When the SPAC Kingpin Michael Klein agreed to buy Multiplan in June 2020 for $11 billion, much to the delight of Blanc in Chekville. It was a record deal size back then, and Multiplan was a decades-old healthcare cost management company with blue chip customers, not a flying taxi startup with blue chip ambitions.
big picture: Those joys were silenced a few months later, when short-seller Muddy Waters published a report claiming that Multiplan was set to lose its biggest customer, UnitedHealthcare (UHC). If not immediately, then in the long term because UHC created a rival product called Naviguard.
- Multiplan argued that Muddy Waters was misreading tea leaves, but its stock broke the $10 barrier and never recovered. It had fallen below $4 a share earlier this month.
- The UHC, which could have clarified the whole thing with a public statement, remained silent.
a possibility It was that UHC did not want to draw any undue attention to the issues of out-of-network bills and cost management, given that it was suing ER services firm TeamHealth for overcharging. The second was that Muddy Waters was right. Either way, it seemed that the owner of the pro sports team refused to give the coach a public vote of confidence.
- PE angle: Multiplan’s SPAC deal included participation from former owners Hellman & Friedman and General Atlantic, while TeamHealth is owned by The Blackstone Group.
Fast forward: UHC declined to comment yesterday when contacted by Nerdshala, but one of its former senior officials discussed the matter under oath last Friday under questioning by UHC’s lawyer at the TeamHealth trial.
- john have testified While a “roadmap” was developed in 2018 under which the Navigator could replace the Multiplan by 2023, that idea was scrapped by Heben’s retirement from the company last August.
- Heben said Multiplan provides services that Navigator does not, and that eliminating Multiplan would not be “plausible.” He then added: “Customers still wanted to use [MultiPlan’s services] … we’re not going to force the client to move.”
- The transcript was released shortly after Multiplan reported that its revenue from UHC had increased by more than 30% since the 2018 roadmap was drawn up. Sources also tell me that SPAC and its PE sponsors met with UHC during their due diligence.
Bottom-line: Multiplan faces some unrelated headwinds, like the ingestion of a surprising medical billing law, and was caught flat-footed by apparently PR-savvy shorts. Its most significant challenge, however, is getting the market to listen to Heben more than Muddy Waters.