Claritev (CTEV) risk factors, FY2024 10-K

Business and Operations Risks

1. 01Our success is dependent on retaining our key clients, as well as the success of those clients, as we depend on a core group of clients for a significant portion of our revenues
2. 02We may be unable to achieve some or all of the operational, growth and other benefits that we expect to realize through our strategic plans, including our Vision 2030 transformation plan
3. 03If we do not continue to attract, motivate and retain members of our senior management team and qualified employees, or if we are unable to maintain sufficient qualified personnel, we may not be able to support our operations
4. 04Our profitability could suffer if we are not able to timely and effectively utilize our employees or manage our cost structure
5. 05If our employees are under-utilized, our profit margin and profitability could suffer. Additionally, if our employees are over-utilized, it could have a material adverse effect on employee engagement and attrition, which would in turn have a material adverse impact on our business
6. 06If we are unable to sustain a level of liquidity sufficient to support our operations and fulfill our obligations, our business, financial condition, and results of operations could be materially and adversely affected
7. 07Our operations may be adversely impacted by the effect of trends in the U.S. healthcare system, including recent trends of reduced healthcare utilization and increased patient financial responsibility for services
8. 08If 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
9. 09Failure to successfully complete divestitures could negatively affect our operations
10. 10The market for our products and services is fragmented and competitive and we may not be able to maintain our competitive position in the market
11. 11If competition or pricing pressures increase, our growth and profits may decline
12. 12Changes in the healthcare industry could adversely affect us
13. 13Evolving industry standards and rapid technological changes could result in reduced demand for our products and services
14. 14We operate in a litigious environment which may adversely affect our financial results
15. 15Our business may be adversely affected by a pandemic, epidemic, or similar public health emergency
16. 16We depend on our providers and our PPO networks to maintain the profitability of our network-based and analytics-based services, as well as the future expansion of our operations
17. 17Our PPO networks may experience decreases in discounts from providers, thereby adversely affecting our competitive position and revenue
18. 18Pressure 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
19. 19The inability of our clients to pay for our products and services could decrease our revenue

Risks Related to Information Technology Systems, Cybersecurity, and Intellectual Property

1. 20Security breaches, loss of data and other cyber incidents or disruptions could compromise sensitive business or patient information and negatively impact our business and reputation, harm both us and our clients and create liability
2. 21Security and privacy concerns with respect to the healthcare industry may also inhibit the growth of the healthcare information services industry in general, and our client base and business in particular
3. 22If we fail to execute our cybersecurity risk management programs and/or our strategy do not perform as intended, we may suffer security and privacy breaches, and our business and reputation could be adversely affected
4. 23Failure to adequately protect the confidentiality of our trade secrets, know-how, proprietary applications, business processes and other proprietary information could adversely affect the value of our technology and products
5. 24We 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
6. 25If our ability to expand our network and technology infrastructure is constrained, we could lose clients, and that loss could adversely affect our operating results
7. 26Our business relies on third party providers of cloud services, and any disruption of, or interference with, our use of cloud services could materially and adversely affect our business, financial condition, or results of operations
8. 27We may be sued by third parties for alleged infringement of their proprietary rights

Other Business and Operational Risks

1. 28If 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
2. 29listing 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
3. 30Our implementation of a new ERP system may adversely affect our business and results of operations or the effectiveness of our internal control over financial reporting
4. 31Changes in accounting principles may negatively affect our results of operations
5. 32We may need to recognize impairment charges related to goodwill, identified intangible assets and fixed assets
6. 33For example, following our annual impairment test in the fourth quarter of 2024, the estimated fair values of our indefinite-lived assets were less than their carrying values and as a result impairment charges of $54.5 million for our indefinite-lived intangibles were recorded
7. 34Changes 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
8. 35Changes in tax laws or exposure to additional income tax liabilities may negatively affect our business, results of operations, financial condition, and cash flows
9. 36Our income tax provision and other tax liabilities may be insufficient if taxing authorities are successful in asserting tax positions that are contrary to our position, and there is no guarantee that we will realize our deferred tax assets
10. 37Inflation could adversely affect our financial results
11. 38There is a rapidly evolving awareness and focus from stakeholders with respect to environmental, social and governance practices, including anti-ESG sentiment, which could affect our business
12. 39Our business is subject to evolving corporate governance and public disclosure regulations and expectations, including with respect to environmental, social and governance matters that could expose us to numerous risks
13. 40Increased focus on sustainability issues, including those related to climate change, may adversely affect our business and financial results and damage our reputation

Risks Related to the Healthcare Industry and other Legal Regulations

1. 41We operate in an industry that is subject to extensive federal, state and local regulation. Changes in existing healthcare laws and regulatory interpretations on a state or federal level may adversely affect us
2. 42our clients. Although we remain ready to assist our clients with regard to NSA compliance and we will continue to adapt to evolving NSA regulations, we cannot assure you that we will be able to do so successfully or at the level of profitability of our other lines of business
3. 43Changes 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
4. 44Heightened enforcement activity by federal and state agencies may increase our potential exposure to damaging lawsuits, investigations and other enforcement actions
5. 45By way of example, the Affordable Care Act increased the penalties applied under the Federal Sentencing Guidelines for federal healthcare offenses that affect a governmental program. The fraud enforcement provisions would apply to us to the extent we are deemed a government contractor for a federal healthcare program

Risks Related to Indebtedness

1. 46Our level of indebtedness and current leverage may materially and adversely affect our ability to raise additional capital to fund our operations or growth and limit our ability to react to changes in the economy or our industry
2. 47We 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
3. 48to 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
4. 49Our debt agreements contain restrictions that limit our flexibility in operating our business
5. 50A lowering or withdrawal of the ratings assigned to our debt instruments by rating agencies may increase our future borrowing costs and reduce our access to capital
6. 51Despite 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
7. 52Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly notwithstanding our use of interest rate swaps

Risks Related to Our Common Stock

1. 53H&F and the Sponsor beneficially own a significant equity interest in us and their interests may conflict with us or other shareholders' interests
2. 54Our ability to issue equity awards to our employees is limited currently due to the lack of sufficient shares approved by our stockholders as part of our 2020 Omnibus Incentive Plan
3. 55We have previously been, and may in the future be, subject to securities or other stockholder litigation, which is expensive and could divert management's attention
4. 56Provisions in our organizational documents, debt agreements and instruments and Investor Rights Agreement could delay or prevent a change of control
5. 57Our Board will be authorized to issue and designate shares of our preferred stock in additional series without stockholder approval
6. 58We currently do not intend to declare dividends on our common stock in the foreseeable future and, as a result, your only opportunity to achieve a return on your investment is if the price of our common stock appreciates
7. 59Any sale of our Class A common stock by a significant stockholder, or the perception that such sale may occur, could cause the market price of our securities to drop significantly, even if our business is doing well
8. 60The price of our securities may be volatile
9. 61We completed a 1-for-40 reverse stock split of our shares of common stock, which may have adverse effects on the trading of our common stock
10. 62We are a smaller reporting company, and the reduced reporting requirements applicable to smaller reporting companies may make our common stock less attractive to investors