Claritev (CTEV) risk factors, FY2025 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 plan93% rewritten
3. 03example, we are consolidating our cloud infrastructure on Oracle Cloud Infrastructure to support our digital transformation, which we anticipate will enable us to better support our clients’ needs by improving efficiency and creating a more flexible infrastructure to meet evolving market demandsNew
4. 04We may not successfully enter new lines of business, launch new products or broaden the scope of our solutions, and such activities may result in expenditures we cannot recoup, divert management's attention or otherwise strain our businessNew
5. 05If 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
6. 06Our 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 services20% rewritten
7. 07If 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
8. 08Failure to successfully complete divestitures could negatively affect our operations
9. 09The market for our products and solutions is fragmented and competitive and we may not be able to maintain our competitive position in the market23% rewritten
10. 10If competition or pricing pressures increase, our growth and profits may decline
11. 11Changes in the healthcare industry could adversely affect us29% rewritten
12. 12Evolving industry standards and rapid technological changes, including the adoption and further development of artificial intelligence, could result in reduced demand for our products and solutions43% rewritten
13. 13We operate in a litigious environment which may adversely affect our financial results31% rewritten
14. 14Our business may be adversely affected by large-scale public health emergencies, pandemics, and other extreme or catastrophic eventsNew
15. 15We depend on our providers and our PPO networks to maintain the profitability of our network and claims intelligence solutions, as well as the future expansion of our operations
16. 16Our PPO networks may experience decreases in discounts from providers, thereby adversely affecting our competitive position and revenue
17. 17Pressure 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
18. 18The inability of our clients to pay for our products and solutions could decrease our revenue35% rewritten
19. 19If 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
20. 20Our profitability could suffer if we are not able to timely and effectively utilize our employees or manage our cost structure
21. 21If 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

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

1. 22Security 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. 23Security 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. 24If 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. 25Failure 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. 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 operations20% rewritten
6. 27We 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
7. 28If our ability to expand our network and technology infrastructure is constrained, we could lose clients and that loss could adversely affect our operating results24% rewritten
8. 29We may be sued by third parties for alleged infringement of their proprietary rights

Other Business and Operational Risks

1. 30If 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 impaired95% rewritten
2. 31Our recent implementation of a new ERP system may adversely affect our business and results of operations or the effectiveness of our internal control over financial reporting30% rewritten
3. 32Changes in accounting principles may negatively affect our results of operations
4. 33We may need to recognize impairment charges related to goodwill, identified intangible assets and fixed assets75% rewritten
5. 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
6. 35Changes in tax laws or exposure to additional income tax liabilities may negatively affect our business, results of operations, financial condition, and cash flows
7. 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
8. 37Inflation could adversely affect our financial results
9. 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
10. 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
11. 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 regulations. Changes in existing healthcare laws and regulatory interpretations on a state or federal level may adversely affect us41% rewritten
2. 42Changes 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
3. 43Heightened enforcement activity by federal and state agencies may increase our potential exposure to damaging lawsuits, investigations and other enforcement actions
4. 44By 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. 45Our 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 industry61% rewritten
2. 46We 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 successful94% rewritten
3. 47Our debt agreements contain restrictions that limit our flexibility in operating our business
4. 48A 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
5. 49Despite 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
6. 50Our 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 swaps47% rewritten

Risks Related to Our Class A Common Stock

1. 51H&F and the Sponsor beneficially own a significant equity interest in us and their interests may conflict with us or other shareholders' interests
2. 52Our 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 Plan21% rewritten
3. 53We 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. 54Provisions in our organizational documents, debt agreements and instruments and Investor Rights Agreement could delay or prevent a change of control
5. 55Our Board is authorized to issue and designate shares of our preferred stock in additional series without stockholder approval
6. 56We currently do not intend to declare dividends on our Class A 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 Class A common stock appreciates20% rewritten
7. 57Any 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. 58The price of our securities may be volatile

Risks Related to Global Economics, Political and Regulatory Conditions

1. 59We face risks associated with the international expansion of our businessNew
2. 60Our financial results and ability to grow our business may be negatively impacted by global events beyond our controlNew
3. 61We face risks associated with international activities, including those related to compliance with the Foreign Corrupt Practices Act and other applicable anti-corruption legislationNew