0001910851falseR1 RCM Inc. /DE00019108512023-11-022023-11-02

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________

FORM 8-K
________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 2, 2023
____________
R1 RCM Inc.
(Exact Name of Registrant as Specified in Charter)  
 ____________
Delaware001-4142887-4340782
(State or Other Jurisdiction
of Incorporation)		(Commission
File Number)		(IRS Employer
Identification No.)
433 W. Ascension Way84123
Suite 200
Murray
Utah
(Address of Principal Executive Offices)(Zip Code)
Registrant’s telephone number, including area code: (312) 324-7820

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))     
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.01 per shareRCM
NASDAQ
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐        


Item 2.02    Results of Operations and Financial Condition

On November 2, 2023, R1 RCM Inc. (the “Company”) announced its financial results for the fiscal quarter ended September 30, 2023. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

Item 7.01    Regulation FD Disclosure

The Company is hosting an investor conference call on November 2, 2023 regarding its financial results for the fiscal quarter ended September 30, 2023. The slide presentation to be used in conjunction with the investor conference call is furnished as Exhibit 99.2 to this Current Report on Form 8-K and will be posted on the Company’s website.

The information in this Form 8-K (including Exhibits 99.1 and 99.2) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01    Financial Statements and Exhibits

(d)Exhibit NumberDescription
104Cover Page Interactive Data File - the cover page iXBRL tags are embedded within the Inline XBRL document


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

R1 RCM INC.
Date: November 2, 2023
By:       /s/ Jennifer Williams                                           
 Name:  Jennifer Williams
 Title:    Chief Financial Officer


Exhibit 99.1
r1logoa09.jpg
R1 RCM Reports Third Quarter 2023 Results
Murray, Utah - November 2, 2023 - R1 RCM Inc. (NASDAQ: RCM), a leading provider of technology-driven solutions that transform the patient experience and financial performance of healthcare providers, today announced results for the three months ended September 30, 2023.
Third Quarter 2023 Results:
•Revenue of $572.8 million, up $76.8 million or 15.5% compared to the same period last year.
•GAAP net income of $1.3 million, compared to net loss of $29.5 million in the same period last year.
•Adjusted EBITDA of $161.5 million, up $37.5 million or 30.2% compared to the same period last year.

“Our strong third quarter results demonstrate our team’s dedication to innovation and efficient execution of our strategy to deliver customer solutions that improve revenues, lower costs and increase patient satisfaction,” said Lee Rivas, chief executive officer of R1. “Our expertise, unit economic advantage and technology enablement continue to make us a preferred market partner for providers. We are confident in our ability to strengthen our provider relationships, drive sustainable value over the long term, and increase demand for our solutions.”

“We sustained our positive momentum in the third quarter with financial results on track to achieve our guidance for the year,” added Jennifer Williams, chief financial officer. “Continued growth across the business, margin improvement from operational excellence and ongoing innovation position us well to deliver increased value to customers and shareholders over the long term.”
2023 Outlook
For 2023, R1 expects to generate:
•Revenue of $2,255 million to $2,275 million
•GAAP operating income of $130 million to $140 million
•Adjusted EBITDA of $600 million to $615 million


Conference Call and Webcast Details
R1’s management team will host a conference call today at 8:00 a.m. Eastern Time to discuss the Company’s financial results and business outlook. To participate, please dial 888-330-2022 (646-960-0690 outside the U.S. and Canada) using conference code number 5681952. A live webcast and replay of the call will be available at the Investor Relations section of the Company’s website at ir.r1rcm.com.
Non-GAAP Financial Measures
In order to provide a more comprehensive understanding of the information used by R1’s management team in financial and operational decision making, the Company supplements its GAAP consolidated financial statements with certain non-GAAP financial measures, including adjusted EBITDA, non-GAAP cost of services, non-GAAP selling, general and administrative expenses, and net debt. Adjusted EBITDA is defined as GAAP net income (loss) before net interest income/expense, income tax provision/benefit, depreciation and amortization expense, share-based compensation expense, CoyCo 2, L.P. (“CoyCo 2”) share-based compensation expense, and certain other items, including business acquisition costs, integration costs, technology transformation, strategic initiatives, the global business services center expansion project in the Philippines, and facility-exit charges. Non-GAAP cost of services is defined as GAAP cost of services less share-based compensation expense, CoyCo 2 share-based compensation expense, and depreciation and amortization expense attributed to cost of services. Non-GAAP selling, general and administrative expenses is defined as GAAP selling, general and administrative expenses less share-based compensation expense, CoyCo 2 share-based compensation expense, and depreciation and amortization expense attributed to selling, general and administrative expenses. Net debt is defined as debt less cash and cash equivalents, inclusive of restricted cash. Adjusted EBITDA guidance is reconciled to operating income guidance, the most closely comparable available GAAP measure.
Our board of directors and management team use adjusted EBITDA as (i) one of the primary methods for planning and forecasting overall expectations and for evaluating actual results against such expectations and (ii) a performance evaluation metric in determining achievement of certain executive incentive compensation programs, as well as for incentive compensation programs for employees. Non-GAAP cost of services and non-GAAP selling, general and administrative expenses are used to calculate adjusted EBITDA. Net debt is used as a supplemental measure of our liquidity.


Tables 4 through 9 present a reconciliation of GAAP financial measures to non-GAAP financial measures. Non-GAAP measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with GAAP.
Forward-Looking Statements
This press release contains “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally relate to future events and relationships, plans, future growth, and future performance. These statements are often identified by the use of words such as “anticipate,” “believe,” “contemplate,” “designed,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “outlook,” “plan,” “predict,” “project,” “see,” “seek,” “target,” “would,” and similar expressions or variations or negatives of these words, although not all forward-looking statements contain these identifying words. These statements are based on various assumptions, whether or not identified in this press release, and on the current expectations of the Company’s management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, assurance, prediction or definitive statement of fact or probability. Actual outcomes and results may differ materially from those contemplated by these forward-looking statements as a result of uncertainties, risks, and changes in circumstances, including but not limited to risk and uncertainties related to: (i) economic downturns and market conditions beyond the Company’s control, including periods of inflation; (ii) the quality of global financial markets; (iii) the Company’s ability to timely and successfully achieve the anticipated benefits and potential synergies of the acquisition of Cloudmed; (iv) the Company’s ability to retain existing customers or acquire new customers; (v) the development of markets for the Company’s revenue cycle management offering; (vi) variability in the lead time of prospective customers; (vii) competition within the market; (viii) breaches or failures of the Company’s information security measures or unauthorized access to a customer’s data; (ix) delayed or unsuccessful implementation of the Company’s technologies or services, or unexpected implementation costs; (x) disruptions in or damages to the Company’s global business services centers and third-party operated data centers; (xi) the volatility of the Company’s stock price; and (xii) the Company’s substantial indebtedness. Additional risks and uncertainties that could cause actual outcomes and results to differ materially from those contemplated by the forward-looking statements are included under the heading “Risk Factors” in the Company’s annual report on Form 10-K for the


year ended December 31, 2022, and any other periodic reports that the Company may file with the United States Securities and Exchange Commission. The foregoing list of factors is not exhaustive. All forward-looking statements included herein are expressly qualified in their entirety by these cautionary statements as of the date hereof and involve many risks and uncertainties that could cause the Company’s actual results to differ materially from those expressed or implied in the Company’s forward-looking statements. Subsequent events and developments, including actual results or changes in the Company’s assumptions, may cause the Company’s views to change. The Company assumes no obligation and does not intend to update these forward-looking statements, except as required by law. You are cautioned not to place undue reliance on such forward-looking statements.
About R1 RCM
R1 is a leading provider of technology-driven solutions that transform the patient experience and financial performance of healthcare providers. R1’s proven and scalable operating models seamlessly complement a healthcare organization’s infrastructure, quickly driving sustainable improvements to net patient revenue and cash flows while reducing operating costs and enhancing the patient experience. To learn more, visit: r1rcm.com.
Contact:
R1 RCM Inc.
Investor Relations:
Evan Smith, CFA
516-743-5184
investorrelations@r1rcm.com

Media Relations:
Allison+Partners
Amanda Critelli
R1PR@allisonpr.com





Table 1
R1 RCM Inc.
Consolidated Balance Sheets
(In millions)
(Unaudited)
 September 30,December 31,
 20232022
Assets
Current assets:
Cash and cash equivalents$164.9 $110.1 
Accounts receivable, net of $38.1 million and $15.1 million allowance as of September 30, 2023 and December 31, 2022, respectively247.7 235.2 
Accounts receivable - related party, net of $0.1 million allowance as of September 30, 2023 and December 31, 202223.9 25.0 
Current portion of contract assets, net89.2 83.9 
Prepaid expenses and other current assets112.7 110.3 
Total current assets638.4 564.5 
Property, equipment and software, net183.6 164.8 
Operating lease right-of-use assets65.4 80.5 
Non-current portion of contract assets, net37.8 32.0 
Non-current portion of deferred contract costs31.3 26.7 
Intangible assets, net1,362.4 1,514.5 
Goodwill2,647.3 2,658.2 
Deferred tax assets10.4 10.4 
Other assets80.4 88.2 
Total assets$5,057.0 $5,139.8 
Liabilities
Current liabilities:
Accounts payable$20.1 $33.4 
Current portion of customer liabilities43.4 57.5 
Current portion of customer liabilities - related party5.8 7.4 
Accrued compensation and benefits120.7 109.0 
Current portion of operating lease liabilities19.0 18.0 
Current portion of long-term debt67.0 53.9 
Accrued expenses and other current liabilities60.7 70.6 
Total current liabilities336.7 349.8 
Non-current portion of customer liabilities2.9 5.0 
Non-current portion of customer liabilities - related party12.2 13.7 
Non-current portion of operating lease liabilities83.1 94.4 
Long-term debt1,646.0 1,732.6 
Deferred tax liabilities190.6 200.7 
Other non-current liabilities24.0 23.1 
Total liabilities2,295.5 2,419.3 
Stockholders’ equity:
Common stock4.4 4.4 
Additional paid-in capital3,180.0 3,123.2 
Accumulated deficit(120.0)(121.9)
Accumulated other comprehensive loss(1.7)(3.4)
Treasury stock(301.2)(281.8)
Total stockholders’ equity2,761.5 2,720.5 
Total liabilities and stockholders’ equity$5,057.0 $5,139.8 


Table 2
R1 RCM Inc.
Consolidated Statements of Operations (Unaudited)
(In millions, except share and per share data)
 Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
Net operating fees$368.0 $324.2 $1,086.8 $965.3 
Incentive fees30.1 20.8 84.5 80.9 
Modular and other174.7 151.0 507.8 227.4 
Net services revenue572.8 496.0 1,679.1 1,273.6 
Operating expenses:
Cost of services447.5 403.1 1,328.1 1,009.7 
Selling, general and administrative54.7 60.8 164.3 120.6 
Other expenses29.4 30.1 87.9 136.1 
Total operating expenses531.6 494.0 1,580.3 1,266.4 
Income from operations41.2 2.0 98.8 7.2 
Net interest expense32.1 23.7 95.3 35.3 
Income (loss) before income tax provision (benefit)9.1 (21.7)3.5 (28.1)
Income tax provision (benefit)7.8 7.8 1.6 (7.6)
Net income (loss)$1.3 $(29.5)$1.9 $(20.5)
Net income (loss) per common share:
Basic$— $(0.07)$— $(0.06)
Diluted$— $(0.07)$— $(0.06)
Weighted average shares used in calculating net income (loss) per common share:
Basic419,008,998 417,700,782 418,299,910 330,877,880 
Diluted456,364,024 417,700,782 454,837,597 330,877,880 











Table 3
R1 RCM Inc.
Consolidated Statements of Cash Flows (Unaudited)
(In millions)
 Nine Months Ended September 30,
 20232022
Operating activities
Net income (loss)$1.9 $(20.5)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization205.6 107.8 
Amortization of debt issuance costs4.3 2.2 
Share-based compensation48.9 46.5 
CoyCo 2 share-based compensation5.4 3.0 
Loss on disposal and right-of-use asset write-downs10.3 3.9 
Provision for credit losses24.1 10.7 
Deferred income taxes(1.5)(9.1)
Non-cash lease expense8.7 10.5 
Other3.6 1.5 
Changes in operating assets and liabilities:
Accounts receivable and related party accounts receivable(35.7)(29.7)
Contract assets(10.0)(12.8)
Prepaid expenses and other assets(22.0)(38.3)
Accounts payable(15.0)(23.9)
Accrued compensation and benefits12.0 (79.6)
Lease liabilities(13.4)(11.4)
Other liabilities12.9 (3.2)
Customer liabilities and customer liabilities - related party(18.8)2.9 
Net cash provided by (used in) operating activities221.3 (39.5)
Investing activities
Purchases of property, equipment, and software(81.1)(74.6)
Acquisition of Cloudmed, net of cash acquired— (847.7)
Proceeds from disposal of assets— 0.4 
Other5.5 — 
Net cash used in investing activities(75.6)(921.9)
Financing activities
Issuance of senior secured debt, net of discount and issuance costs— 1,016.6 
Borrowings on revolver30.0 30.0 
Payment of debt issuance costs— (1.0)
Repayment of senior secured debt(37.1)(13.1)
Repayments on revolver(70.0)(30.0)
Payment of equity issuance costs— (2.0)
Exercise of vested stock options1.3 4.6 
Purchase of treasury stock— (12.5)
Shares withheld for taxes(20.0)(26.9)
Other5.3 (0.2)
Net cash (used in) provided by financing activities(90.5)965.5 
Effect of exchange rate changes in cash, cash equivalents and restricted cash(0.4)(3.1)
Net increase in cash, cash equivalents and restricted cash54.8 1.0 
Cash, cash equivalents and restricted cash, at beginning of period110.1 130.1 
Cash, cash equivalents and restricted cash, at end of period$164.9 $131.1 





Table 4
R1 RCM Inc.
Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA (Unaudited)
(In millions)
 Three Months Ended September 30,2023 vs. 2022
Change		Nine Months Ended September 30,2023 vs. 2022
Change
 20232022Amount%20232022Amount%
Net income (loss)$1.3 $(29.5)$30.8 (104)%$1.9 $(20.5)$22.4 (109)%
Net interest expense32.1 23.7 8.4 35 %95.3 35.3 60.0 170 %
Income tax provision (benefit)7.8 7.8 — — %1.6 (7.6)9.2 (121)%
Depreciation and amortization expense70.8 64.2 6.6 10 %205.6 107.8 97.8 91 %
Share-based compensation expense18.4 24.7 (6.3)(26)%48.9 46.4 2.5 5 %
CoyCo 2 share-based compensation expense1.7 3.0 (1.3)(43)%5.4 3.0 2.4 80 %
Other expenses29.4 30.1 (0.7)(2)%87.9 136.1 (48.2)(35)%
Adjusted EBITDA (non-GAAP)$161.5 $124.0 $37.5 30 %$446.6 $300.5 $146.1 49 %



Table 5
R1 RCM Inc.
Reconciliation of GAAP Cost of Services to Non-GAAP Cost of Services (Unaudited)
(In millions)
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Cost of services$447.5 $403.1 $1,328.1 $1,009.7 
Less:
Share-based compensation expense11.9 11.3 30.7 20.7 
CoyCo 2 share-based compensation expense0.5 1.0 1.4 1.0 
Depreciation and amortization expense70.4 63.9 204.6 107.0 
Non-GAAP cost of services$364.7 $326.9 $1,091.4 $881.0 






Table 6
R1 RCM Inc.
Reconciliation of GAAP Selling, General and Administrative to Non-GAAP Selling, General and Administrative (Unaudited)
(In millions)
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Selling, general and administrative$54.7 $60.8 $164.3 $120.6 
Less:
Share-based compensation expense6.5 13.4 18.2 25.7 
CoyCo 2 share-based compensation expense1.2 2.0 4.0 2.0 
Depreciation and amortization expense0.4 0.3 1.0 0.8 
Non-GAAP selling, general and administrative$46.6 $45.1 $141.1 $92.1 



Table 7
R1 RCM Inc.
Consolidated Non-GAAP Financial Information (Unaudited)
(In millions)
 Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
Net operating fees$368.0 $324.2 $1,086.8 $965.3 
Incentive fees30.1 20.8 84.5 80.9 
Modular and other174.7 151.0 507.8 227.4 
Net services revenue 572.8 496.0 1,679.1 1,273.6 
Operating expenses:
        Cost of services (non-GAAP)364.7 326.9 1,091.4 881.0 
        Selling, general and administrative (non-GAAP)46.6 45.1 141.1 92.1 
Sub-total411.3 372.0 1,232.5 973.1 
Adjusted EBITDA $161.5 $124.0 $446.6 $300.5 





Table 8
R1 RCM Inc.
Reconciliation of GAAP Operating Income Guidance to Non-GAAP Adjusted EBITDA Guidance (Unaudited)
(In millions)
2023E
GAAP Operating Income Guidance$130-140
Plus:
Depreciation and amortization expense$275-285
Share-based compensation expense$65-70
CoyCo 2 share-based compensation expense$7-8
Strategic initiatives, severance and other costs$115-120
Adjusted EBITDA Guidance$600-615



Table 9
R1 RCM Inc.
Reconciliation of Total Debt to Net Debt (Unaudited)
(In millions)
 September 30,December 31,
20232022
Senior Revolver$60.0 $100.0 
Term A Loans1,178.0 1,211.4 
Term B Loan495.0 498.7 
Total debt1,733.0 1,810.1 
Less:
Cash and cash equivalents164.9 110.1 
Net Debt$1,568.1 $1,700.0 





November 2, 2023 Third Quarter 2023 Earnings Call Exhibit 99.2

 
22 Forward-Looking Statements This presentation includes information that may constitute “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally relate to future events and relationships, plans, future growth, and future performance, including, but not limited to, statements about future financial and operational performance, expected commercial activity, strategic initiatives, capital plans, costs, ability to successfully implement new technologies, and liquidity. These statements are often identified by the use of words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “designed,” “may,” “plan,” “predict,” “project,” “target,” “contemplate,” “would,” “seek,” “see,” and similar expressions or variations or negatives of these words, although not all forward-looking statements contain these identifying words. These statements are based on various assumptions, whether or not identified in this presentation, and on the current expectations of the Company’s management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, assurance, prediction or definitive statement of fact or probability. Actual outcomes and results may differ materially from those contemplated by these forward-looking statements as a result of uncertainties, risks, and changes in circumstances, including but not limited to risk and uncertainties related to: (i) economic downturns and market conditions beyond the Company’s control, including periods of inflation; (ii) the quality of global financial markets; (iii) the Company’s ability to timely and successfully achieve the anticipated benefits and potential synergies of the acquisition of Cloudmed; (iv) the Company’s ability to retain existing customers or acquire new customers; (v) the development of markets for the Company’s revenue cycle management offering; (vi) variability in the lead time of prospective customers; (vii) competition within the market; (viii) breaches or failures of the Company’s information security measures or unauthorized access to a customer’s data; (ix) delayed or unsuccessful implementation of the Company’s technologies or services, or unexpected implementation costs; (x) disruptions in or damages to the Company’s global business services centers and third-party operated data centers; (xi) the volatility of the Company’s stock price; and (xii) the Company’s substantial indebtedness. Additional risks and uncertainties that could cause actual outcomes and results to differ materially from those contemplated by the forward-looking statements are included under the heading “Risk Factors” in the Company’s annual report on Form 10-K for the year ended December 31, 2022, quarterly reports on Form 10-Q, and any other periodic reports that the Company may file with the United States Securities and Exchange Commission (the “SEC”). The foregoing list of factors is not exhaustive. All forward-looking statements included herein are expressly qualified in their entirety by these cautionary statements as of the date hereof and involve many risks and uncertainties that could cause the Company’s actual results to differ materially from those expressed or implied in the Company’s forward-looking statements. Subsequent events and developments, including actual results or changes in the Company’s assumptions, may cause the Company’s views to change. The Company assumes no obligation and does not intend to update these forward-looking statements, except as required by law. You are cautioned not to place undue reliance on such forward-looking statements. Non-GAAP Financial Information Some of the financial information and data contained in this presentation, including adjusted EBITDA (and related measures), have not been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Our non-GAAP measures may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. These non-GAAP financial measures should not be considered in isolation or as a substitute for analysis of our results of operations as reported under GAAP. Please refer to the Appendix located at the end of this presentation for a reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measure.

 
33 Third Quarter Results and Key Themes Third Quarter 2023 Results Note1: Adjusted EBITDA is a non-GAAP measure; refer to the Appendix for reconciliation of non-GAAP financial measures • Revenue of $572.8 million, up $76.8 million or 15.5% compared to the same period last year • GAAP net income of $1.3 million, compared to net loss of $29.5 million in the same period last year • Adjusted EBITDA1 of $161.5 million, up $37.5 million or 30.2% compared to the same period last year Key Themes • Continued improvement in operating trends • Deployed incremental innovation across technology platform • Increased demand and commercial pipeline activity with strong modular bookings • Remain on track to deliver on 2023 financial guidance

 
44 Today's Discussion Topics: Q3 Updates • Favorable industry tailwinds continued to enhance multi-year pipeline potential • Positive momentum in cross-sell activity across the Cloudmed base • Continued progress on converting $4B NPR; focused on delivering the right long-term partnership with the right terms to create optimal long-term value Commercial Activity Industry Dynamics and Operational Performance • Payer turnaround times remained stable on a sequential basis • Low single digit growth in patient volumes in line with expectations • Expect continued stabilization in patient volumes to positively impact future cash collections Technology Advancements • Advanced technology strategy centered around intelligent automation, patient experience, and scaled analytics • Leveraged vast data resources to advance innovative technologies to RCM including GenAI • Announced collaboration with Microsoft to accelerate integration of Azure OpenAI Service across the enterprise including launch of first Large Language Model application

 
55 3Q'23 Non-GAAP Results – Q/Q and Y/Y Comparison ($ in millions) 3Q'23 2Q'23 3Q'22 Key change driver(s) Revenue $572.8 $560.7 $496.0 • Q/Q: Primarily net operating fee revenue growth • Y/Y: Contribution from new enterprise customers, modular revenue growth and higher incentive fees Adjusted Cost of Services1 $364.7 $364.5 $326.9 • Q/Q: Relatively flat due to operational cost discipline • Y/Y: Onboarding of new customers and modular business growth Adjusted SG&A Expense1 $46.6 $53.3 $45.1 • Q/Q: Lower allowance for credit losses and modest decrease in support functions spend • Y/Y: Investments in technology and other corporate costs partially offset by synergy realization Adjusted EBITDA1 $161.5 $142.9 $124.0 • Q/Q: Revenue performance, cost discipline, and realization of synergies • Y/Y: Modular business growth, contribution from new enterprise customers, and realization of synergies Note1: Adjusted cost of services, adjusted SG&A expense and adjusted EBITDA are non-GAAP measures; refer to the Appendix for a reconciliation of non-GAAP financial measures

 
66 Additional Commentary – Q3’23 Cash Flow and Balance Sheet Highlights • Revenue of $2.255 billion to $2.275 billion • GAAP operating income of $130 million to $140 million • Adjusted EBITDA1 of $600 million to $615 million 2023 Guidance Note1: Net debt and adjusted EBITDA are non-GAAP measures; refer to the Appendix for a reconciliation of non-GAAP financial measures Note2: Includes cash, cash equivalents and availability under our revolver • Cash and cash equivalents of $164.9 million at end of Q3. Major drivers of cash flow: • $109.2 million cash from operations • $32.4 million for capex • $42.3 million debt repayment (includes $30M voluntary debt repayment) • Net debt1 of $1.57 billion at the end of Q3 • $703.7 million in available liquidity2 at quarter-end

 
7 Appendix

 
88 Use of Non-GAAP Financial Measures Reconciliation of GAAP Operating Income Guidance to Non-GAAP Adjusted EBITDA Guidance $ in millions ▪ In order to provide a more comprehensive understanding of the information used by R1’s management team in financial and operational decision making, the Company supplements its GAAP consolidated financial statements with certain non-GAAP financial performance measures, including adjusted EBITDA, non-GAAP cost of services, non- GAAP selling, general and administrative expenses, and net debt. Adjusted EBITDA is defined as GAAP net income (loss) before net interest income/expense, income tax provision/benefit, depreciation and amortization expense, share-based compensation expense, CoyCo 2, L.P. ("CoyCo 2") share-based compensation expense, and certain other items, including business acquisition costs, integration costs, technology transformation, strategic initiatives, the global business services center expansion project in the Philippines, and facility-exit charges. Non-GAAP cost of services is defined as GAAP cost of services less share-based compensation expense, CoyCo 2 share-based compensation expense, and depreciation and amortization expense attributed to cost of services. Non-GAAP selling, general and administrative expenses is defined as GAAP selling, general and administrative expenses less share-based compensation expense, CoyCo 2 share-based compensation expense, and depreciation and amortization expense attributed to selling, general and administrative expenses. Net debt is defined as debt less cash and cash equivalents, inclusive of restricted cash. ▪ Our board of directors and management team use adjusted EBITDA as (i) one of the primary methods for planning and forecasting overall expectations and for evaluating actual results against such expectations and (ii) a performance evaluation metric in determining achievement of certain executive incentive compensation programs, as well as for incentive compensation programs for employees. Non-GAAP cost of services and non-GAAP selling, general and administrative expenses are used to calculate adjusted EBITDA. Net debt is used as a supplemental measure of our liquidity. ▪ Adjusted EBITDA guidance for 2023 is reconciled to operating income guidance, the most closely comparable available GAAP measure. A reconciliation of GAAP operating income guidance to non-GAAP adjusted EBITDA guidance for 2023 is provided below. Note1: Strategic initiatives, severance and other costs are comprised of strategic initiative costs, acquisition and integration costs, various exit activities, transformation initiatives, and certain other costs Reconciliation of Total Debt to Net Debt $ in millions 1 1

 
99 Reconciliation of Non-GAAP Financial Measures Reconciliation of GAAP SG&A to Non-GAAP SG&A Reconciliation of GAAP Cost of Services to Non-GAAP Cost of Services Note1: For details, see Note 8, Other Expenses, to the consolidated financial statements included in the Company’s quarterly report on Form 10-Q $ in millions Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted EBITDA 1

 
v3.23.3
Document and Entity Information Document
Nov. 02, 2023
Cover [Abstract]  
Document Type 8-K
Document Period End Date Nov. 02, 2023
Entity Registrant Name R1 RCM Inc. /DE
Entity Incorporation, State or Country Code DE
Entity File Number 001-41428
Entity Tax Identification Number 87-4340782
Entity Address, Address Line One 433 W. Ascension Way
Entity Address, Address Line Two Suite 200
Entity Address, City or Town Murray
Entity Address, State or Province UT
Entity Address, Postal Zip Code 84123
City Area Code 312
Local Phone Number 324-7820
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common stock, par value $0.01 per share
Trading Symbol RCM
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Entity Central Index Key 0001910851
Amendment Flag false
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