MultiPlan (MPLN) - 2020 Q2 - Quarterly Report

Company Overview Business Operations Churchill Capital Corp III is a SPAC formed to pursue a business combination, generating non-operating income from IPO proceeds - The company is a SPAC formed to execute a business combination and has not yet generated operating revenue[22][24] - On February 19, 2020, the company completed its Initial Public Offering, raising $1.1 billion in gross proceeds[25] - Concurrently with the IPO, 23,000,000 private placement warrants were sold to the sponsor, generating an additional $23 million in gross proceeds[26] - Following the IPO, $1.1 billion was placed in a trust account, invested in U.S. government securities for a future business combination[28] Part I. Financial Information Item 1. Financial Statements Financial statements for June 30, 2020, reflect the company's pre-business combination SPAC status, highlighting trust account assets and IPO-driven cash flows Condensed Balance Sheets As of June 30, 2020, total assets were $1.108 billion, dominated by marketable securities in the Trust Account, with significant common stock subject to redemption Condensed Balance Sheet Highlights (as of June 30, 2020) | Metric | June 30, 2020 (unaudited) | December 31, 2019 | | :--- | :--- | :--- | | Assets | | | | Cash | $2,955,367 | $34,000 | | Marketable securities held in Trust Account | $1,104,209,313 | $0 | | Total Assets | $1,107,564,339 | $318,930 | | Liabilities & Equity | | | | Total Liabilities | $40,464,311 | $295,380 | | Common stock subject to possible redemption | $1,062,100,027 | $0 | | Total Stockholders' Equity | $5,000,001 | $23,550 | | Total Liabilities and Stockholders' Equity | $1,107,564,339 | $318,930 | Condensed Statement of Operations For Q2 2020, the company reported a net loss of $1.34 million, while the six months ended June 30, 2020, showed net income of $1.70 million Statement of Operations Summary (Unaudited) | Metric | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Operating costs | $1,846,344 | $2,061,847 | | Interest earned on marketable securities | $2,394,013 | $4,215,679 | | Net (Loss) Income | ($1,335,040) | $1,696,498 | | Basic and diluted net loss per common share | ($0.04) | ($0.03) | Condensed Statement of Cash Flows For the six months ended June 30, 2020, financing activities provided $1.104 billion, primarily from the IPO, with $1.1 billion used for trust account investments Cash Flow Summary for Six Months Ended June 30, 2020 (Unaudited) | Cash Flow Activity | Amount | | :--- | :--- | | Net cash used in operating activities | ($949,613) | | Net cash used in investing activities | ($1,100,000,000) | | Net cash provided by financing activities | $1,103,870,980 | | Net Change in Cash | $2,921,367 | | Cash – End of period | $2,955,367 | Notes to Unaudited Condensed Financial Statements Notes detail the company's formation, IPO, accounting policies, and significant subsequent events, including the definitive merger agreement with Polaris Parent Corp - The company must complete a business combination by February 19, 2022, or face liquidation[36] - On July 12, 2020, the company entered a definitive Merger Agreement with Polaris Parent Corp. for $5.678 billion in cash and stock consideration[81][83] - The merger secured $1.3 billion in Common PIPE and $1.3 billion in Convertible PIPE investments for funding[85][87] - The company pays a Sponsor affiliate $50,000 per month for administrative and support services[71] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's blank check status, with results driven by trust account interest income and liquidity from IPO proceeds, noting the recent Merger Agreement - The company's activities through June 30, 2020, were limited to organizational tasks, the IPO, and searching for a business combination target[117] Results of Operations Summary | Period | Net (Loss) Income | Key Drivers | | :--- | :--- | :--- | | Three months ended June 30, 2020 | ($1,335,040) | Operating costs and unrealized loss on securities, offset by interest income | | Six months ended June 30, 2020 | $1,696,498 | Interest income on marketable securities, offset by operating costs | - As of June 30, 2020, the company held $1.104 billion in marketable securities in the Trust Account and $2.96 million in cash for working capital[122][125] - On July 12, 2020, the company issued a $1.5 million promissory note to the Sponsor for working capital, convertible into warrants[127] Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk The company's market risk is minimal, as trust account funds are invested in short-term U.S. government securities, limiting interest rate exposure - The company's market risk exposure is limited to interest rate risk on short-term U.S. government securities in the Trust Account[136] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2020, with no material changes to internal control over financial reporting - Management concluded that disclosure controls and procedures were effective as of June 30, 2020[138] - No material changes were made to internal control over financial reporting during the quarter[139] Part II. Other Information Item 1. Legal Proceedings The company reported no legal proceedings - There are no legal proceedings to report[141] Item 1A. Risk Factors Key risks include potential negative interest rates on trust account securities and the adverse impact of the COVID-19 pandemic on business combination efforts - A key risk is potential negative interest rates on U.S. government treasury obligations, reducing public share redemption value below $10.00[143][144] - The COVID-19 pandemic poses a material risk to timely business combination completion due to travel restrictions and market volatility[145] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details $1.1 billion gross proceeds from the IPO and $23 million from private placement warrants, with $1.1 billion placed into the Trust Account - The company consummated its IPO on February 19, 2020, raising $1.1 billion in gross proceeds[146] - A private placement of 23,000,000 warrants to the Sponsor generated an additional $23 million in proceeds[147] - Total offering costs included $18.4 million in upfront underwriting discounts and $38.5 million deferred[149] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[151] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not Applicable[152] Item 5. Other Information The company reported no other information - None[153] Item 6. Exhibits This section lists exhibits filed with the Quarterly Report on Form 10-Q, including officer certifications and XBRL data files