MultiPlan Corporation (MPLN - Get Rating) is a data analytics and technology-enabled, end-to-end cost management solutions provider to the healthcare industry. The company combined its business with its parent company Churchill Capital Corp III last October and thereafter began trading on NYSE under the ticker “MPLN”.

Shares of MPLN have gained 16.9% year-to-date, and 10.1% over the past month.

Click here to checkout our Healthcare Sector Report for 2021

Here’s what we think could shape MPLN’s performance in the near term:

Lawsuits

Several class action lawsuits have been filed against MPLN  alleging false and/or misleading statements made by the company. The allegations state that MPLN has been losing tens of millions of dollars in revenues to competitor Naviguard, and there has been a fundamental deterioration of demand for MPLN’s services. Furthermore, the company has  been facing significant pricing pressures, allegedly forcing it to reduce its take rate. Consequently, MPLN has been forced to improve its growth potential through arguably overvalued acquisitions, such as the purchase of HST for $140 million.

In June, Bronstein, Gewirtz & Grossman, LLC filed a class action lawsuit against MPLN regarding alleged violations of the federal securities laws under the Securities Exchange Act of 1934.

Impressive Growth Estimates

A consensus $262.98 million revenue estimate for the current quarter (ending September 2021) indicates a 17.7% improvement year-over-year. MPLN’s revenues increased 13% from the same period last year to $1.06 billion in fiscal 2021.

The Street expects the company’s EPS to increase 101.3% year-over-year to $0.03 in the current quarter, and 53.8% year-over-year to $0.13 in the current year.

Mixed Financials and Profitability

The company’s trailing-12-month revenues came in at $940.61 million. Its  trailing-12-month gross profit was $634.99 million, translating to a 67.51% margin. MPLN’s trailing-12-month gross profit margin is 20.9% higher than the 55.85% industry average.

The company’s trailing-12-month net operating cash flow amounted to $400.89 million. And  its levered free cash flow margin stood at 54.07%, 2,299% higher than the 2.25% industry average.

However, MPLN’s bottom line has remained negative over the past year. It’s trailing-12-month net loss came in at $472.09 million, or $0.89 per share. The company’s return on sales, ROE, ROA and ROTC are negative.

Premium Valuation

In terms of non-GAAP forward P/E, MPLN is currently trading at 19.06x, which is 21.9% lower than the 24.41 industry average. Its 14.18 and 5.74 respective forward EV/EBITDA and Price/Sales ratios are significantly lower than the 16.72 and 8.21 industry averages.

MPLN’s 15.35 trailing-12-month Price/Cash Flow multiple is 26.1% lower than the 20.76 industry average.

POWR Ratings Reflect Uncertainty

MPLN has an overall C rating, which equates to Neutral in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.

MPLN has a D grade for Quality and Value, and C for Stability. The company’s negative profitability and relative overvaluation justify its  Quality and Value grades.

Of the 59 stocks in the D-rated Software – Business industry, MPLN is ranked #40.

In addition to the grades highlighted, we have also ranked MPLN for Momentum, Sentiment, and Growth. Click here to view all MPLN Ratings. For other top stocks in this industry, make sure to click here.

Bottom Line

MPLN’s technological prowess and increasing market reach make it a strong player in the digital healthcare industry. However, investors should wait to invest in the stock until the lawsuits filed against the company are resolved.

Click here to checkout our Healthcare Sector Report for 2021

MPLN shares were trading at $9.35 per share on Friday afternoon, up $0.01 (+0.11%). Year-to-date, MPLN has gained 17.02%, versus a 16.60% rise in the benchmark S&P 500 index during the same period.

About the Author: Aditi Ganguly

Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...

More Resources for the Stocks in this Article