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): January 14, 2015

 

 

Accretive Health, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

Delaware   001-34746   02-0698101

(State or Other Jurisdiction

of Incorporation)

  

(Commission

File Number)

  

(IRS Employer

Identification No.)

 

401 North Michigan Avenue, Suite 2700, Chicago, Illinois   60611
(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 (see General Instruction A.2. below):

 

¨ 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))

 

 

 

Item 2.02. Results of Operations and Financial Condition.

On January 14, 2015 and January 15, 2015, Accretive Health, Inc. (the “Company”) plans to participate in investor meetings and present materials at the 33rd Annual J.P. Morgan Healthcare Conference. The materials will include the Company’s outlook for selected operating results for the year ended December 31, 2014. A copy of the materials to be presented by the Company in connection with such meetings and presentations are attached to this current report as Exhibit 99.1.

Item 7.01. Regulation FD Disclosure.

The information set forth in Item 2.02 is incorporated herein by reference.

The information in this Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (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 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

The following exhibit relating to Items 2.02 and 7.01 shall be deemed to be furnished, and not filed:

 

99.1    Slide Presentation

SIGNATURE

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.

 

    ACCRETIVE HEALTH, INC.
Date: January 14, 2015     By:  

/s/ Peter Csapo

     

Peter Csapo

Chief Financial Officer, Treasurer and Chief

Accounting Officer

EXHIBIT INDEX

 

Exhibit No.

   

Description

99.1    Slide Presentation


©2015 Accretive Health Inc.
1
33
rd
Annual J.P. Morgan Healthcare Conference
January 15, 2015
Exhibit 99.1

2
©2015 Accretive Health Inc.
Safe Harbor
This presentation contains forward-looking statements, including the Company’s ability to continue to deliver value to its
customers,
to
address
hospitals’
increasingly
complex
challenges,
and
to
complete
its
remaining
2014
filings
and
apply
for
stock
exchange
listing
in
the
time
frames
indicated.
All
forward-looking
statements
contained
in
this
press
release
involve
risks
and
uncertainties. Our actual results and outcomes could differ materially from those anticipated in these forward-looking statements
as a result of various factors, including the possibility that our ongoing restatement could have unanticipated consequences and
the factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on December
30,
2014,
under
the
heading
“Risk
Factors”.
The
words
“strive,”
“objective,”
“anticipates,”
“believes,”
“estimates,”
“expects,”
“intends,”
“may,”
“plans,”
“projects,”
“vision,”
“would,”
and similar expressions are intended to identify forward-looking statements,
although not all forward-looking statements contain these identifying words. The Company has based these forward-looking
statements on its current expectations and projections about future events. Although the Company believes that the expectations
underlying any of its forward-looking statements are reasonable, these expectations may prove to be incorrect and all of these
statements
are
subject
to
risks
and
uncertainties.
Should
one
or
more
of
these
risks
and
uncertainties
materialize,
or
should
underlying assumptions, projections, or expectations prove incorrect, actual results, performance, financial condition, or events
may vary materially and adversely from those anticipated, estimated, or expected.
All forward-looking statements included in this presentation are expressly qualified in their entirety by these cautionary
statements. The Company cautions readers not to place undue reliance on any forward-looking statement that speaks only as of
the date made and to recognize that forward-looking statements are predictions of future results, which may not occur as
anticipated. Actual results could differ materially from those anticipated in the forward-looking statements and from historical
results, due to the uncertainties and factors described above, as well as others that the Company may consider immaterial or
does not anticipate at this time. Although the Company believes that the expectations reflected in its forward-looking statements
are reasonable, the Company does not know whether its expectations may prove correct. The Company’s expectations reflected
in its forward-looking statements can be affected by inaccurate assumptions it might make or by known or unknown uncertainties
and factors, including those described above. The risks and uncertainties described above are not exclusive, and further
information concerning the Company and its business, including factors that potentially could materially affect its financial results
or condition or relationships with customers and potential customers, may emerge from time to time. The Company assumes no,
and it specifically disclaims any, obligation to update, amend, or clarify forward-looking statements to reflect actual results or
changes in factors or assumptions affecting such forward-looking statements. The Company advises investors, however, to
consult any further disclosures it makes on related subjects in our periodic reports that it files with or furnishes to the SEC.

©2015 Accretive Health Inc.
3
1
Market Dynamics
2
The New
Accretive Health
3
Differentiated
Value Proposition
4
Positioned for
Growth

©2015 Accretive Health Inc.
4
Health systems will get larger with acquisitions
across continuum of care
Healthcare Industry Dynamics
Tremendous burden on health systems’
margins
Reimbursement complexity will increase, over 10
different payment frameworks possible
Maximize
reimbursement
Provider Priorities
Reduce
expenses
Transition
from fee-for-service to
fee-for-value
Integrate
across the continuum
Align
clinical & financial
incentives
Industry Pressures
1
Market
Dynamics
•
Reimbursement continues to decline
•
Administrative and authorization denials will
rise significantly
•
Fee for service alone is not an option
•
Up to 50% of volume on risk-based contracts
in next 3-5 years
•
Hospitals’
infrastructure unprepared for VBR
•
High
performance
networks
will
be
new
normal
•
Clinical-financial interdependency
•
Health systems will seek efficiency in both
inpatient and physician RCM

©2015 Accretive Health Inc.
5
Total
US
Healthcare
expenditures
are
estimated
to
be
$3
trillion
in
2014
•
Hospital costs are the largest portion, projected to grow to
$1.1 trillion in 2016
Complexity is driving revenue cycle costs higher
Operating margins will be under significant pressure
Revenue cycle becoming a priority, increase in outsourcing
Significant investments required for clinical integration and
coordination
RCM Market Opportunity
Sources: CMS, Kaulkin Ginsberg, Revenue Cycle Management Outsourcing Industry Report, 2012, Moody’s Investor Services, American Hospital
Association
1
Market
Dynamics

©2015 Accretive Health Inc.
6
Industry Transformation –
Paying for Value &
Outcomes
Significant investment in new revenue cycle solutions is
necessary to manage complexity
1
Market
Dynamics

©2015 Accretive Health Inc.
7
The Changing Reimbursement Landscape
We expect  Administrative Costs to increase 
by 100% -
300% in the next 5 years
1
Market
Dynamics
Notes:
FFS Revenue assumes reductions in the following: 1.75% productivity and pre-
determined reduction to the annual market basket to hospital IP and OP
prospective payment system, 3% readmission reduction, 2% readmission VBP,
2% Sequestration, 1% IP Hospital Acquired Conditions (HAC)
Pierre L. Yong and LeighAnne Olsen; Roundtable on Evidence-Based Medicine;
Institute of Medicine
Value-based and administration cost trends are Accretive Health estimates.

©2015 Accretive Health Inc.
8
Accretive Health Today
2
The New
Accretive Health

©2015 Accretive Health Inc.
9
Value Proposition
Delivering value to our customers in three ways
A provider-centric end-to-end revenue cycle organization
3
Prepare for Value Based
Reimbursement (VBR)
Reduce cost to
collect revenue
1
2
Improve revenue
collections
> 4% Revenue Yield
Improvement
2
The New
Accretive Health
Note: 10-30% reduction in cost to collect and >4% revenue yield improvement is based on average contract performance in the fourth year of a contract
10-30%
Reduction in
Cost-to-collect

©2015 Accretive Health Inc.
10
Superior Performance = Results
A proprietary framework is at the root of our
disciplined and scalable end-to-end operating model
3
Differentiated
Value Proposition

©2015 Accretive Health Inc.
11
Integrated Technology And Service Portfolio
Value Based Reimbursement Tools Span the Revenue Cycle Continuum
Pre-Encounter
Process
Patient Scheduling,
Registration and CRM
Insurance Verification
and Eligibility
Pre-Authorization/
Pre-Certification
Financial Counseling
and Payment
Management
Mid Revenue Cycle /
Point of Care
Order Entry/Medical
Coding & Transcription
Claims Generation
EDI/ Clearing House
Billing Follow-Up
Adjudication/
Underpayments
AHtoAnalytics, AHtoContract, Denial Prevention, AHtolink
3
Differentiated
Value Proposition
Post-Encounter
Process

©2015 Accretive Health Inc.
12
New Performance Metrics Replace Legacy
Patented Best Possible Measurement
Levers
Uninsured
Conversion
Patient
Cash
Payer
Cash
Cost to
Collect
Operational Denials
% AR > 90 Days
Conversion Cash
Patient Cash
Charge Capture
Post-coding Quality
Payroll Costs
Non-Payroll Costs
Output Metrics
In-Process Metrics
•
Denials/Clean-Claim Rate
•
Follow-Up Backlog
•
Resolution Rate
•
% Collected Identified at Registration
•
Accurate Demographic Collection
•
Phone Call Connects (Pre-Collect)
•
FTE Trending by Department
•
Overtime Costs
•
Vendor Spend
•
Rules Enacted
•
Clinical
Doc
DRG
Improvement
•
Transfer DRG
•
Screening Rate
•
Solution Identification Rate
•
Conversion to Sponsorship Rate
3
Differentiated
Value Proposition
Residual Bad Debt/Charity
Self-Pay Bad Debt/Charity
Net Compliant
Revenue

©2015 Accretive Health Inc.
13
Differentiated Model
Software
and
Services
model
leverages
our
proprietary
technology;
generates better outcomes than software or services in isolation
Flexible
Technology
Platform
which
supplements
customers’
existing
investments (i.e., Epic, Cerner, etc.)
Integrated
RCM
Solution
addresses
growing
interdependency
between
clinical and financial reimbursement drivers
Shared
Service
Centers
with
domestic
and
offshore
capabilities
Collaborative
Partnership
within
the
operating
framework
of
our
customers
Disciplined
Operating
Approach
with
consistency
in
performance
&
outcomes
Win-win
proposition:
our
success
is
aligned
with
customers
Easy Customer Decision:
no up front costs, performance based fees
Reduce
cost to collect
by 10 –
30%
Increase
revenue yield
by >4%
De-risk financial
exposure
in a
complex
reimbursement
environment
3
Differentiated
Value Proposition
Note: 10-30% reduction in cost to collect and >4% revenue yield improvement is based on average contract performance in the fourth year of a contract

©2015 Accretive Health Inc.
14
Positioned for Growth
4
Positioned for
Growth
Accretive Health has the breadth and experience to address
hospitals’
increasingly complex challenges
Scalable Technology Infrastructure
Solutions
and
infrastructure
are
geared
to
support
expansion
and
innovation
Proven Leadership
New management team with strong track record of execution and growth
Stable Customer Base
Retained and renewed largest customers
Customer Financial Incentive
Solutions and measurable results do not require capital investment; cost to
customer realized as % of actual cash improvement
Infrastructure Positioned for Leverage
Investments and operational improvements during the restatement

©2015 Accretive Health Inc.
15
Peter Csapo
Chief Financial Officer

©2015 Accretive Health Inc.
16
Restatement Highlights
Restatement resulted in changes in three main areas
Filed 2013 Form 10-K on December 30, 2014
Timing of
Revenue
Recognition
1
Software
Capitalization
3
Presentation of
Base Fees
2

©2015 Accretive Health Inc.
17
Targeted Timeline
Completed
Restatement
Q4 2014
Apply for stock
exchange listing
After becoming
current with SEC
filings
2014 SEC
filings
1H 2015
Annual
shareholder
meeting
~90 days
after 2014
Form 10-K
Ongoing
Remediate internal control deficiencies

18
©2015 Accretive Health Inc.
Non-GAAP Measures
Gross Cash Generated
from Customer
Contracting Activities
GAAP revenue plus change in
deferred customer billings
Net Cash Generated from
Customer Contracting
Activities
GAAP net income less interest,
taxes, depreciation and amortization
expense, share-based
compensation, and one-time costs,
plus change in deferred customer
billings
We introduced two non-GAAP measures
to supplement GAAP measures

©2015 Accretive Health Inc.
19
Deferred customer billings include the portion of net operating fees and
incentive fees which have not yet met revenue recognition criteria
From RCM Contract to Cash to GAAP Revenue

©2015 Accretive Health Inc.
20
GAAP revenue is lumpy under new revenue recognition framework; deferred
customer billings increase until revenue recognition event
Non-GAAP gross cash generated provides an additional perspective of trends
and performance
Revenue (GAAP) and
Gross Cash Generated (non-GAAP)
$-
$150
$300
$450
$600
$750
Net services revenue (GAAP)
Deferred Customer Billings
$0
$25
$50
$75
$100
Gross cash generated from customer contracting activities

©2015 Accretive Health Inc.
21
Financial Outlook (non-GAAP)
($ in millions)
2014
2015
(preliminary)
Gross Cash Generated
$223 -
$233
$225
-
$235
Cost of Services
$160
-
$170
$145
-
$155
SG&A
$55 -
$65
$50
-
$60
Net Cash Generated
$5 -
$10
$30
-
$40
Year-end cash balance
$145.5

©2015 Accretive Health Inc.
22
Thank You

©2015 Accretive Health Inc.
23
APPENDIX

©2015 Accretive Health Inc.
24
Use of Non-GAAP Financial Measures
·
In order to provide a more comprehensive understanding of the information used by Accretive Health’s management
team in financial and operational decision making, the Company supplements its GAAP consolidated financial
statements with certain non-GAAP financial measures, which are included in this press release.  These include gross
and
net
cash
generated
from
customer
contracting
activities,
and
adjusted
EBITDA.  
·
Gross cash generated from customer contracting activities reflects GAAP net services revenue and the change in
deferred customer billings.  Net cash generated from customer contracting activities reflects non-GAAP adjusted
EBITDA and the change in deferred customer billings.
·
Adjusted EBITDA is defined as net income before net interest income, provision for income taxes, depreciation and
amortization expense, share-based compensation and certain non-recurring, or one-time, items.  The use of adjusted
EBITDA
to
measure
financial
and
operating
performance
is
limited
in
that
under
GAAP,
net
services
revenue
is
recognized at the end of a contract or other contractual agreement event.  Adjusted EBITDA does not adequately
match corresponding cash flows from customer contracting activities.  As a result, the Company uses gross cash
and net cash generated from customer contracting activities to better compare cash flows to operating performance. 
·
Deferred customer billings include the portion of both invoiced net operating fees and cash collections related to
incentive fees that, in each case, have not met the Company’s revenue recognition criteria.  Deferred customer
billings are included in the detail of the customer liabilities account in the consolidated balance sheet available on the
Company’s Annual Report on Form 10-K.  
·
Slide
33
presents
a
reconciliation
of
GAAP
revenue
to
gross
cash
generated
from
customer
contracting
activities, 
and slide 34 presents a reconciliation of GAAP net income (loss), the most comparable GAAP measure, to adjusted
EBITDA and net cash generated from customer contracting activities, in each case, for each of the periods indicated. 
These adjusted measures are non-GAAP and should be considered in addition to, but not as a substitute for, the
information prepared in accordance with GAAP.
·
A reconciliation of the non-GAAP financial measures included in the Company’s outlook for the year ended
December
31,
2014
appearing
on
slide
21
is
not
available
without
unreasonable
efforts
because
the
most
directly
comparable GAAP financial measures are dependent on the timing of revenue recognition which the Company is
unable to predict.

©2015 Accretive Health Inc.
25
Consolidated Statement of Operations
($ in thousands, except per share data)
Year ended December 31,
2013
2012
2011
(As restated)
Revenue
RCM
net operating fees
$            34,923
RCM
incentive fees
210,303
928
25,946
Other services
69,528
61,438
41,097
Net services revenue
Operating Expenses:
Cost of services
186,752
188,666
158,715
Selling, general and administrative
79,951
67,750
63,268
Restatement and other nonrecurring costs
33,963
3,714
0
Total operating expenses
300,666
221,983
Operating income (loss)
204,102
(187,876)
(120,017)
Net interest income
330
141
26
Net income (loss) before provision for income taxes
204,432
(187,735)
(119,991)
Provision for income taxes
74,349
(67,995)
(48,246)
Net income (loss)
130,083
(119,740)
(71,745)
Net income (loss) per common
share
Basic
$                   1.36
$               (1.21)
$              (0.74)
Diluted
$                   1.34
$               (1.21)
$              (0.74)
Weighted average common shares outstanding
Basic
95,687,940
98,602,099
96,964,661
Diluted
96,845,664
98,602,099
96,964,661
$             9,888
$            224,937
$            504,768
$             72,254
260,130
$          101,966

©2015 Accretive Health Inc.
26
Reconciliation of GAAP revenue to Gross Cash
Generated from Customer Contracting Activities
($ in thousands)
Year ended December 31,
Components of net services revenue:
2013
2012
2011
(As restated)
RCM net operating fees (NOF)
$           224,937
$           9,888
$          34,923
RCM incentive fees (IF)
210,303
928
25,946
Other
69,528
61,438
41,097
Net services revenue (GAAP)
504,768
72,254
101,966
Change in deferred customer billings:
Change in NOF deferred customer billings
(118,484)
108,142
86,877
Change in IF deferred customer billings
(134,643)
91,972
58,920
Gross cash generated from customer contracting activities:
RCM net operating fees
106,453
118,030
121,800
RCM incentive fees
75,660
92,900
84,866
RCM Sub total
182,113
210,930
206,666
Other
69,528
61,438
41,097
Gross cash generated from customer contracting activities
251,641
272,368
247,763

©2015 Accretive Health Inc.
27
Reconciliation of GAAP net income (loss) to Net
Cash Generated from Customer Contracting
Activities
($ in thousands)
Year ended December 31,
2013
2012
2011
Net income (loss)
130,083
$         
$        (119,740)
$       (71,745)
Net interest income
(330)
(141)
(26)
Provision for income taxes
74,349
(67,995)
(48,246)
Depreciation and amortization expense
6,823
6,355
4,862
Share-based compensation expense
-
23,801
25,298
25,186
Restatement and other costs
33,963
3,714
—
Adjusted EBITDA
268,689
(152,509)
(89,969)
Change in deferred customer billings
(253,127)
200,114
145,797
Net cash generated from customer contracting activities
15,562
47,605
55,828
R1 RCM (NASDAQ:RCM)
Historical Stock Chart
From Mar 2024 to Apr 2024 Click Here for more R1 RCM Charts.
R1 RCM (NASDAQ:RCM)
Historical Stock Chart
From Apr 2023 to Apr 2024 Click Here for more R1 RCM Charts.