healthcare companies and providers of non-network repricing services such as fee negotiation. In addition, some of our competitors have introduced enhanced PPO network products that increase the proportion of contracted in-network provider utilization as compared to out-of-network utilization. These products compromise the market position of our traditional out-of-network lines of business by reducing out-of-network utilization.
Our customers often select PPO providers by specific geography based upon the magnitude of the discount provided or the breadth of the network. Although we are one of the largest independent PPO network providers, regional and local PPO network providers may have deeper discounts or broader networks within their particular region. Our customers may select regional competitors in specific geographies based upon potential deeper discounts and broader networks. Accordingly, we cannot assure you that we will continue to maintain our existing customers or our ranking in their claims matching process. We also cannot assure you that we will be successful in any new markets that we may enter.
Our failure to do any of the foregoing may have a material adverse effect on our business, financial condition and results of operations.
If competition or pricing pressures increase, our growth and profits may decline.
Consolidation among our customers may lead to increased pricing pressures. Pricing is highly competitive across all of our lines of service. PPOs compete on the basis of many factors, including the quality of healthcare services, the breadth of provider networks, the discounts afforded by the provider contracts and the efficiency of the administration of claims. However, we expect that price will continue to be a significant competitive factor. Our customer contracts are subject to negotiation and renegotiation as customers seek to contain their costs, and they may elect to reduce benefits in order to constrain cost increases. Alternatively, customers may purchase different types of products that are less profitable to us or move to competitors to obtain more favorable pricing. Industry consolidation may make it more difficult for us to attract and retain customers and healthcare providers on advantageous terms. In addition, many of our current and potential competitors have greater financial and marketing resources than us and continued consolidation in the industry will likely increase the number of competitors that have greater resources
 
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than us. If we do not compete effectively in our markets, our business, financial condition and results of operations may be materially and adversely affected.
The inability of our customers to pay for our services could decrease our revenue.
Our health insurance payor customers may be required to maintain restricted cash reserves and satisfy strict balance sheet ratios promulgated by state regulatory agencies. In addition, the financial stability of our payor customers may be adversely affected by physician groups or associations within their organizations that become subject to costly litigation or become insolvent. Our ability to collect fees for our services may become impaired if our payor customers are unable to pay for our services because they need to maintain cash reserves, if they fail to maintain required balance sheet ratios or if they become insolvent. The potential financial instability of our customers in the future could adversely affect our revenues and cash flows.
Our PPO networks may experience decreases in discounts from providers, thereby adversely affecting our competitive position and revenue.
Our PPO networks receive discounts from healthcare providers (such as acute care hospitals, practitioners and ancillary facilities) who participate in such networks. These discounts could be reduced by the healthcare providers’ desire to increase their net level of reimbursement or to offset reductions, or lack of adequate increases, in reimbursement from payors or from our PPO competitors, any of whom may have greater market penetration and/or the ability to direct more patients to such providers. Any such reductions may reduce our revenues and make our network less attractive to our customers.
We depend on our providers to maintain the profitability of our business and expand our operations.
The healthcare providers that constitute our network are integral to our operations. Our growth depends on our ability to retain our existing providers and to attract additional providers to our network. Typical contracts with our providers have a one-year term, renewable automatically for successive one-year terms (although most such contracts permit early termination without penalty and with short notice periods). These contracts are also subject to negotiation and revisions with respect to the level and amount of price concessions for medical services. Our revenues are based on a percentage of the price concessions from these providers that apply to claims of our payor customers. In addition, our ability to contract at competitive rates with our PPO providers will affect the attractiveness and profitability of our products. Increasing consolidation in the provider sector also may make it more difficult for us to contract at competitive rates and could affect the profitability of our products.
The termination of a significant number of contracts with our high volume providers, the inability to replace such contracts, or the negotiation of contracts with lower discounts resulting in reduced price concessions would reduce the number and value of claims we are able to match and the attractiveness of our network to our customers, each of which could have a material adverse effect on our business, financial condition and results of operations.
If we do not continue to attract, motivate and retain members of our senior management team and qualified employees, we may not be able to support our operations.
The completion and execution of our strategies depend on the continued service and performance of our senior management team. If we lose key members of our senior management team, we may not be able to effectively manage our current and future operations.
In addition, our business depends on our ability to continue to attract, motivate and retain a large number of skilled employees across all of our product lines. There is a limited pool of employees who have the requisite skills, training and education. We compete with many businesses and organizations that are seeking skilled individuals, particularly those with experience in healthcare and insurance industries. Attracting and retaining highly skilled employees will be costly as we offer competitive compensation packages to prospective and current employees.
Competition for professionals across our business can be intense, as other companies seek to enhance their positions in the markets we serve. In addition, competition for experienced talent in our faster growing
 
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geographic areas, such as Illinois, New York and Texas, continues to intensify, requiring us to increase our focus on attracting and developing highly skilled employees in our most strategically important locations in those areas.
Future organizational changes, including the implementation of our cost savings initiatives, could also cause our employee attrition rate to increase. If we are unable to continue to identify or be successful in attracting, motivating and retaining appropriately qualified personnel, our business, financial condition and results of operations would be adversely affected.
If we are unable to implement our operational and financial information systems or expand, train, manage and motivate our workforce, our business may be adversely affected.
The success of our business strategy depends in part on our ability to expand our operations in the future. Our growth has placed, and will continue to place, increased demands on our information systems and other resources and further expansion of our operations will require substantial financial resources. Our growth strategies include the evaluation of opportunities in new geographic markets as well as in adjacent and new market verticals. Any expansions into such markets could significantly increase the demands placed on our operational and financial information systems and our workforce. To accommodate our past and anticipated future growth and to compete effectively, we will need to continue to integrate our financial information systems and expand, train, manage and motivate our workforce. Furthermore focusing our financial resources on the expansion of our operations may negatively impact our financial results. Any failure to implement our operational and financial information systems, or to expand, train, manage or motivate our workforce, may adversely affect our business.
We operate in an industry that is subject to extensive federal, state and local regulation. Changes in existing health care law and regulatory interpretations on a state or federal level may adversely affect us.
The healthcare industry is subject to extensive and evolving federal, state and local regulations, including among other things, laws and regulations relating to:

health benefit plans subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”);

privacy and security of patient information, including the Health Insurance Portability and Accountability Act of 1996, the Health Information Technology for Economic and Clinical Health Act (the “HITECH Act”), and regulations promulgated thereunder, which we collectively refer to as “HIPAA”;

the conduct of operations, including fraud and abuse, anti-kickback, patient inducement and false claims prohibitions;

the operation of provider networks, including transparency, access, licensing, certification and credentialing requirements;

the methods of payment of out of network claims, including “surprise” billing;

health information technology;

breach of duty, the corporate practice of medicine and fee-splitting prohibitions;

laws and regulations relating to business corporations in general;

additional restrictions relating to our ability to utilize the claims data we collect from providers; and

payors subject to the requirements for health reform under the Affordable Care Act.
As a provider of network management services to our customers and as a contractor and/or subcontractor with federal and state governments, we are subject to extensive and increasing regulation by a number of governmental entities at the federal, state and local levels with respect to the above laws. Because of the breadth of these laws and the narrowness of available statutory and regulatory exceptions, it is possible that some of our business activities could be subject to challenge under one or more of such laws from time to time, including in private litigation. Statutory changes to, or changes in the interpretation or
 
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enforcement of, the laws and regulations described above may significantly impact or restrict our ability to carry on our business as currently conducted and may have a material adverse impact on our business, financial condition and results of operations. These risks may be exacerbated by our expansion into new geographic markets and, in particular, by any expansion into international markets.
Changes in the healthcare industry could adversely affect us.
Our business is dependent on a variety of factors, including our ability to enter into contracts with payors and providers on terms attractive to all parties and the absence of substantial changes in the healthcare industry that would diminish the need for the services we offer. Our ability to continue conducting business in the current manner could be jeopardized if, among other things, a significant number of payors were to seek price concessions directly from providers. In addition, substantial changes in the health care industry, such as the adoption of regulations unfavorable to us or our relationships with payors and providers, including regulations aimed at addressing “surprise” billing (medical bills that arise when an insured patient receives care from an out-of-network provider resulting in costs that were not expected by the patient), a substantial trend towards HMOs from PPOs, the adoption of a single payor healthcare system in the United States or changes caused by, or that result from, the COVID-19 pandemic could have a material adverse effect on our business, financial condition and results of operations and could cause us to substantially alter our business strategy and methods of operation.
Healthcare providers are becoming increasingly resistant to the application of certain healthcare cost management techniques, which may increase our costs or decrease revenues from our cost management operations.
Healthcare providers have become more resistant to the use of cost management techniques and are engaging in litigation to avoid application of cost management practices. Litigation brought by healthcare providers has challenged insurers’ claims adjudication and reimbursement decisions, and healthcare cost management providers are sometimes made party to such suits or involved in related litigation. We and our subsidiaries have and may, in the future, become involved in such litigation.
New federal and state laws and regulations or other changes that adversely impact healthcare providers or insurers could lead to increased litigation risk to us and other cost management providers and insurers. In addition, many healthcare providers and insurers have greater financial resources than us and other healthcare cost management providers have and may be more willing to engage in, and devote resources to, litigation as a result. In addition, certain of the agreements we enter into include indemnification provisions which may subject us to costs and damages in the event of a claim against an indemnified third party. We maintain insurance coverage for certain types of claims; however, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise.
If lawsuits of this type proliferate, they could materially adversely affect our results. In addition, lawsuits of this type may affect insurers’ use of our cost management services.
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.
A number of healthcare providers have historically sought and in the future may seek to limit access to their contractually negotiated network discounts by, for example, limiting either the type of payor or the type of benefit plan that may access a contractual network discount. In addition, some states have proposed legislation designed to regulate the secondary PPO market by limiting the ability of preferred provider networks to offer broad access to discounted rates negotiated with contracted providers. For example, certain states have proposed or implemented laws limiting access to provider networks by requiring that the applicable network be identified on a member’s identification card in order for the network discount to apply. Although many of our network offerings are branded, such that members carry identification cards branded with our network logo, we also operate a non-logo business. Where enacted, such laws may adversely affect our non-logo business by limiting our ability to continue this business in existing markets or to expand it into new markets.
 
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Heightened enforcement activity by federal and state agencies may increase our potential exposure to damaging lawsuits, investigations and other enforcement actions.
In recent years, both federal and state government agencies have increased civil and criminal enforcement efforts relating to the healthcare industry. This heightened enforcement activity increases our potential exposure to damaging lawsuits, investigations and other enforcement actions. Any such investigation or action could force us to expend considerable resources to respond to or defend against such investigation or action and could adversely affect our reputation or profitability.
By way of example, the Affordable Care Act allocated an additional $350.0 million of fraud enforcement funding over 10 fiscal years, starting in fiscal year 2011 and increased the penalties applied under the Federal Sentencing Guidelines for federal health care offenses that affect a governmental program. The fraud enforcement would apply to us to the extent we are deemed a government contractor for a federal health care program.
A number of laws bear on our relationships with physicians. There is a risk that state authorities in some jurisdictions may find that our contractual relationships with physicians violate laws prohibiting the corporate practice of medicine and fee-splitting. These laws generally prohibit the practice of medicine by lay entities or persons and are intended to prevent unlicensed persons or entities from interfering with or inappropriately influencing the physician’s professional judgment. They may also prevent the sharing of professional services income with non-professional or business interests. Judicial and regulatory interpretation or other guidance regarding the application of these types of laws to businesses such as ours is limited. These laws regarding fee-splitting and the corporate practice of medicine could also be invoked by litigants in a breach of contract dispute against us or in an action to find our contracts to be legally invalid or unenforceable. In addition, patients may seek to hold us responsible for third parties’ recommendations regarding the appropriateness of providers’ medical treatment plans for patients. We could be subject to claims or investigations under certain state laws were such laws interpreted to apply to our provision of such recommendations.
We can provide no assurance that state regulators will not take the position that our current and planned activities and the conduct of our business constitute illegal fee-splitting, the unlawful practice of medicine or a breach of any legal duty. Moreover, we can provide no assurance that future interpretations or applications of these laws will not require us to make material changes to our operations or business, including with respect to our existing contractual arrangements with providers and payors. If regulatory authorities assert or determine that we have violated any of these laws, we could be subject to significant penalties and/or restructuring requirements that could have a material adverse impact on our business, financial condition and results of operations.
We may be unable to achieve some or all of the strategic, operational, growth and other benefits that we expect to realize through our Short-Term Execution Plan. Executing the various aspects of our Short-Term Execution Plan may take longer than expected and require greater resources than we anticipate.
In support of our growth strategy, we have developed a short-term execution plan (the “Short-Term Execution Plan”), which includes initiatives across sales and marketing, product development and mergers and acquisitions, and efficiency measures to help self-fund some of the necessary investments to support these initiatives.
We cannot assure you that we will be able to successfully execute such Short-Term Execution Plan in the short term, or at all, or realize the expected benefits of such Plan. A variety of risks could cause us not to execute such Plan or realize some or all of the expected benefits therefrom. These risks include, among others: higher than expected implementation expenses; delays in the anticipated timing of activities related to such initiatives, in particular with respect to the development and deployment of additional sales and marketing professionals and achievement of certain technology-related product development goals, which will require significant external resources; failure to realize estimated savings from our efficiency measures or, if realized, an inability to sustain such cost savings over time; and the risks and uncertainties inherent in pursuing acquisitions as a portion of our growth strategy in light of our limited acquisition and integration experience. Our ability to successfully manage the organizational changes that we expect to result from the implementation of our Short-Term Execution Plan is important for our future business success. In
 
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particular, our reputation and results of operations could be harmed if employee morale, engagement or productivity decline as a result of organizational or other changes we effect as part of our implementation efforts.
Moreover, our implementation of these initiatives may disrupt our operations and performance, and distract management from day-to-day operations and other on-going initiatives, including initiatives relating to becoming a public company, and challenges, such as those presented by the COVID-19 pandemic. In addition, the estimated cost savings from our efficiency initiatives are based on assumptions that may prove to be inaccurate and, as a result, we cannot assure you that our efficiency measures will help offset the costs we expect to incur in connection with the implementation of our Short-Term Execution Plan. As a result, we may incur significant upfront expenses in connection with our Short-Term Execution Plan which may adversely impact our results of operations. Some of these expenses, such as the implementation of certain technology-related initiatives, may increase our fixed overhead costs for the foreseeable future and we may be unable to reduce these costs if such initiatives do not progress according to plan.
If, for any reason, the benefits we realize are less than our estimates, or our improvement initiatives adversely affect our operations or cost more or take longer to implement than we project, or if our assumptions prove inaccurate, our results of operations may be materially adversely affected.
We may not successfully enter new lines of business and broaden the scope of our services.
We have entered into new lines of business that are adjacent to our existing lines of business and have broadened the scope of our services, such as the expansion of our Payment Integrity Solutions services, and may in the future enter into non-adjacent lines of business. We may not achieve our expected growth if we do not successfully enter these new lines of business and broaden the scope of our services. Entering new lines of business and broadening the scope of our services may require significant upfront and ongoing expenditures that we may not be able to recoup in the future. These efforts may also divert management’s attention and expose us to new risks and regulations. As a result, entering new lines of business and broadening the scope of our services may have material adverse effects on our business, financial condition and results of operations.
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.
Many aspects of our business are dependent upon our ability to store, retrieve, process and manage data and to maintain and upgrade our data processing capabilities. Our success is dependent on our ability to deliver high-quality and uninterrupted access for our customers to our computer system, requiring us to protect our computer equipment, software and the information stored in servers against damage by fire, natural disaster, power loss, telecommunications failures, unauthorized intrusion and other catastrophic events. Interruption of data processing capabilities for any extended length of time, loss of stored data, programming errors or other technological problems could impair our ability to provide certain services. A system failure, if prolonged, could result in reduced revenues, loss of customers and damage to our reputation, any of which could cause our business to materially suffer. In addition, due to the highly automated environment in which we operate our computer systems, any undetected error in the operation of our business processes or computer software may cause us to lose revenues or subject us to liabilities for third party claims. While we carry property and business interruption insurance to cover operations, the coverage may not be adequate to compensate us for losses that may occur.
Our use and disclosure of individually identifiable information, including 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.
State and federal laws and regulations, including HIPAA, govern the collection, dissemination, use, privacy, confidentiality, security, availability and integrity of individually identifiable information, including protected health information, or PHI. HIPAA establishes basic national privacy and security standards for protection of PHI by covered entities such as our clients, and the business associates with whom such entities
 
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contract for services, including us. HIPAA requires both covered entities and business associates to develop and maintain policies and procedures for PHI that is used or disclosed, and to adopt administrative, physical and technical safeguards to protect PHI. Our clients that are covered entities are mandated by HIPAA to enter into written agreements with us — known as business associate agreements — that require us to safeguard PHI in accordance with HIPAA. As a business associate, we are also directly liable for compliance with HIPAA.
Mandatory penalties for HIPAA violations can be significant. A single breach incident can result in violations of multiple standards. If a person knowingly or intentionally obtains or discloses PHI in violation of HIPAA requirements, criminal penalties may also be imposed.
HIPAA authorizes state attorneys general to file suit under HIPAA on behalf of state residents. Courts can award damages, costs and attorneys’ fees related to violations of HIPAA in such cases. While HIPAA does not create a private right of action allowing individuals to sue us in civil court for HIPAA violations, its standards have been used as the basis for a duty of care claim in state civil suits such as those for negligence or recklessness in the misuse or breach of PHI.
HIPAA further requires covered entities to notify affected individuals without unreasonable delay and in no case later than 60 calendar days after discovery of the breach if their unsecured PHI is subject to an unauthorized access, use or disclosure, though state laws and our contracts may require shorter breach notification timelines. HIPAA imposes a similar requirement on business associates to notify their covered entity clients. If a breach affects 500 patients or more, it must be reported to the United States Department of Health and Human Services (“HHS”) and local media without unreasonable delay, and HHS will post the name of the breaching entity on its public website. If a breach affects fewer than 500 individuals, the covered entity must log it and notify HHS at least annually.
We maintain safeguards that we believe are reasonable and appropriate to protect the privacy and security of PHI and other personally identifiable information consistent with applicable law and our contractual obligations; however, our systems may be vulnerable to physical break-ins, viruses, hackers, and other potential sources of security breaches. In addition, we may not be able to prevent incidents of inappropriate use or unauthorized access to PHI by our employees or contractors. Any such breaches could result in exposure to liability under federal and state laws and/or under our contractual arrangements and could adversely impact our business.
In addition to HIPAA, we must comply with state laws that are not preempted by HIPAA, including those that are more stringent than HIPAA requirements.
Numerous other state, federal and foreign laws, including consumer protection laws and regulations, govern the collection, dissemination, use, access to, confidentiality and security of patient health information, medical records and personal data, and breaches of such information. In addition, Congress and some states are considering new laws and regulations that further protect the privacy and security of medical records or medical information. With the recent increase in publicity regarding data breaches resulting in improper dissemination of consumer information, many states have passed laws regulating the actions that a business must take if it experiences a data breach, such as prompt disclosure to affected customers. Generally, these laws are limited to electronic data and make some exemptions for smaller breaches. Congress has also been considering similar federal legislation relating to data breaches. The Federal Trade Commission, or FTC, and states’ Attorneys General have also brought enforcement actions and prosecuted some data breach cases as unfair and/or deceptive acts or practices under the Federal Trade Commission Act of 1914. In addition to data breach notification laws, some states have enacted statutes and rules requiring businesses to reasonably protect certain types of personal information they hold or to otherwise comply with certain specified data security requirements for personal information. As with HIPAA, these laws may apply directly to our business or indirectly by contract when we provide services to other companies. We are currently evaluating potential growth opportunities, including opportunities that involve the processing and analysis of third-party data which may include PHI or other protected personal information, which could increase our compliance obligations and may subject us to state, foreign, federal or other laws that we are not currently subject. In the event that we are found out of compliance with applicable state, federal and foreign laws and regulations, we could potentially be subject to civil or criminal sanctions, which could have a material adverse effect on our business, financial condition and results of operations.
 
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Computer systems like ours could suffer security and privacy breaches that could negatively impact our business and reputation, harm both us and our customers and create liability.
We currently operate servers and maintain connectivity from multiple facilities. Despite our implementation of standard network security measures, our infrastructure may be vulnerable to computer viruses, physical break-ins, attacks by hackers and similar disruptive problems caused by customers or other users. Computer viruses, ransomware and other cyber-attacks, break-ins or other security problems could lead to interruption, delays or cessation in service to our customers. In addition, our safeguards may not prevent incidents of inappropriate and/or unauthorized access to protected health information or other personal data by our employees or contractors. Such physical breaches and incidents may result in unauthorized use, disclosure, modification or deletion of protected health or other personally identifiable information that is transmitted or stored over our networks.
A security or privacy breach may:

expose us to liability under federal and state laws related to the privacy and security of health information, including liability to the individuals that are the subject of the information and/or the parties to whom we are contractually obligated, and subject us to fines or penalties;

increase operating expenses as necessary to notify affected individuals of security breaches, correct problems, comply with federal and state regulations, defend against potential claims and implement and maintain any additional requirements imposed by government action, and take action to manage public relations issues and preserve our reputation; and

harm our reputation and deter or prevent customers from using our products and services, and/or cause customers to find other means to achieve cost savings, including by switching to a competitor or by in-sourcing such services.
These problems could also potentially jeopardize the security of confidential information stored in the computer systems of our customers, which may deter potential customers from doing business with us and give rise to possible liability to users whose security or privacy has been infringed. The security and privacy concerns of existing and potential customers may inhibit the growth of the healthcare information services industry in general, and our customer base and business in particular. A significant security breach could result in loss of customers, loss of revenues, damage to our reputation, direct damages, costs of repair and detection and other unplanned expenses. While we carry professional liability insurance to cover such breaches, the coverage may not be adequate to compensate us for losses that may occur.
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 ofour technology and products.
We largely rely on our own security systems and confidentiality procedures, including employee nondisclosure agreements for certain employees, to maintain the confidentiality and security of our trade secrets, know-how, internally developed computer applications, business processes and other proprietary information. If third parties gain unauthorized access to our information systems or if our proprietary information is misappropriated, it may have a material adverse effect on our business, financial condition and results of operations. Trade secrets laws offer limited protection against third party development of competitive products or services. Because we lack the protection of registered copyrights for our internally developed software applications, we may be vulnerable to misappropriation of our proprietary applications by third parties or competitors. Enforcing a claim that a third party illegally obtained and is using any of our proprietary information or technology is expensive and time consuming, and the outcome is unpredictable. The failure to adequately protect our proprietary information could have a material adverse effect on our business, financial condition and results of operations.
We may be sued by third parties for alleged infringement of their proprietary rights.
Our success depends also in part on us not infringing the intellectual property rights of others. Our competitors, as well as a number of other entities and individuals, may own or claim to own intellectual property relating to our industry. In the future, such third parties may claim that we are infringing their
 
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intellectual property rights, and we may be found to be infringing such rights. Any claims or litigation could cause us to incur significant expenses and, if successfully asserted against us, could require that we pay substantial damages or ongoing royalty payments, prevent us from offering our services, or require that we comply with other unfavorable terms. Even if we were to prevail in such a dispute, any litigation could be costly and time-consuming and divert the attention of our management and key personnel from our business operations.
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.
Our business relies on certain third-party software obtained under licenses from other companies.We anticipate that we will continue to rely on such third-party software in the future. Commercially reasonable alternatives to the third-party software we currently license may not always be available and such alternatives may be difficult or costly to implement. In addition, integration of new third-party software may require significant work and require substantial investment of our time and resources. Our use of additional or alternative third-party software would require us to enter into license agreements with third parties, which may not be available on commercially reasonable terms or at all. Many of the risks associated with the use of third-party software cannot be eliminated, and these risks could negatively affect our business.
Additionally, the software powering our technology systems incorporates software covered by open source licenses. The terms of many open source licenses have not been interpreted by U.S. courts and there is a risk that the licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to operate our systems. In the event that portions of our proprietary software are determined to be subject to an open source license, we could be required to publicly release the affected portions of our source code or re-engineer all or a portion of our technology systems, each of which could reduce or eliminate the value of our technology system. Such risk could be difficult or impossible to eliminate and could adversely affect our business, financial condition and results of operations.
Evolving industry standards and rapid technological changes could result in reduced demand for our services.
Rapidly changing technology, evolving industry standards and the frequent introduction of new and enhanced services characterize the market for our services. Our success will depend upon our ability to enhance our existing services, introduce new services on a timely and cost-effective basis to meet evolving customer requirements, achieve market acceptance for new services and respond to emerging industry standards and other technological changes. We may not be able to respond effectively to technological changes or new industry standards. Moreover, other companies may develop competitive services that may result in reduced demand for our services.
Our cash taxes paid and effective tax rate have and will continue to fluctuate from time to time, and increases in either may adversely affect our business, results of operations, financial condition and/or cash flows.
Our cash taxes paid and effective income tax rate are influenced by our projected and actual profitability in the taxing jurisdictions in which we operate as well as changes in income tax rates. Additionally, changes in the distribution of profits and losses among taxing jurisdictions may have a significant impact on our cash taxes paid and effective income tax rate. Factors that may affect our cash taxes paid and/or effective income tax rate include, but are not limited to:

the requirement to exclude from our quarterly effective income tax calculations losses in jurisdictions where no income tax benefit can be recognized;

actual and projected full year pre-tax income;

changes in existing tax laws and rates in various taxing jurisdictions;

examinations or audits by taxing authorities;

the use of foreign tax credits, and restrictions therein;

changes in our capital structure;
 
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the establishment of valuation allowances against deferred income tax assets if we determine that it is more likely than not that future income tax benefits will not be realized; and

provisions of the Tax Cuts and Jobs Act, as modified by the tax provisions of the CARES Act, including (i) base erosion and anti-abuse tax, if applicable, (ii) taxation of foreign-derived intangible income and global intangible low-taxed income and (iii) limitations on deductions for interest, among others.
These factors could have a material adverse effect on our business, results of operations, financial condition and/or cash flows.
Additionally, we rely upon generally accepted interpretations of tax laws and regulations in the jurisdictions in which we operate and cannot be certain that these interpretations are accurate or that the responsible taxing authority is in agreement with our views. We currently have open examinations with various tax authorities. If a satisfactory resolution cannot be achieved with the tax authorities, the ultimate tax outcome may have a material adverse effect on our results of operations, financial condition and/or cash flows.
If our ability to expand our network infrastructure is constrained, we could lose customers and that loss could adversely affect our operating results.
We must continue to expand and adapt our network and technology infrastructure to accommodate additional users, increased transaction volumes, changing customer requirements and current and future growth initiatives. We may not be able to accurately project the rate or timing of increases, if any, in the volume of transactions we process, reprice or otherwise service or be able to expand and upgrade our systems and infrastructure to accommodate such increases. Projecting such needs may be particularly difficult for new solutions and services or for the expansion of existing solutions and services into international or other markets in which we have limited or no prior experience. We may be unable to expand or adapt our network infrastructure to meet additional demand or our customers’ changing needs on a timely basis, at a commercially reasonable cost or at all. Our current information technology systems, procedures and controls may not continue to support our operations while maintaining acceptable overall performance and may hinder our ability to exploit the market for healthcare applications and services. Service lapses could cause our users to switch to the services of our competitors or in-source such services.
If we are unable to identify, complete and successfully integrate acquisitions, our ability to grow our business may be limited and our business, financial position and results of operations may be adversely impacted.
We may not be able to identify, complete and successfully integrate acquisitions in the future and any failure to do so may limit our ability to grow our business. Our acquisition strategy involves a number of risks, including:

our ability to find suitable businesses to acquire at affordable valuations or on other acceptable terms;

competition for acquisition targets may lead to substantial increases in purchase prices or one of our competitors acquiring one of our acquisition targets;

our continued dependence on access to the credit and capital markets to fund acquisitions;

prohibition of any of our proposed acquisitions under United States or foreign antitrust laws;

the diversion of management’s attention from existing operations to the integration of acquired companies;

our inability to realize expected cost savings and synergies;

expenses, delays and difficulties of integrating acquired businesses into our existing business structure, which risks are heightened for large-scale acquisitions; and

difficulty in retaining key customers and management personnel.
 
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If we are unable to continue to acquire and efficiently integrate suitable acquisition candidates, our ability to increase revenues and fully implement our business strategy may be adversely impacted, which could adversely affect our business, financial position and results of operations.
We operate in a litigious environment which may adversely affect our financial results.
We may become involved in legal actions and claims arising in the ordinary course of business, including litigation regarding employment matters, breach of contract, violations of laws and regulations, and other commercial matters. Due to the inherent uncertainty in the litigation process, the resolution of any particular legal proceeding could result in changes to our products and business practices and could have a material adverse effect on our financial position and results of operations.
We have identified two material weaknesses in our internal control over financial reporting. If our remediation of these material weaknesses is not effective, or if we experience additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls in the future, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our Class A common stock.
Prior to the consummation of the Transactions, we were a private company with limited accounting personnel and other resources with which to address our internal control over financial reporting. In connection with the audits of our consolidated financial statements as of December 31, 2018 and 2019, and for the years ended December 31, 2017, 2018 and 2019, we identified two material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. We have identified the following material weaknesses in our internal controls over financial reporting;

we did not maintain a sufficient complement of resources with an appropriate level of accounting knowledge and experience commensurate with the financial reporting requirements for a public company, including condensed timelines to close and sufficient oversight of internal control over financial reporting; and

we did not maintain sufficient formal accounting policies, procedures and controls for accounting and financial reporting with respect to the requirements and application of public company financial reporting requirements.
We cannot assure you that additional significant deficiencies or material weaknesses in our internal control over financial reporting will not be identified in the future. Any failure to maintain or implement required new or improved controls, or to implement our remediation plans or any difficulties we encounter in our implementation thereof, could result in additional significant deficiencies or material weaknesses or result in material misstatements in our financial statements. If we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, lenders and investors may lose confidence in the accuracy and completeness of our financial reports and we may face restricted access to various sources of financing in the future.
These material weaknesses, if not remediated, could result in misstatements of accounts or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.
Our management anticipates that our internal control over financial reporting will not be effective until the above material weaknesses are remediated. If our remediation of these material weaknesses is not effective, or we experience additional material weaknesses in the future or otherwise fail to maintain an effective system of internal control over financial reporting in the future, the accuracy and timing of our financial reporting may be adversely affected, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to the NYSE listing requirements, investors may lose confidence in our financial reporting, and the price of our Class A common stock may decline as a result.
 
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We may need to recognize impairment charges related to goodwill, identified intangible assets and fixed assets.
We have substantial balances of goodwill and identified intangible assets. We are required to test goodwill and any other intangible assets with an indefinite life for possible impairment on an annual basis, or more frequently when circumstances indicate that impairment may have occurred. We are also required to evaluate amortizable intangible assets and fixed assets for impairment if there are indicators of a possible impairment.
Based on the results of the annual impairment test as of June 30, 2019, the fair values of our assets exceeded the carrying value, and goodwill was not impaired. The current goodwill impairment analysis incorporates our expectations for moderate sales growth and the overall outlook was consistent with our long-term projections.
There is significant judgment required in the analysis of a potential impairment of goodwill, identified intangible assets and fixed assets. If, as a result of a general economic slowdown, deterioration in one or more of the markets in which we operate or impairment in our financial performance and/or future outlook, the estimated fair value of our long-lived assets decreases, we may determine that one or more of our long-lived assets is impaired. An impairment charge would be recorded if the estimated fair value of the assets is lower than the carrying value and any such impairment charge could have a material adverse effect on our results of operations and financial position.
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.
As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, and the rules and regulations of the applicable listing standards of the NYSE. We expect that the requirements of these rules and regulations will continue to increase our legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly and place significant strain on our personnel, systems and resources.
The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In particular, Section 404 of the Sarbanes-Oxley Act (“Section 404”) will require us to perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on, and our independent registered public accounting firm to attest to, the effectiveness of our internal control over financial reporting. Any failure to maintain effective disclosure controls and internal control over financial reporting could have a material and adverse effect on our business, results of operations and financial condition and could cause a decline in the trading price of our Class A common stock.
We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers. We are also continuing to improve our internal control over financial reporting. In order to develop, maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related and audit-related costs and significant management oversight.
We are currently in the process of remediating two material weaknesses in internal control over financial reporting and, even after successfully remediating such material weaknesses, these and other controls, including any new controls that we develop, may become inadequate because of changes in conditions in our business. Further, weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our results of operations or cause us to fail to meet our reporting obligations and may result in a restatement of our consolidated financial statements for prior periods. Any failure to implement and maintain effective internal control over financial
 
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reporting could also adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will be required to include in our periodic reports that will be filed with the SEC. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our Class A common stock. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the NYSE.
We will incur increased costs and obligations as a result of being a public company.
As a result of the Transactions, we are required to comply with certain corporate governance and financial reporting practices and policies required of a publicly traded company and do not qualify for the exemptions and transition periods available to “emerging growth companies.” As a publicly traded company, we will incur significant legal, accounting and other expenses that we were not required to incur in the recent past. In addition, new and changing laws, regulations and standards relating to corporate governance and public disclosure, including the Dodd Frank Wall Street Reform and Consumer Protection Act and the rules and regulations promulgated and to be promulgated thereunder, as well as under the Sarbanes-Oxley Act, the Jobs Act, and the rules and regulations of the SEC and national securities exchanges have created uncertainty for public companies and increased the costs and the time that the Board and management must devote to complying with these rules and regulations. We expect these rules and regulations to increase our legal and financial compliance costs and lead to a diversion of management time and attention from revenue generating activities.
Furthermore, the need to establish the corporate infrastructure demanded of a public company may divert management’s attention from implementing our growth strategy, which could prevent us from improving our business, results of operations and financial condition. We have made, and will continue to make, changes to our internal controls and procedures for financial reporting and accounting systems to meet our reporting obligations as a publicly traded company. However, the measures we take may not be sufficient to satisfy our obligations as a publicly traded company.
The Sponsor and H&F will beneficially own a significant equity interest in us and their interests may conflict with us or your interests.
The Sponsor and H&F collectively control approximately 40% of our voting equity (assuming the vesting of all of our securities subject to vesting requirements). As a result, they have significant influence over our decisions to enter into any corporate transaction. In addition, the Sponsor and H&F are each in the business of making investments in companies and may acquire and hold interests in businesses that compete directly or indirectly with us. The Sponsor and H&F, and their respective affiliates, may also pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us. Our second amended and restated certificate of incorporation provides that certain parties may engage in competitive businesses and renounces any entitlement to certain corporate opportunities offered to the private placement investors or any of their managers, officers, directors, equity holders, members, principals, affiliates and subsidiaries (other than us and our subsidiaries) that are not expressly offered to them in their capacities as our directors or officers. The second amended and restated certificate of incorporation also provides that certain parties or any of their managers, officers, directors, equity holders, members, principals, affiliates and subsidiaries (other than us and our subsidiaries) do not have any fiduciary duty to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as us or any of our subsidiaries.
Our results of operations may differ significantly from the unaudited pro forma financial data included in this prospectus.
This prospectus includes unaudited pro forma condensed combined financial statements. The unaudited pro forma condensed combined statement of loss combines the historical audited results of operations of Churchill for the year ended December 31, 2019 and the unaudited results of Churchill for the nine months ended September 30, 2020, with the historical audited results of operations of MultiPlan Parent for the year ended December 31, 2019 and the unaudited results of MultiPlan Parent for the nine months ended
 
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September 30, 2020 respectively, and gives pro forma as adjusted effect to the Transactions and Refinancing as if they had been consummated on January 1, 2019. The unaudited pro forma condensed combined balance sheet combines the historical balance sheets of Churchill as of September 30, 2020 and of MultiPlan Parent as of September 30, 2020 and gives pro forma as adjusted effect to the Transactions and Refinancing as if they had been consummated on September 30, 2020.
The unaudited pro forma condensed combined financial statements are presented for illustrative purposes only, are based on certain assumptions, address a hypothetical situation and reflect limited historical financial data. Therefore, the unaudited pro forma condensed combined financial statements are not necessarily indicative of the results of operations and financial position that would have been achieved had the Transactions and Refinancing been consummated on the dates indicated above, or the future consolidated results of operations or financial position. Accordingly, our business, assets, cash flows, results of operations and financial condition may differ significantly from those indicated by the unaudited pro forma condensed combined financial statements included in this prospectus. For more information, please see the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.
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.
Under our charter, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum will be a state court within the State of Delaware for:

any derivative action or proceeding brought on behalf of MultiPlan;

any action asserting a claim of breach of a fiduciary duty owed by, or any wrongdoing by, any director, officer or employee of ours to us or our stockholders;

any action asserting a claim against us or any director or officer or other employee of ours arising pursuant to any provision of the DGCL or our charter or bylaws (as either may be amended, restated, modified, supplemented or waived from time to time);

any action asserting a claim against us or any director or officer or other employee of ours governed by the internal affairs doctrine; or any action asserting an “internal corporate claim” as that term is defined in Section 115 of the DGCL, shall be a state court located within the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware).
For the avoidance of doubt, the foregoing provisions of our charter will not apply to any action or proceeding asserting a claim under the Securities Act or the Exchange Act. These provisions of our charter could limit the ability of our stockholders to obtain a favorable judicial forum for certain disputes with us or with our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and employees. Alternatively, if a court were to find these provisions of our charter inapplicable to, or unenforceable in respect of, one or more of the types of actions or proceedings listed above, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition and results of operations.
Our quarterly operating results may fluctuate significantly.
Our quarterly operating results may fluctuate significantly because of several factors, including:

labor availability and costs for hourly and management personnel;

profitability of our products, especially in new markets and due to seasonal fluctuations;

changes in government regulations;

changes in interest rates;

impairment of long-lived assets;
 
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macroeconomic conditions, both nationally and locally;

negative publicity relating to products we serve;

pandemics (including COVID-19), natural disasters, potential or actual military conflicts or acts of terrorism;

changes in consumer preferences and competitive conditions; and

expansion to new markets.
We may be unable to obtain additional financing to fund our operations or growth.
We may require additional financing to fund our operations or growth. The failure to secure additional financing could have a material adverse effect on our continued development or growth. None of our officers, directors or stockholders will be obligated to provide any financing to us.
Legal proceedings in connection with the business combination, the outcomes of which are uncertain, may adversely affect our business, financial condition and results of operations.
Five actions (collectively, the “Stockholder Actions”), including two putative class actions, have been filed in federal courts in New York and Delaware by purported Churchill stockholders in connection with the Business Combination: Hutchings v. Churchill Capital Corp III, et al., No. 1:20‑ cv‑ 06318 (S.D.N.Y.) (the “Hutchings Complaint”); Kent v. Churchill Capital Corp III, et al., No. 1:20-cv-01068 (D. Del.) (the “Kent Complaint”); Feges v. Churchill Capital Corp III, et al., No. 1:20-cv-06627 (S.D.N.Y.) (the “Feges Complaint”); Noor v. Churchill Capital Corp III, et al., No. 1:20-cv-06686 (S.D.N.Y.) (the “Noor Complaint”); and Greenman v. Churchill Capital Corp III, et al., No. 1:20-cv-07466 (S.D.N.Y.) (the “Greenman Complaint”). On September 11, 2020, October 5, 2020, October 8, 2020, October 19, 2020 and November 2, 2020, the plaintiffs in the Noor, Greenman, Kent, Hutchings and Feges actions, respectively, voluntarily dismissed their complaints. Each of the complaints in the Stockholder Actions named Churchill and the members of the Churchill Board as defendants. The Stockholder Actions generally alleged, among other things, that our proxy statement relating to the Transactions was false and misleading and/or omitted material information concerning the transactions contemplated by the Merger Agreement in violation of Sections 14(a) and 20(a) of the Exchange Act and Rule 14d-9 promulgated thereunder. The Hutchings Complaint and the Greenman Complaint also alleged breach of fiduciary duty claims against the Churchill Board in connection with the Transactions. The Stockholder Actions generally sought, among other things, injunctive relief and an award of attorneys’ fees and expenses. Additional lawsuits may be filed against us or our directors and officers. Defending such additional lawsuits could require us to incur significant costs. Further, the defense or settlement of any lawsuit or claim may adversely affect our business, financial condition, results of operations and cash flows.
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.
We are subject to laws, regulations and rules enacted by national, regional and local governments and the NYSE. In particular, we are required to comply with certain SEC, NYSE and other legal or regulatory requirements. Compliance with, and monitoring of, applicable laws, regulations and rules may be difficult, time consuming and costly. Those laws, regulations or rules and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws, regulations or rules, as interpreted and applied, could have a material adverse effect on our business and results of operations.
Risks Related to the Healthcare Industry and other Legal Regulations
New federal and state laws and regulations could force us to change the conduct of our business or operations or affect our ability to expand our operations into other states.
Federal Legislation
In recent years, Congress has introduced and, in some cases, passed a number of legislative proposals governing various aspects of the healthcare industry, including initiatives to provide greater government
 
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control of health care spending, to broaden access to health care services, to address “surprise” billing by out of network providers and to change the operating environment for health care providers and payors.
We are unable to predict the success of such initiatives, but, if passed, these and other efforts may adversely affect our business or operations. Healthcare reform laws such as the Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act (collectively, the “Affordable Care Act”) have had a significant impact on the health care industry, including changing the manner in which providers and payors contract for services. In addition, under the Affordable Care Act payors are required to meet certain financial criteria. While these obligations directly affect many of our customers, the obligations may also affect the contract terms and relationships between us and those customers. In addition, there are currently a number of proposals for legislation aimed at addressing “surprise” billing under consideration by state governments and the U.S. Congress, including the Consumer Protections Against Surprise Medical Bills Act of 2020 (H.R.5826), Ban Surprise Billing Act (H.R.5800), Lower Health Care Costs Act (S.1895) and No Surprises Act (H.R.3630). While we currently service payor customers that are already subject to state-level “surprise” billing legislation, we cannot assure you that these and other initiatives aimed at addressing “surprise” billing, if implemented, would not adversely impact our ability to continue certain lines of business in existing markets or expand such business into new markets or adversely affect the contractual terms and relationships between us and our customers.
Since its enactment, there have been judicial and congressional challenges to certain aspects of the Affordable Care Act, as well as recent efforts by the Trump Administration to repeal or replace certain aspects of the Affordable Care Act, and we expect there will be additional challenges, amendments and modifications to the Affordable Care Act in the future. The current Administration and certain Members of Congress have attempted, and will likely continue to seek, to modify, repeal, or otherwise invalidate all, or certain provisions of, the Affordable Care Act or its implementation or interpretation through further legislative or executive action.
For example, effective January 2019, the Jobs Act reduced to $0 the financial penalty associated with not complying with the Affordable Care Act’s individual mandate to carry insurance. These changes may impact the number of individuals that elect to obtain public or private health insurance or the scope of such coverage, if purchased. Further, because the financial penalty associated with the individual mandate was effectively eliminated, a federal district court in Texas ruled in December 2018 that the individual mandate is unconstitutional and that the rest of the Affordable Care Act is therefore, invalid. In December 2019, the Fifth Circuit Court of Appeals upheld this decision with respect to the individual mandate but remanded for further consideration of how this affects the rest of the law. On March 2, 2020, the U.S. Supreme Court granted petitions for writs of certiorari to review this case and oral argument is scheduled for November 10, 2020. It remains unclear when or how the Supreme Court will rule. However, the law remains in place pending appeal. It is uncertain the extent to which any such judicial, legislative, regulatory or administrative changes, if made, may impact our business or financial condition. Although the Affordable Care Act has not caused us to significantly change our customer contracts or other aspects of our business, it is difficult to quantify the financial impact of the Affordable Care Act and there can be no assurances that we will not be adversely impacted in the future.
Other legislative or regulatory changes that could significantly harm us include, but are not limited to, changes that:

increase the number of individuals covered by government entitlement programs such as Medicare and Medicaid as opposed to private health insurance plans;

impact the operation of provider networks, including changes relating to transparency, access, licensing, certification and credentialing;

limit contractual terms with providers, including audit, payment and termination provisions; and

impose additional health care information privacy or security requirements.
We cannot predict what impact, if any, these government proposals and activities, which include efforts to change or reform the administration or interpretation of government health care programs, laws, regulations or policies, might have on us. Accordingly, there can be no assurance that such activities will not limit the expansion of our business, impose new compliance requirements on us or have a material adverse effect on
 
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our business, financial condition and results of operation. The passage and implementation of new federal laws or regulations that govern the conduct of our business could significantly impact or restrict our ability to carry on our business as currently conducted and could have a material adverse impact on our business, financial condition and results of operations.
State Legislation
State laws and regulations governing our business vary widely among the states in which we operate, and include laws requiring credentialing of all network providers and “any willing provider” laws requiring networks to accept as participating providers any qualified professional who is willing to meet the terms and conditions of the network. There is little regulatory or judicial guidance with respect to the application of such laws and in some cases they may increase the costs of operations in such states.
Several states have implemented legislation mandating certain contract terms in provider contracts for group health plans, preferred provider organizations, HMOs and other third-party payors. Depending on the state, these mandatory contract terms may relate to prompt payment, payment amounts and payment methods. As a result of such legislation and similar future legislative initiatives, we may be required to amend some of our provider contracts and comply with legislative mandates related to payment.
Some states have also considered legislation designed to regulate the PPO market by limiting the ability of preferred provider networks to offer broad access to discounted rates negotiated with contracted providers. State laws limiting access to provider networks may affect our ability to continue certain lines of business in existing markets or expand such business into new markets. Some states have also recently considered legislation designed to regulate the manner in which certain insurers should pay for certain categories of out of network claims or aimed at addressing “surprise” billing by out of network providers. State laws regulating the basis of payment may affect our ability to continue certain lines of business in existing markets or expand such business into new markets and the contractual terms and relationships between us and our customers.
Changes to state laws and regulations or the interpretation and enforcement of such state laws and regulations may adversely impact our existing business in certain states, or restrict our ability to expand our operations in other states, in each case potentially adversely impacting our business, financial condition and results of operations.
Risks Related to Our Indebtedness
Our substantial level of indebtedness and significant leverage may materially adversely affect our ability to raise additional capital to fund our operations and limit our ability to react to changes in the economy or our industry.
We have a substantial amount of indebtedness and are significantly leveraged. As of September 30, 2020, on a pro forma as adjusted basis after giving effect to the Transactions and Refinancing, we had total indebtedness (excluding an aggregate of $1.8 million of letters of credit which were outstanding as of September 30, 2020) of $4,941.0 million, $3,641.0 million of which is comprised $1,300.0 million in aggregate principal amount of 5.750% Notes and $2,341.0 million in outstanding term loans under the senior secured credit facilities. In addition, we would have had an additional $450.0 million available for borrowing under MPH’s senior secured revolving credit facility at that date (without giving effect to the $1.8 million of outstanding letters of credit referred to above). Our substantial level of indebtedness increases the possibility that we may be unable to generate cash sufficient to pay, when due, the principal of, interest on or other amounts due in respect of our indebtedness. Our substantial indebtedness, combined with our other financial obligations and contractual commitments, may have a material adverse impact on us and our business. For example, it could:

make it more difficult for us to satisfy obligations with respect our indebtedness and any repurchase obligations that may arise thereunder;

require us to dedicate a substantial portion of cash flow from operations to payments on our indebtedness, thereby reducing funds available for working capital, capital expenditures, acquisitions, research and development and other purposes;
 
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increase our vulnerability to adverse economic, market and industry conditions and limit our flexibility in planning for, or reacting to, these conditions;

expose us to the risk of increased interest rates as certain of our borrowings are at variable rates of interest;

limit our flexibility to adjust to changing market conditions and our ability to withstand competitive pressures, and we may be more vulnerable to a downturn in general economic or industry conditions or be unable to carry out capital spending that is necessary or important to our growth strategy;

limit our ability to borrow additional funds or to dispose of assets to raise funds, if needed, for working capital, capital expenditures, acquisitions, research and development and other corporate purposes; and

limit our ability to compete with others who are not as highly-leveraged.
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.
We and our subsidiaries may be able to incur significant additional indebtedness in the future. Although certain of our subsidiaries are subject to restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial. These restrictions also will not prevent us or such subsidiaries from incurring obligations that do not constitute indebtedness. We may also seek to increase the borrowing availability under the senior secured credit facilities through incremental term loans or an increase to the revolving credit facility commitments under the senior secured credit facilities under certain circumstances.
Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.
All of the borrowings under the senior secured credit facilities bear interest at variable rates. As a result, an increase in interest rates, whether due to an increase in market interest rates or an increase in our own cost of borrowing, would increase the cost of servicing our debt even though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease. A 0.25% increase in interest rates under the senior secured credit facilities (assuming the revolving credit facility was fully drawn) would increase our annual interest expense by approximately $7.0 million. The impact of such an increase would be more significant than it would be for some other companies because of our substantial debt. In the future, we may enter into interest rate swaps that involve the exchange of floating for fixed rate interest payments in order to reduce interest rate volatility. However, we may not maintain interest rate swaps with respect to all of our variable rate indebtedness, and any swaps we enter into may not fully mitigate our interest rate risk.
Our debt agreements contain restrictions that limit our flexibility in operating our business.
The senior secured credit facilities contain, and the indenture that governs the 5.750% Notes issued by MPH contains, various covenants that limit MPH’s and its restricted subsidiaries’ ability to engage in specified types of transactions. These covenants limit MPH’s and its restricted subsidiaries’ ability to, among other things:

incur additional indebtedness or issue certain preferred shares;

pay certain dividends or make certain distributions on capital stock or repurchase or redeem capital stock;

make certain loans, investments or other restricted payments;

transfer or sell certain assets;

incur certain liens;

place restrictions on the ability of its subsidiaries to pay dividends or make other payments to MPH;
 
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guarantee indebtedness or incur other contingent obligations;

consolidate, merge, sell or otherwise dispose of all or substantially all of their assets; and

engage in transactions with our affiliates.
In addition, under the senior secured credit facilities, in certain circumstances, MPH is required to satisfy specified financial ratios, including a first-lien secured debt leverage ratio. MPH’s ability to meet those financial ratios can be affected by events beyond our control, and MPH may not be able to meet those ratios and tests.
The restrictions and specified financial ratios could limit our ability to plan for or react to market or economic conditions or meet capital needs or otherwise restrict our activities or business plans and could adversely affect our ability to finance operations, acquisitions, investments or strategic alliances or other capital needs or to engage in other business activities that would be in our interest.
A breach of the covenants under the indentures that govern the Convertible Notes, the credit agreement that governs the senior secured credit facilities or the indenture that governs the 5.750% Notes could result in an event of default under the applicable indebtedness. Such default may allow the creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In addition, an event of default under the senior secured credit facilities would permit the lenders under the senior secured credit facilities to terminate all commitments to extend further credit under those facilities. Furthermore, if we were unable to repay the amounts due and payable under the senior secured credit facilities, those lenders could proceed against the collateral granted to them to secure such indebtedness. These actions by lenders could cause cross-acceleration under the indentures that govern the Convertible Notes and the indenture that governs the 5.750% Notes. A significant portion of our indebtedness then may become immediately due and payable. We cannot be certain whether we would have, or would be able to obtain, sufficient funds to make these accelerated payments. If any such indebtedness is accelerated, our assets may not be sufficient to repay in full such indebtedness and our other indebtedness.
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 ability to make scheduled payments on or to refinance our debt obligations depends on our financial condition and operating performance, which in turn are subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. We may not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our indebtedness. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. The terms of existing or future debt instruments may restrict us from adopting some of these alternatives. In addition, any failure to make payments of interest and principal on our outstanding indebtedness on a timely basis would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness. In the absence of such cash flows and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. The agreement that governs the senior secured credit facilities and the indenture that governs the 5.750% Notes restrict us, MPH and our restricted subsidiaries’ ability to dispose of assets and use the proceeds from the disposition. We may not be able to consummate those dispositions or to obtain the proceeds that we could realize from them and these proceeds may not be adequate to meet any debt service obligations then due. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations.
A lowering or withdrawal of the ratings assigned to our debt securities by rating agencies may increase our future borrowing costs and reduce our access to capital.
Our debt currently has a non-investment grade rating, and any rating assigned could be lowered or withdrawn entirely by a rating agency if, in that rating agency’s judgment, future circumstances relating to
 
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the basis of the rating, such as adverse changes in our performance under assorted financial metrics and other measures of financial strength, our business and financial risk, our industry or other factors determined by such rating agency, so warrant. There can be no assurances that our credit ratings or outlook will not be lowered in the future in response to adverse changes in these metrics and factors caused by our operating results or by actions that we take, that reduce our profitability, or that require us to incur additional indebtedness for items such as substantial acquisitions, significant increases in costs and capital spending in security and IT systems, significant costs related to settlements of litigation or regulatory requirements, or by returning excess cash to shareholders through dividends. Consequently, real or anticipated changes in our credit rating will generally affect the market value of our indebtedness. Additionally, credit ratings may not reflect the potential effect of risks relating to the structure of our indebtedness. Any future lowering of our ratings likely would make it more difficult or more expensive for us to obtain additional debt financing and may reduce our profitability.
Risks Related to Our Common Stock
The NYSE may not continue to list our securities, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.
Our Class A common stock and Public Warrants are currently listed on the NYSE. There can be no assurance that we will be able to comply with the continued listing standards of NYSE. If the NYSE delists our Class A common stock from trading on its exchange for failure to meet the listing standards, our stockholders could face significant material adverse consequences including:

a limited availability of market quotations for our securities;

reduced liquidity for our securities;

a determination that our common stock is a “penny stock” which will require brokers trading in such securities to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;

a limited amount of news and analyst coverage; and

a decreased ability to issue additional securities or obtain additional financing in the future.
A significant portion of our Class A common stock is restricted from immediate resale, but may be sold into the market in the future. This could cause the market price of our Class A common stock to drop significantly, even if our business is doing well.
The market price of shares of our Class A common stock could decline as a result of substantial sales of our Class A common stock, particularly by our significant stockholders, a large number of shares of our Class A common stock becoming available for sale or the perception in the market that holders of a large number of shares intend to sell their shares. Sales of a substantial number of shares of common stock in the public market could occur at any time. As of November 11, 2020, we had 667,461,272 shares of our Class A common stock outstanding and we are registering up to 633,750,000 shares of Class A common stock pursuant to the registration statement of which this prospectus is a part.
In connection with the Merger Agreement, we, the Sponsor, Holdings, H&F and certain other parties thereto entered into the Investor Rights Agreement, pursuant to which such stockholders are entitled to, among other things, certain registration rights, including demand, piggy-back and shelf registration rights, subject to cut-back provisions. Certain parties to the Investor Rights Agreement, including H&F and the Sponsor, have agreed not to sell, transfer, pledge or otherwise dispose of shares of our Class A common stock and warrants they hold or receive for certain time periods specified therein, however, upon expiration of their respective lock-up periods, the sale of shares of our Class A common stock and warrants or the perception that such sales may occur, could cause the market price of our securities to drop significantly.
We may issue additional shares of our Class A common stock or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of your shares.
We may issue additional shares of our Class A common stock or other equity securities of equal or senior rank in the future in connection with, among other things, future acquisitions, repayment of outstanding indebtedness or under our Incentive Plan, without stockholder approval, in a number of circumstances.
 
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Our issuance of additional shares of our Class A common stock or other equity securities of equal or senior rank could have the following effects:

your proportionate ownership interest in MultiPlan will decrease;

the relative voting strength of each previously outstanding share of common stock may be diminished; or

the market price of your shares of MultiPlan stock may decline.
A market for our securities may not continue, which would adversely affect the liquidity and price of our securities.
The price of our securities may fluctuate significantly due to the market’s reaction to the business combination and general market and economic conditions. An active trading market for our securities may never develop or, if developed, it may not be sustained. In addition, the price of our securities can vary due to general economic conditions and forecasts, our general business condition and the release of our financial reports. Additionally, if our securities become delisted from the NYSE for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of our securities may be more limited than if we were quoted or listed on the NYSE or another national securities exchange. You may be unable to sell your securities unless a market can be established or sustained.
The price of our securities may be volatile.
If the benefits of the business combination do not meet the expectations of investors, stockholders or securities analysts, the market price of our securities may decline. In addition, fluctuations in the price of our securities could contribute to the loss of all or part of your investment. Immediately prior to the business combination, there was not a public market for stock relating to our business and trading in shares of our Class A common stock was not active. Accordingly, the valuation ascribed to our business and our securities in the business combination may not be indicative of the price that will prevail in the trading market.
The trading price of our securities may fluctuate substantially and may be lower than its current price. This may be especially true for companies like ours with a small public float. If an active market for our securities develops and continues, the trading price of our securities could be volatile and subject to wide fluctuations. The trading price of our securities will depend on many factors, including those described in the “Risk Factors” section, many of which are beyond our control and may not be related to our operating performance. These fluctuations could cause you to lose all or part of your investment in our securities since you might be unable to sell your shares or warrants at or above the price you paid for them. Any of the factors listed below could have a material adverse effect on your investment in our securities and our securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our securities may not recover and may experience a further decline.
The price of our securities may fluctuate due to a variety of factors, including:

actual or anticipated fluctuations in our quarterly and annual results and those of other public companies in our industry;

changes in the market’s expectations about our operating results;

the public’s reaction to our press releases, other public announcements and filings with the SEC;

speculation in the press or investment community;

actual or anticipated developments in our business, competitors’ businesses or the competitive landscape generally;

the operating results failing to meet the expectation of securities analysts or investors in a particular period;

the timing of the achievement of objectives under our Short-Term Execution Plan and the timing and amount of costs we incur in connection therewith;
 
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changes in financial estimates and recommendations by securities analysts concerning us or the market in general;

the failure of securities analysts to publish research about us, or shortfalls in our operating results compared to levels forecast by securities analysts;

operating and stock price performance of other companies that investors deem comparable to ours;

changes in laws and regulations affecting our business;

commencement of, or involvement in, litigation involving us;

changes in our capital structure, such as future issuances of securities or the incurrence of additional debt;

the volume of our Class A common stock available for public sale (which will increase significantly at the time the registration statement of which this prospectus is a part is declared effective);

any major change in our board of directors or management;

sales of substantial amounts of our common stock by our directors, officers or significant stockholders or the perception that such sales could occur;

mergers and strategic alliances in the industry in which we operate;

market prices and conditions in the industry in which we operate;

general economic and political conditions such as recessions, interest rates and “trade wars,” pandemics (such as COVID-19), natural disasters, potential or actual military conflicts or acts of terrorism;

the general state of the securities markets; and

other risk factors listed under “Risk Factors.”
Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance. The stock market in general and the NYSE have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of our securities, may not be predictable. A loss of investor confidence in the market for the stocks of other companies which investors perceive to be similar to us could depress our stock price regardless of our business, prospects, financial conditions or results of operations. Broad market and industry factors, including, most recently, the impact of the novel coronavirus, COVID-19, and any other global pandemics, as well as general economic, political and market conditions such as recessions or interest rate changes, may seriously affect the market price of our securities, regardless of our actual operating performance. These fluctuations may be even more pronounced in the trading market for our securities shortly following the business combination. A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.
In addition, in the past, following periods of volatility in the overall market and the market prices of particular companies’ securities, securities class action litigations have often been instituted against these companies. Litigation of this type, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources. Any adverse determination in any such litigation or any amounts paid to settle any such actual or threatened litigation could require that we make significant payments.
If securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they change their recommendations regarding our Class A common stock adversely, then the price and trading volume of our securities could decline.
The trading market for our Class A common stock and warrants will be influenced by the research and reports that industry or securities analysts may publish about us, our business and operations, our market, or our competitors. Securities and industry analysts do not currently, and may never, publish research on us. If no securities or industry analysts commence coverage of us, the trading price and trading volume of our
 
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securities would likely be negatively impacted. If any of the analysts who may cover us change their recommendation regarding our stock adversely, or provide more favorable relative recommendations about our competitors, the price of our securities would likely decline. If any analyst who may cover us were to cease coverage of us or fail to regularly publish reports on it, we could lose visibility in the financial markets, which could cause our the trading price or trading volume of our securities to decline.
There is no guarantee that an active and liquid public market for our securities will develop.
A liquid trading market for our Class A common stock and warrants may never develop. In the absence of a liquid public trading market:

you may not be able to liquidate your investment in our securities;

you may not be able to resell your shares of our Class A common stock or warrants at or above the price you paid for them;

the market price of our securities may experience significant price volatility; and

there may be less efficiency in carrying out your purchase and sale orders.
 
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Use of Proceeds
All of the shares of Class A common stock and the warrants (including shares of Class A common stock underlying such warrants) offered by the Selling Securityholders pursuant to this prospectus will be sold by the Selling Securityholders for their respective accounts. We will not receive any of the proceeds from these sales.
We will receive up to an aggregate of approximately $449.5 million from the exercise of all Public Warrants, Private Placement Warrants, Working Capital Warrants and PIPE Warrants, assuming the exercise in full of all such warrants for cash.
Unless we inform you otherwise in a prospectus supplement or free writing prospectus, we intend to use the net proceeds from the exercise of such warrants for general corporate purposes which may include acquisitions or other strategic investments or repayment of outstanding indebtedness. Our management will have broad discretion over the use of proceeds from the exercise of the warrants.
There is no assurance that the holders of the warrants will elect to exercise any or all of the warrants. To the extent that the warrants are exercised on a “cashless basis,” the amount of cash we would receive from the exercise of the warrants will decrease.
 
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Churchill’s Selected Historical Financial Information
Churchill’s balance sheet data as of December 31, 2019 and statement of operations data for the period from October 30, 2019 (inception) through December 31, 2019 are derived from Churchill’s audited financial statements, included elsewhere in this prospectus. Such data as of and for the period ended September 30, 2020 are derived from Churchill’s unaudited financial statements, included elsewhere in this prospectus.
The information is only a summary and should be read in conjunction with Churchill’s financial statements and related notes. The historical results included below and elsewhere in this prospectus are not indicative of future performance.
Nine Months Ended
September 30, 2020
Period from October 30,
2019 (inception) through
December 31, 2019
(unaudited)
Statement of Operations Data:
Revenues
$ $
Loss from operations
$ (10,676,879) $ (1,450)
Interest earned on cash equivalents held in Trust Account
$ 4,375,998 $
Net (loss) income
$ (6,961,179) $ (1,450)
Weighted average shares outstanding, basic and diluted(1)
30,815,111 25,000,000
Basic and diluted net loss per common share(2)
$ (0.31) $ (0.00)
As of September 30, 2020
As of December 31, 2019
(unaudited)
Balance Sheet Data:
Cash
$ 3,189,455 $ 34,000
Cash equivalents held in Trust Account, Restricted
$ 1,104,025,998 $
Total assets
$ 1,107,513,145 $ 318,930
Total liabilities
$ 49,070,794 $ 295,380
Stockholders’ equity
$ 5,000,003 $ 23,550
(1)
Excludes an aggregate of 105,003,860 shares subject to possible redemption at September 30, 2020.
(2)
Excludes interest income of $2,449,217 attributable to shares subject to possible redemption for the nine months ended September 30, 2020.
 
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MultiPlan Parent’s Selected Historical Financial Information
The following tables present the selected historical consolidated financial data of MultiPlan Parent and MPH (the predecessor of MultiPlan Parent) for the periods presented. The consolidated statement of income and comprehensive income data and consolidated statement of cash flows data for the years ended December 31, 2017, 2018 and 2019 and the consolidated balance sheet data as of December 31, 2018 and 2019 have been derived from MultiPlan Parent’s audited consolidated financial statements included elsewhere in this prospectus. The consolidated statement of income and comprehensive income data and consolidated statement of cash flows data for the nine months ended September 30, 2019 and 2020 and the consolidated balance sheet data as of September 30, 2020 have been derived from MultiPlan Parent’s unaudited condensed consolidated financial statements included elsewhere in this prospectus. The unaudited condensed consolidated financial statements of MultiPlan Parent have been prepared on the same basis as the audited consolidated financial statements of MultiPlan Parent. In the opinion of MultiPlan Parent’s management, the unaudited condensed consolidated interim financial data reflects all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the financial information in those statements. The selected historical consolidated financial data for the year ended December 31, 2015, the period from January 1, 2016 through June 6, 2016 and the period from May 2, 2016 through December 31, 2016, and the summary balance sheet data as of December 31, 2016 and September 30, 2019 has been derived from MultiPlan Parent’s (or its predecessor’s) unaudited financial statements not included in this prospectus.
On June 7, 2016, affiliates of Hellman & Friedman LLC, certain other investors and certain members of management acquired, indirectly, all of the capital stock of MultiPlan Parent. The following discussion includes references to the “successor” and “predecessor” of, and the related accounting periods resulting from, the consummation of such acquisition on June 7, 2016. In accordance with GAAP, the accounting period for the successor began on May 2, 2016, the date the successor began accruing expenses related to such acquisition.
You should read the selected financial data presented below in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and MultiPlan Parent’s consolidated financial statements and the related notes included elsewhere in this prospectus. The financial information contained in this section relates to MultiPlan, prior to and without giving pro forma effect to the impact of the Transactions and the Refinancing and the results reflected in this section may not be indicative of our results going forward. See the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” included elsewhere in this prospectus.
 
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Nine
Months
Ended
September 30,
2020
Nine
Months
Ended
September 30,
2019
Year Ended
December 31,
2019
Year Ended
December 31,
2018
Year Ended
December 31,
2017
May 2 –
December 31,
2016
January 1 –
June 6,
2016
Year Ended
December 31,
2015
($ in thousands except share data)
Successor
Successor
Successor
Successor
Successor
Successor
Predecessor
Predecessor
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Consolidated Statements of Income and Comprehensive Income Data:
Revenues(1) $ 682,419 $ 736,497 $ 982,901 $ 1,040,883 $ 1,067,266 $ 575,889 $ 412,597 $ 865,094
Expenses:
Cost of services (exclusive of depreciation and amortization of intangible assets shown below)
244,445 116,191 149,607 149,463 193,655 106,639 175,470 217,956
General and administrative
expenses
241,931 62,513 75,225 77,558 122,920 160,294 187,764 174,951
Depreciation
44,903 41,723 55,807 52,268 53,002 30,244 19,818 41,650
Amortization of intangible
assets
250,540 250,540 334,053 334,053 334,053 189,297 80,152 184,967
Total expenses
781,819 470,967 614,692 613,342 703,630 486,474 463,204 619,524
Operating income (loss)
(99,400) 265,530 368,209 427,541 363,636 89,415 (50,607) 245,570
Interest expense(2)
259,290 286,438 376,346 383,261 281,972 155,140 81,385 152,127
Interest income
(229) (133) (196) (51) (9) (19) (12)
Loss on extinguishments and modification of debt
20,053 127,307
Gain on repurchase and cancellation of notes
(18,450) (18,450)
Net (loss) income before income
taxes
(358,461) (2,325) 10,509 44,331 61,620 (65,706) (259,299) 93,455
(Benefit) provision for income
taxes
(11,219) (191) 799 8,108 (586,512) (9,203) (11,701) 85,706
Net (loss) income
(347,242) (2,134) 9,710 36,223 648,132 (56,503) (247,598) 7,749
Weighted-average shares of
common stock outstanding −
basic and diluted .
10 10 10 10 10 10 10 10
Net (loss) income per share − basic and diluted
$ (34,724,200) $ (213,400) $ 971 $ 3,622 $ 64,813 $ (5,650) $ (24,760) $ 775
Other comprehensive income,
net of tax:
Unrealized gain (loss) on change in fair value of derivatives
(2,244) (3,971)
Comprehensive (loss)
income
$ (347,242) $ (2,134) $ 9,710 $ 36,223 $ 648,132 $ (56,503) $ (249,842) $ 3,778
Consolidated Balance Sheets Data (at end of period):
Cash and cash equivalents
$ 203,807 $ 23,778 $ 21,825 $ 5,014 $ 21,417 $ 26,396 $ 56,313
Total assets(3)
8,400,027 8,503,894 8,360,411 8,642,973 8,987,709 9,285,126 5,297,921
Long-term debt
5,409,451 5,393,779 5,397,122 5,603,413 5,835,697 4,700,644 2,676,697
Shareholders’ equity
1,937,604 1,987,945 1,985,218 1,990,388 1,949,448 2,670,238 1,378,304
Cash dividends per share
141,971 38,765
Consolidated Statements of Cash Flows Data:
Cash flows provided by (used in):
Operating activities
$ 332,301 $ 267,927 $ 284,313 $ 292,303 $ 368,945 $ 157,621 $ 28,987 $ 347,117
Investing activities
(150,328) (48,020) (66,414) (63,556) (60,709) (6,838,883) (22,568) (49,079)
Financing activities
9 (201,143) (201,088) (245,150) (313,215) 6,707,658 (52,265) (270,083)
 
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(1)
On January 1, 2018, MultiPlan Parent adopted ASC Topic 606, Revenue from Contracts with Customers. See Note 2 to MultiPlan Parent’s annual consolidated financial statements included elsewhere in this prospectus for additional information.
(2)
In the years ended December 31, 2017, 2018 and 2019, MultiPlan Parent did not recognize expense for the portions of debt issuance costs related to the amounts of the principal loan prepayments of MPH’s term loan facility in each year, which resulted in an understatement of long-term debt of $2.3 million as of December 31, 2019. MultiPlan Parent corrected this error as an out-of-period adjustment resulting in an overstatement of interest expense of $2.3 million in the nine months ended September 30, 2020.
(3)
On January 1, 2019, MultiPlan Parent adopted ASC Topic 842, Leases. See Note 2 to MultiPlan Parent’s annual consolidated financial statements included elsewhere in this prospectus for additional information.
 
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Unaudited Pro Forma Condensed Combined Financial Information
Introduction
The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X and should be read in conjunction with the accompanying notes.
On February 19, 2020, Churchill consummated its initial public offering (the “Churchill IPO”) of 110,000,000 units, including 10,000,000 units under the underwriters’ over-allotment option, with each unit consisting of one share of Class A common stock and one-fourth of one warrant, each whole warrant to purchase one share of Class A common stock. The units were sold at an offering price of $10.00 per unit, generating gross proceeds of $1,100,000,000. Simultaneously with the consummation of the Churchill IPO, Churchill consummated the private placement of 23,000,000 warrants at a price of $1.00 per warrant, generating total proceeds of $23,000,000. Transaction costs amounted to $57,620,020 consisting of $18,402,000 of underwriting fees, $38,500,000 of deferred underwriting fees and $718,020 of other offering costs.
Following the consummation of the Churchill IPO, $1,100,000,000 was deposited into a U.S.-based trust account with Continental Stock Transfer & Trust Company acting as trustee.
On July 12, 2020, Churchill entered into the Merger Agreement with MultiPlan Parent, Holdings, First Merger Sub and Second Merger Sub, which among other things, provides for (i) First Merger Sub to be merged with and into MultiPlan Parent with MultiPlan Parent surviving the First Merger and (ii) MultiPlan Parent to be merged with and into Second Merger Sub, with Second Merger Sub surviving the Second Merger as a wholly owned subsidiary of Churchill.
On October 8, 2020, the Transactions were consummated in accordance with the terms of the Merger Agreement.
In connection with the consummation of the Transactions:

$1,521,000,000 in cash was paid to Holdings on behalf of Holdings’ equityholders as the Closing Cash Consideration;

Churchill issued 415,700,000 shares of its Class A common stock as Closing Share Consideration;

8,693,855 shares of Churchill’s Class A common stock were redeemed for an aggregate of $87.2 million, or approximately $10.03 per share, paid from the Churchill trust account;

Churchill issued and sold to the Common PIPE Investors, (x) 130,000,000 shares of Churchill’s Class A common stock at a purchase price of $10.00 per share for aggregate proceeds of $1,300,000,000, (y) warrants to purchase 6,500,000 shares of Churchill’s Class A common stock and (z) an additional 2,050,000 shares of Churchill’s Class A common stock in lieu of an original issue discount (the shares of Class A common stock described in clause (x) and clause (z) are collectively referred to herein as the “Common PIPE Shares”);

Churchill issued and sold to the Convertible PIPE Investors $1,300,000,000 in aggregate principal amount of Convertible Notes, with an original issue discount of $32,500,000, for aggregate proceeds of $1,267,500,000;

the Senior PIK notes were redeemed in full for a total redemption price of $1,237.6 million (which includes accrued interest through October 7, 2020);

all of Churchill’s 27,500,000 outstanding shares of Class B common stock were converted into shares of Churchill’s Class A common stock on a one-for-one basis;

Churchill paid KG a transaction fee of $15,000,000 and a placement fee of $15,500,000, all of which was paid in cash; and

Sponsor elected to convert the full balance of the Sponsor Note, in the principal amount of $1,500,000, into 1,500,000 Working Capital Warrants.
 
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The consummation of the Mergers constituted a definitive liquidity event under the agreements governing the Unit awards and as a result all unvested Units vested on October 7, 2020. MultiPlan Parent recorded these awards within shareholders’ equity as an equity contribution from Holdings based on the fair value of the outstanding Units at each reporting period. The settlement of these awards was made in a combination of cash and shares of Churchill’s Class A common stock and was included in the aggregate consideration paid to MultiPlan Parent Owners.
Transaction costs included $20,000,000 of transaction bonuses approved by the compensation committee that will be paid to employees, including executive officers.
On October 29, 2020, the Refinancing was consummated. In connection with the Refinancing:

the 7.125% Notes were redeemed in full for a total redemption price of $1,652.6 million (which includes a redemption premium of $55.6 million and accrued interest of $37.1 million). The calculation of the total redemption price assumes the 7.125% Notes were redeemed on September 30, 2020.

MPH issued the 5.750% Notes in the aggregate principal amount of $1,300.0 million. The 5.750% Notes will mature on November 1, 2028. MPH incurred $16.3 million in discounts and commissions on the 5.750% Notes.

MPH prepaid $369.0 million on the term loan facility and amended the credit agreement governing the revolving credit facility to increase the committed principal by $350.0 million, from $100.0 million to $450.0 million. The revolving credit facility remained undrawn at the closing of the Refinancing, except to replace any outstanding letters of credit ($1.8 million of which were outstanding as of September 30, 2020). MPH incurred $4.5 million in commissions on the revolving credit facility amendment.
The unaudited pro forma condensed combined balance sheet as of September 30, 2020 combines the unaudited condensed consolidated balance sheet of Churchill as of September 30, 2020 with the unaudited condensed consolidated balance sheet of MultiPlan Parent as of September 30, 2020, giving effect to the Transactions and Refinancing as if they had been consummated on that date.
The unaudited pro forma condensed combined statement of loss for the nine months ended September 30, 2020 combines the unaudited condensed consolidated statements of operations of Churchill for the nine months ended September 30, 2020 with the unaudited condensed consolidated statements of (loss) income and comprehensive (loss) income of MultiPlan Parent for the nine months ended September 30, 2020. The unaudited pro forma condensed combined statement of loss for the year ended December 31, 2019 combines the audited statements of operations for the period from October 30, 2019 (inception) through December 31, 2019 of Churchill with the audited consolidated statements of income and comprehensive income of MultiPlan Parent for the year ended December 31, 2019. The unaudited pro forma condensed combined statements of loss for the nine months ended September 30, 2020 and the year ended December 31, 2019 give effect to the Transactions and Refinancing as if they had occurred as of January 1, 2019.
The unaudited pro forma condensed combined financial information is for illustrative purposes only and is based on information currently available and the assumptions and estimates described herein. The unaudited pro forma condensed combined financial information does not necessarily reflect what our financial condition or results of operations would have been had the Transactions and Refinancing occurred on the dates indicated. The unaudited pro forma condensed combined financial information also may not be useful in predicting our future financial condition and results of operations. Our actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.
The historical financial information of Churchill was derived from the unaudited financial statements of Churchill as of and for the nine months ended September 30, 2020 and from the audited financial statements of Churchill for the year ended December 31, 2019, included elsewhere in this prospectus. The historical financial information of MultiPlan Parent was derived from the unaudited condensed consolidated financial statements of MultiPlan Parent as of and for the nine months ended September 30, 2020 and from the audited consolidated financial statements of MultiPlan Parent for the year ended December 31, 2019, included elsewhere in this prospectus. This information should be read together with Churchill’s and
 
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MultiPlan Parent’s audited and unaudited financial statements and related notes, the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other financial information included elsewhere in this prospectus.
Accounting for the Transactions
The Transactions were accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Under this method of accounting, Churchill was treated as the acquired company for financial reporting purposes. Accordingly, for accounting purposes, the Transactions were treated as the equivalent of MultiPlan Parent issuing shares of common stock for the net assets of Churchill, accompanied by a recapitalization. The net assets of Churchill were recognized at fair value (which were consistent with carrying value), with no goodwill or other intangible assets recorded.
MultiPlan Parent was determined to be the accounting acquirer based on an evaluation of the following facts and circumstances:

The existing MultiPlan Parent shareholders (the “MultiPlan Parent Owners”) have the majority ownership interest and voting interest in the combined entity;

the combined company’s board of directors initially consists of nine directors: three of whom will initially be appointed by H&F, three of whom will initially be appointed by the Sponsor, two independent directors and one of whom will be the combined company’s chief executive officer. Two additional members will also be appointed as independent directors by H&F (subject to the Sponsor’s consent); and

MultiPlan Parent was the larger entity, in terms of both revenues and total assets.
Other factors were considered, including composition of management, purpose and intent of the Transactions and the location of the combined company’s headquarters, noting that the preponderance of evidence as described above was indicative that MultiPlan Parent was the accounting acquirer in the Transactions.
Accounting for the Refinancing
We have assumed the following accounting treatment for purposes of preparing the unaudited pro forma condensed combined financial information herein.
The redemption of the 7.125% Notes was accounted for as an extinguishment and the difference between the reacquisition price of the debt and the net carrying amount of the extinguished debt was recognized as a loss on extinguishment through retained earnings.
The issuance of the 5.750% Notes was accounted for as the issuance of new debt.
The call and put options embedded in the 7.125% Notes and the senior secured credit facilities are closely related to the debt host and not accounted for separately.
Description of the Transactions
The following represents the aggregate stock consideration issued by Churchill at the closing of the Transactions (the “Closing”) with the shares valued at $10.00 per share.
(in millions)
Share issuance to MultiPlan Parent Owners(1)
$ 4,157.0
Shares previously issued to Churchill public shareholders, net of redemptions(1)
1,013.1
Share issuance to the Sponsor (or any of its affiliates)(1)(2)
275.0
Share issuance to Purchasers of the Common PIPE Shares(1)
1,320.5
Share consideration – at Closing(3)
$ 6,765.6
 
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(1)
Shares of Churchill issued as set forth in the Merger Agreement.
(2)
All of Churchill’s 27,500,000 outstanding shares of Class B common stock were converted in the Transactions to shares of Churchill’s Class A common stock on a one-for-one basis.
(3)
Excludes the impact of the shares of common stock underlying the (a) Common PIPE Warrants, (b) Convertible Notes, (c) Working Capital Warrants, (d) warrants issued in the Churchill IPO and (e) the Private Placement Warrants. See Note 2 to Unaudited Pro Forma Condensed Combined Financial Information, “Earnings Per Share.”
The value of share consideration issued at the Closing to the MultiPlan Parent Owners was $10.00 per share.
The following summarizes the pro forma shares outstanding as of the Closing:
(shares in millions; numbers may not sum due to rounding)
Shares
%
Share issuance to the MultiPlan Parent Owners
415.7
Total MultiPlan Parent Owners shares
415.7 61.4%
Shares held by current Churchill public shareholders
110.0
Less: public shares redeemed
(8.7)
Total held by current Churchill public shareholders
101.3 15.0%
Shares held by the Sponsor (or any of its affiliates)(1)
27.5 4.1%
Common PIPE Shares
132.1 19.5%
Net Chu