0001910851falseR1 RCM Inc. /DE00019108512024-05-082024-05-08

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): May 8, 2024
____________
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 May 8, 2024, R1 RCM Inc. (the “Company”) announced its financial results for the fiscal quarter ended March 31, 2024. 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 May 8, 2024 regarding its financial results for the fiscal quarter ended March 31, 2024. 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: May 8, 2024
By:       /s/ Jennifer Williams                                           
 Name:  Jennifer Williams
 Title:    Chief Financial Officer


Exhibit 99.1
r1logo.jpg
R1 RCM Reports First Quarter 2024 Results
Murray, Utah - May 8, 2024 - R1 RCM Inc. (NASDAQ: RCM) (“R1” or the “Company”), a leading provider of technology-driven solutions that transform the financial performance and patient experience for health systems, hospitals, and physician groups, today announced results for the three months ended March 31, 2024 and updated full year 2024 outlook.
First Quarter 2024 Results:
•Revenue of $603.9 million, up $58.3 million or 10.7% compared to the same period last year.
•GAAP net loss of $35.1 million, compared to net income of $1.6 million in the same period last year.
•Adjusted EBITDA of $152.2 million, compared to adjusted EBITDA of $142.2 million in the same period last year.
The quarter reflects impacts of the Change Healthcare cyberattack totaling $9.5 million for revenue and adjusted EBITDA as well as additional impact from a modular customer bankruptcy.
“First quarter results reflect the strength and flexibility of our technology platform, our people, and our global scale. While addressing the impact of the Change Healthcare cyberattack, R1 continued to deliver operationally and began the onboarding of our largest new customer,” stated Lee Rivas, R1’s CEO. “Looking ahead, we will remain focused on executing against our technology roadmap, delivering excellent results, and aligning our strategy to our customers’ business, while achieving measurable results for our shareholders.”
2024 Updated Outlook
For 2024, R1 now expects to generate:
•Revenue of $2.60 billion to $2.64 billion
•GAAP operating income of $85 million to $105 million
•Adjusted EBITDA of $625 million to $650 million


The updated guidance reflects the impacts of the Change Healthcare cyberattack on first quarter and expected full year 2024 revenue related to collections timing, claims inflows, and the ability to meet key performance metrics, as well as increased expenses to support our customers.
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 888-596-4144 (646-968-2525 outside the U.S. and Canada) using conference code number 9123341. 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, including the amortization of cloud computing arrangement implementation fees, share-based compensation expense, CoyCo 2, L.P. (“CoyCo 2”) share-based compensation expense, and certain other items, including acquisition and integration costs, various exit activities costs, strategic and transformation initiatives costs, costs related to organization changes to improve business alignment and cost structure, and costs related to review of strategic alternatives and stockholder litigation. 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 8 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” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this press release are forward-looking statements. The words “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 are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Such forward-looking statements include, among other things, statements about the Company’s review of strategic alternatives, strategy, future operations, future financial position, prospects, plans, challenges faced by health systems and their revenue cycle operations and the role of business therein, objectives of management, ability to successfully deliver on commitments to customers, impacts of the Change Healthcare cyberattack and a customer bankruptcy on the business, ability to deploy new business as planned, ability to successfully implement new technologies, ability to complete or integrate acquisitions as planned and to realize the expected benefits from acquisitions, including the acquisition of Acclara, the expected outcome or impact of pending or threatened litigation, and expected market growth. Such forward-looking statements are based on management’s current expectations about future events 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 its 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 does not undertake to update its


forward-looking statements except to the extent required by applicable law. Readers are cautioned not to place undue reliance on such forward-looking statements. All forward-looking statements included herein are expressly qualified in their entirety by these cautionary statements. The Company’s actual results and outcomes could differ materially from those included in these forward-looking statements as a result of various factors, including, but not limited to, the impact that the review of strategic alternatives could have on the business or stock price; the outcome and timing of the review of strategic alternatives and a suspension thereof; economic downturns and market conditions beyond the Company’s control, including high inflation; the quality of global financial markets; the Company’s ability to timely and successfully achieve the anticipated benefits and potential synergies of the acquisitions of Cloudmed and Acclara; the Company’s ability to retain existing customers or acquire new customers; the development of markets for the Company’s revenue cycle management offering; variability in the lead time of prospective customers; competition within the market; breaches or failures of the Company’s or their vendors’ information security measures or unauthorized access to a customer’s data; delayed or unsuccessful implementation of the Company’s technologies or services, or unexpected implementation costs; disruptions in or damages to the Company’s global business services centers, third-party operated data centers or other services provided by other third-parties; the volatility of the Company’s stock price; the Company’s substantial indebtedness; and the factors set forth under the heading “Risk Factors” in the Company’s most recent annual report on Form 10-K, and any other periodic reports that the Company may file with the U.S. Securities and Exchange Commission.
About R1 RCM
R1 is a leading provider of technology-driven solutions that transform the financial performance and patient experience for health systems, hospitals, and physician groups. 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 driving revenue yield, 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:
Joshua Blumenthal
678-895-9401
media@r1rcm.com


Table 1
R1 RCM Inc.
Consolidated Balance Sheets
(In millions)
(Unaudited)
 March 31,December 31,
 20242023
Assets
Current assets:
Cash and cash equivalents$178.0 $173.6 
Accounts receivable, net of $46.7 million and $48.2 million allowance as of March 31, 2024 and December 31, 2023, respectively291.4 243.3 
Accounts receivable - related party, net of $0.1 million allowance as of March 31, 2024 and December 31, 202326.5 26.1 
Current portion of contract assets, net96.3 94.4 
Prepaid expenses and other current assets107.9 95.9 
Total current assets700.1 633.3 
Property, equipment and software, net186.6 173.7 
Operating lease right-of-use assets72.6 62.5 
Non-current portion of contract assets, net41.4 37.7 
Non-current portion of deferred contract costs33.3 30.4 
Intangible assets, net1,626.5 1,310.7 
Goodwill3,049.4 2,629.4 
Deferred tax assets10.9 10.9 
Other assets74.4 71.6 
Total assets$5,795.2 $4,960.2 
Liabilities
Current liabilities:
Accounts payable$27.1 $22.7 
Current portion of customer liabilities37.6 39.8 
Current portion of customer liabilities - related party5.7 5.2 
Accrued compensation and benefits98.7 126.3 
Current portion of operating lease liabilities21.7 19.3 
Current portion of long-term debt91.0 67.0 
Accrued expenses and other current liabilities110.2 65.9 
Total current liabilities392.0 346.2 
Non-current portion of customer liabilities3.5 2.7 
Non-current portion of customer liabilities - related party11.3 11.8 
Non-current portion of operating lease liabilities87.4 77.8 
Long-term debt2,189.6 1,570.5 
Deferred tax liabilities263.1 176.6 
Other non-current liabilities24.7 23.2 
Total liabilities2,971.6 2,208.8 
Stockholders’ equity:
Common stock4.5 4.5 
Additional paid-in capital3,306.6 3,197.4 
Accumulated deficit(171.8)(136.7)
Accumulated other comprehensive loss(5.2)(5.9)
Treasury stock(310.5)(307.9)
Total stockholders’ equity2,823.6 2,751.4 
Total liabilities and stockholders’ equity$5,795.2 $4,960.2 


Table 2
R1 RCM Inc.
Consolidated Statements of Operations (Unaudited)
(In millions, except share and per share data)
 Three Months Ended March 31,
 20242023
Net operating fees$381.5 $361.0 
Incentive fees15.6 23.6 
Modular and other206.8 161.0 
Net services revenue603.9 545.6 
Operating expenses:
Cost of services497.6 434.7 
Selling, general and administrative64.4 47.0 
Other expenses33.9 30.2 
Total operating expenses595.9 511.9 
Income from operations8.0 33.7 
Net interest expense41.3 30.7 
Income (loss) before income tax provision(33.3)3.0 
Income tax provision1.8 1.4 
Net income (loss)$(35.1)$1.6 
Net income (loss) per common share:
Basic$(0.08)$— 
Diluted$(0.08)$— 
Weighted average shares used in calculating net income (loss) per common share:
Basic420,427,136 417,346,840 
Diluted420,427,136 452,925,789 











Table 3
R1 RCM Inc.
Consolidated Statements of Cash Flows (Unaudited)
(In millions)
 Three Months Ended March 31,
 20242023
Operating activities
Net income (loss)$(35.1)$1.6 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization78.3 66.0 
Amortization of debt issuance costs1.8 1.4 
Share-based compensation30.2 10.5 
CoyCo 2 share-based compensation1.8 1.8 
Provision (recoveries) for credit losses(0.5)1.5 
Deferred income taxes1.6 0.5 
Non-cash lease expense3.4 2.9 
Other1.8 — 
Changes in operating assets and liabilities:
Accounts receivable and related party accounts receivable0.1 4.7 
Contract assets(5.6)(4.0)
Prepaid expenses and other assets1.3 8.2 
Accounts payable(0.3)(10.9)
Accrued compensation and benefits(49.5)(24.5)
Lease liabilities(5.4)(4.4)
Other liabilities25.4 9.7 
Customer liabilities and customer liabilities - related party(2.6)(10.3)
Net cash provided by operating activities46.7 54.7 
Investing activities
Purchases of property, equipment, and software(24.4)(23.4)
Acquisition of Acclara, net of cash acquired(661.9)— 
Other(12.1)(2.2)
Net cash used in investing activities(698.4)(25.6)
Financing activities
Issuance of senior secured debt, net of discount and issuance costs561.5 — 
Borrowings on revolver80.0 — 
Repayment of senior secured debt— (12.4)
Repayments on revolver— (10.0)
Refund of inducement dividend16.4 — 
Exercise of vested stock options0.6 0.5 
Shares withheld for taxes(2.3)(13.4)
Other(0.1)(0.1)
Net cash provided by (used in) financing activities656.1 (35.4)
Effect of exchange rate changes in cash, cash equivalents and restricted cash— 0.4 
Net increase (decrease) in cash, cash equivalents and restricted cash4.4 (5.9)
Cash, cash equivalents and restricted cash, at beginning of period173.6 110.1 
Cash, cash equivalents and restricted cash, at end of period$178.0 $104.2 





Table 4
R1 RCM Inc.
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted EBITDA (Unaudited)
(In millions)
 Three Months Ended March 31,2024 vs. 2023
Change
 20242023Amount%
Net income (loss)$(35.1)$1.6 $(36.7)n.m.
Net interest expense41.3 30.7 10.6 35 %
Income tax provision1.8 1.4 0.4 29 %
Depreciation and amortization expense78.3 66.0 12.3 19 %
Share-based compensation expense30.2 10.5 19.7 188 %
CoyCo 2 share-based compensation expense1.8 1.8 — — %
Other expenses (1)33.9 30.2 3.7 12 %
Adjusted EBITDA (non-GAAP)$152.2 $142.2 $10.0 7 %

(1) For details, see Note 9 to the Condensed Consolidated Financial Statements included in the Company’s Quarterly Report on Form 10-Q.

Table 5
R1 RCM Inc.
Reconciliation of GAAP Cost of Services to Non-GAAP Cost of Services (Unaudited)
(In millions)
Three Months Ended March 31,
20242023
Cost of services$497.6 $434.7 
Less:
Share-based compensation expense18.3 6.4 
CoyCo 2 share-based compensation expense0.5 0.5 
Depreciation and amortization expense77.7 65.6 
Non-GAAP cost of services$401.1 $362.2 






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 March 31,
20242023
Selling, general and administrative$64.4 $47.0 
Less:
Share-based compensation expense11.9 4.1 
CoyCo 2 share-based compensation expense1.3 1.3 
Depreciation and amortization expense0.6 0.4 
Non-GAAP selling, general and administrative$50.6 $41.2 


Table 7
R1 RCM Inc.
Reconciliation of GAAP Operating Income Guidance to Non-GAAP Adjusted EBITDA Guidance (Unaudited)
(In millions)
2024E
GAAP Operating Income Guidance$85-105
Plus:
Depreciation and amortization expense$330-350
Share-based compensation expense$85-95
Strategic initiatives, severance and other costs$105-120
Adjusted EBITDA Guidance$625-650


Table 8
R1 RCM Inc.
Reconciliation of Total Debt to Net Debt (Unaudited)
(In millions)
 March 31,December 31,
20242023
Senior Revolver$80.0 $— 
Term A Loans1,162.5 1,162.5 
Term B Loans1,068.8 493.8 
Total debt2,311.3 1,656.3 
Less:
Cash and cash equivalents178.0 173.6 
Net Debt$2,133.3 $1,482.7 


First Quarter 2024 Earnings Call Nasdaq: RCM May 8, 2024 Exhibit 99.2

 
© 2024 R1 RCM, Inc. All Rights Reserved. Proprietary Confidential Information. 2 Forward-Looking Statements This presentation 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, including, but not limited to, the Company’s ability to complete or integrate acquisitions as planned and to realize the expected benefits from acquisitions, including the acquisition of Acclara, statements about challenges faced by health systems and their revenue cycle operations and the role of the Company’s solutions therein, impacts of the Change Healthcare cyberattack and the customer bankruptcy on the Company, the Company's strategic initiatives, the Company's capital plans, the Company's costs, the Company's ability to successfully implement new technologies, the Company's future financial and operational performance, and the Company's liquidity. 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,” "should,” “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 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 risks and uncertainties related to: (i) the impact that the review of strategic alternatives could have on the Company or its stock price; (ii) the outcome and timing of the review of strategic alternatives and a suspension thereof; (iii) economic downturns and market conditions beyond the Company’s control, including high inflation; (iv) the quality of global financial markets; (v) the Company’s ability to timely and successfully achieve the anticipated benefits and potential synergies of the acquisitions of Cloudmed and Acclara; (vi) the Company’s ability to retain existing customers or acquire new customers; (vii) the development of markets for the Company’s revenue cycle management offering; (viii) variability in the lead time of prospective customers; (ix) competition within the market; (x) breaches or failures of the Company’s information security measures or unauthorized access to a customer’s data; (xi) delayed or unsuccessful implementation of the Company’s technologies or services, or unexpected implementation costs; (xii) disruptions in or damages to the Company’s global business services centers and third-party operated data centers; (xiii) the volatility of the Company’s stock price; (xiv) the impact of the recent restatements of the financial statements for the applicable periods on the price of the Company’s common stock, reputation and relationships with its investors, suppliers, customers, employees and other parties; and (xv) 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, 2023, quarterly reports on Form 10-Q and any other periodic reports that the Company may file with the U.S. 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 actual results to differ materially from those expressed or implied in the 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”). These non-GAAP financial measures are 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 reconciliations of non-GAAP financial measures to their most directly comparable GAAP financial measures.

 
© 2024 R1 RCM, Inc. All Rights Reserved. Proprietary Confidential Information. 3 CEO Summary • Align Go-To-Market approach with customers • Focus on operational delivery • Execute against technology roadmap 2024 Business Priorities Financial Results Q1’24 Q1’24 Business Highlights • Flexible models resonated with the market – bookings and pipeline remained strong • Delivered strong results – expanded within existing customer base, worked with customers to address cyberattack • Advanced technology initiatives and launched new use cases Note1: Adjusted cost of services, adjusted SG&A expense, and adjusted EBITDA are non-GAAP financial measures; refer to the Appendix for reconciliations of non-GAAP financial measures. ($ in millions) Revenue $ 603.9 Adjusted Cost of Services1 $ 401.1 Adjusted SG&A Expense1 $ 50.6 Adjusted EBITDA1 $ 152.2

 
© 2024 R1 RCM, Inc. All Rights Reserved. Proprietary Confidential Information. 4 Q1’24 Performance Compared to Prior Year ($ in millions) Q1’24 Q1’23 % Change Revenue $ 603.9 $ 545.6 10.7% Adjusted Cost of Services1 $ 401.1 $ 362.2 10.7% Adjusted SG&A Expense1 $ 50.6 $ 41.2 22.8% Adjusted EBITDA1 $ 152.2 $ 142.2 7.0% • Revenue growth was driven by Acclara and new modular business partially offset by known attrition and expected divestitures, as well as the impact of the Change Healthcare cyberattack and modular client bankruptcy • Adjusted cost of services increase was driven by the addition of Acclara and technology investments partially offset by continued cost savings and realization of synergies • Adjusted SG&A expense increase was primarily driven by the addition of Acclara • Adjusted EBITDA increase driven by Acclara contribution, base revenue growth, continued cost optimization initiatives and timing of new business investments partially offset by the Change Healthcare cyberattack Note1: Adjusted cost of services, adjusted SG&A expense, and adjusted EBITDA are non-GAAP financial measures; refer to the Appendix for reconciliations of non-GAAP financial measures.

 
© 2024 R1 RCM, Inc. All Rights Reserved. Proprietary Confidential Information. 6 Q1’24 Cash Generation and Liquidity Net Debt1 Liquidity2 • Cash and cash equivalents totaled $178.0 million at March 31, 2024 • First quarter 2024 cash flow from operating activities was $46.7 million • Net debt leverage3 was 2.9x at March 31, 2024 • Total liquidity of $696.8 million reflecting cash and cash equivalents and borrowing capacity under the revolver at March 31, 2024 Note1: Net debt and adjusted EBITDA are non-GAAP financial measures; refer to the Appendix for reconciliations of non-GAAP financial measures. Note2: Includes cash, cash equivalents, and borrowing capacity under our revolver. Note3:Net debt leverage is based on credit facility definitions. $1,483 $2,133 Q4’23 Q1’24 $772 $697 Q4’23 Q1’24

 
© 2024 R1 RCM, Inc. All Rights Reserved. Proprietary Confidential Information. 7 • Expected Change Healthcare impact: • Revenue impact of approximately $20 million for the FY including lower incentives fees and a shift in timing for base fee revenue in 2H’24 • $25 million Adj. EBITDA impact for the FY • Expected Acclara revenue of $275 - $280 million due to harmonization of Acclara businesses and customer contracts. No change to Adj. EBITDA outlook for Acclara Qualitative Overview Updated FY 2024 Outlook Note1: Adjusted EBITDA is a non-GAAP financial measure; refer to the Appendix for reconciliations of non-GAAP financial measures. ($ in millions) Original FY’24 Outlook Updated FY’24 Outlook Revenue $2,625 - $2,675 $2,600 - $2,640 Net Operating Income $105 - $135 $85 - $105 Adj. EBITDA1 $650 - $670 $625 - $650

 
© 2024 R1 RCM, Inc. All Rights Reserved. Proprietary Confidential Information. 8 Other Outlook Assumptions • Continue to assume low single digit year-over-year growth for base net operating fees • No changes to our assumption on customer attrition and facility divestitures • Modular and other revenue, excluding Acclara, to grow low double digits • Capital expenditures of approximately 5% of revenue • Other expenses of approximately $105 - $120 million, including Acclara transaction and integration related expenses • Interest expense in the range of $175 - $180 million, including the impact of Acclara • Depreciation and amortization expense of $330 - $350 million

 
Appendix

 
© 2024 R1 RCM, Inc. All Rights Reserved. Proprietary Confidential Information. 10 Use of 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 performance measures, including adjusted EBITDA. Adjusted EBITDA is defined as GAAP net income (loss) before net interest income/expense, income tax provision/benefit, depreciation and amortization expense including the amortization of cloud computing arrangement implementation fees, share-based compensation expense, CoyCo, L.P. (“CoyCo 2”) share-based compensation expense, strategic initiatives costs, and certain other items. • 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. • Adjusted EBITDA should be considered in addition to, but not as a substitute for, the information presented in accordance with GAAP. Note1:.For details, see Note 9, Other Expenses, to the Consolidated Financial Statements included in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 Reconciliation of GAAP Operating Income Guidance to Non-GAAP Adjusted EBITDA Guidance (Unaudited) (In millions) 2024E GAAP Operating Income Guidance $85-105 Plus: Depreciation and amortization expense $330-350 Share-based compensation expense $85-95 Strategic initiatives, severance and other costs $105-120 Adjusted EBITDA Guidance $625-650 Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted EBITDA (Unaudited) (In millions) Three Months Ended March 31, 2024 2023 Net income (loss) $ (35.1) $ 1.6 Net interest expense 41.3 30.7 Income tax provision 1.8 1.4 Depreciation and amortization expense 78.3 66.0 Share-based compensation expense 30.2 10.5 CoyCo 2 share-based compensation 1.8 1.8 Other expenses (1) 33.9 30.2 Adjusted EBITDA (non-GAAP) $ 152.2 $ 142.2

 
© 2024 R1 RCM, Inc. All Rights Reserved. Proprietary Confidential Information. 11 Reconciliation of Non-GAAP Financial Measures Reconciliation of GAAP Cost of Services to Non-GAAP Cost of Services (Unaudited) (In millions) Three Months Ended March 31, 2024 2023 Cost of services $ 497.6 $ 434.7 Less: Share-based compensation expense 18.3 6.4 CoyCo 2 share-based compensation expense 0.5 0.5 Depreciation and amortization expense 77.7 65.6 Non-GAAP cost of services $ 401.1 $ 362.2 Reconciliation of GAAP Selling, General and Administrative to Non-GAAP Selling, General and Administrative (Unaudited) (In millions) Three Months Ended March 31, 2024 2023 Selling, general and administrative $ 64.4 $ 47.0 Less: Share-based compensation expense 11.9 4.1 CoyCo 2 share-based compensation expense 1.3 1.3 Depreciation and amortization expense 0.6 0.4 Non-GAAP selling, general and administrative $ 50.6 $ 41.2 Reconciliation of Total Debt to Net Debt (Unaudited) (In millions) March 31, December 31, 2024 2023 Senior Revolver $ 80.0 $ — Term A Loans 1,162.5 1,162.5 Term B Loans 1,068.8 493.8 Total debt 2,311.3 1,656.3 Less: Cash and cash equivalents 178.0 173.6 Net Debt $ 2,133.3 $ 1,482.7

 
v3.24.1.u1
Document and Entity Information Document
May 08, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date May 08, 2024
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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