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Shareholder Letter

Picture of David Swift, Douglas Williams2016 was a milestone year for Cotiviti. In May, we successfully completed our IPO on the New York Stock Exchange and over the course of the year we generated over $3.7 billion in value for our clients.

Cotiviti is a leading provider of analytics-driven payment accuracy solutions focused on the Healthcare and Global Retail sectors. Our unique value proposition centers on leveraging our proprietary information assets to deliver client value.

Our 2016 results speak to the strength of our model, with revenue increasing 15% to $625 million and adjusted EBITDA growing 18% to $240 million. Based on our strong results, we also delivered meaningful shareholder value as our stock price appreciated 81% from the IPO price of $19.00 per share to $34.40 at year-end 2016.

Cotiviti’s strategy centers on leveraging a powerful business model that includes:

  • Talented employees with deep domain expertise in the markets we serve;
  • A proprietary and scalable technology platform capable of ingesting large quantities and varieties of data and running complex analytics;
  • Solutions that are tailored to meet clients’ needs;
  • A very effective delivery model that is aligned with client requirements; and
  • A culture of innovation.

We successfully deploy our model within our two operating segments, Healthcare and Global Retail. Healthcare represents 88% of Cotiviti’s total revenue while our Global Retail and Other segment represents the balance. These operating segments are synergistic as both leverage similar analytic algorithm logic and share a common technology platform.


In healthcare, we help our clients navigate a complex marketplace, ever-changing regulatory environment and increasing operating pressure. With an estimated $3 trillion in annual healthcare payments flowing to multiple, disparate parties, ensuring payment accuracy has become increasingly critical to our clients. Accuracy depends on many variables and the review of significant amounts of complex data. Cotiviti has decades of experience in the healthcare payment continuum and is well positioned to handle these inherent complexities today, and as they evolve. As a result, in 2016 we generated approximately $3.2 billion of savings for our commercial healthcare clients.

Global Retail

We have more than 35 years of experience in retail auditing and are a leader in the retail payment accuracy market in the United States, Canada and the United Kingdom. Cotiviti has long-standing relationships with over 35 retail clients, including 8 out of the top 10 retailers based on sales in the United States. With our strong focus on delivering client value, we saved more than $500 million for our retail clients in 2016.

Looking Ahead

As both the healthcare and retail sectors continue to face more complexity, Cotiviti is well-positioned to address the resulting challenges for our clients. We believe that our healthcare payment accuracy market opportunity alone is approximately $5 billion and that our existing client base represents $3.5 billion of the $5 billion in revenue potential. We can capture more of the opportunity within our existing healthcare clients in three ways:

  1. Increasing the claims volume reviewed;
  2. Expanding the utilization of our content library; and
  3. Cross selling prospective and retrospective solutions.

We are excited by the opportunity to expand the volume of claims reviewed and cross-sell our solutions among our existing clients. As clients recognize the tangible value our solutions provide, we have seen significant traction in the adoption of additional solutions. In fact, 95% of our 2016 revenue growth was generated by existing clients. We also continue to add new clients and in healthcare alone this year, we expanded the number of clients we serve to include 20 of the 25 largest health plans.

Beyond the estimated $5 billion addressable healthcare payment accuracy market, we expect further upside by continuing to innovate additional offerings and solutions that leverage our technology platform, data assets and analytics capabilities. We will also review compelling inorganic growth opportunities; however, the bar is high given the extensive opportunity we see within our existing client base.

Board of Directors

Our Board of Directors is composed of 11 highly qualified individuals with a strong balance of finance, technology and healthcare backgrounds to create diversity of thought and experience. In 2016, we added two new Board members, Ruben King-Shaw, Jr. and Mala Anand. Mr. King-Shaw’s background in health policy, economics, and the health care insurance industry and Ms. Anand’s experience in analytics, Go-To-Market strategies and technology product development add significant expertise to our Board.

We are saying goodbye to two Board members who will not stand for re-election at our upcoming annual shareholder meeting, Larry Connolly and Doug Present. We thank both Larry and Doug for their commitment and sage counsel over the years, and wish them well in their future endeavors.

2017 and Beyond

The investments we are making today in people, analytics and technology are positioning Cotiviti for a bright future. As stewards of shareholder capital, we believe it is important to take a long-term view to generate meaningful shareholder returns and continue our track record of delivering sustainable value to our clients. As we look to 2017 and beyond, we are committed to building on our success to the benefit of our shareholders, clients and employees.


Signature of David Swift David Swift
Chairman of the Board

Signature of Douglas WilliamsDouglas Williams
Chief Executive Officer