MultiPlan Corporation

According to the complaint, defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business, operations, and prospects. Specifically, defendants allegedly failed to disclose to investors:

a) that MultiPlan was losing tens of millions of dollars in sales and revenues
to Naviguard, a competitor created by one of MultiPlan’s largest customers, UnitedHealthcare, which threatened up to 35% of the Company’s sales and 80% of its levered cash flows by 2022;
b) that sales and revenue declines in the quarters leading up to the Merger
were not due to “idiosyncratic” customer behaviors as represented, but rather due to a fundamental deterioration in demand for MultiPlan’s services and increased competition, as payors developed competing services and sought alternatives to eliminating excessive healthcare
costs;
c) that MultiPlan was facing significant pricing pressures for its services and
had been forced to materially reduce its take rate in the lead up to the Merger by insurers, who had expressed dissatisfaction with the price and quality of MultiPlan’s services and balanced billing practices, causing the Company’s to cut its take rate by up to half in some cases;
d) that, as a result of (a)-(c) above, MultiPlan was set to continue to suffer
from revenues and earnings declines, increased competition and deteriorating pricing dynamics following the Merger; that, as a result of (a)-(d) above, MultiPlan was forced to seek continued
e) revenue growth and to improve its competitive positioning through pricey
acquisitions, including through the purchase of HST for $140 million at a premium price from a former MultiPlan executive only one month after the Merger; and
f) that, as a result of (a)-(e) above, Churchill III investors had grossly overpaid for the acquisition of MultiPlan in the Merger, and MultiPlan’s business was worth far less than represented to investors.