R1 RCM INC. Fourth Quarter 2023 Results:
- Revenue of
$575.1 million , up$41.8 million or 7.8% compared to the same period last year - GAAP net income of
$1.4 million , compared to a net loss of$36.6 million in the same period last year - Adjusted EBITDA of
$167.7 million , up$42.1 million or 33.5% compared to the same period last year
Full Year 2023 Results:
- Revenue of
$2,254.2 million , up$447.8 million or 24.8% compared to 2022 - GAAP net income of
$3.3 million , compared to net loss of$63.3 million in 2022 - Adjusted EBITDA of
$614.3 million , up$190.5 million or 45.0% compared to 2022
“R1 executed on its key objectives in 2023. We established a stronger foundation for growth, stabilized key metrics for several clients and delivered approximately
2024 Outlook
For 2024, R1 expects to generate:
- Revenue of between
$2,625 million and$2,675 million - GAAP operating income of
$105 million to$135 million - Adjusted EBITDA of
$650 million to$670 million
Supplemental Forward-Looking Information and Assumptions for Fiscal Year 2024
The Company is providing the following supplemental expectations and related assumptions regarding its fiscal year 2024 results, all of which are subject to change, to further provide transparency to investors:
- Revenue of
$2,625 to$2,675 million assumes the following:- Net operating fees and incentive fees remain consistent with the fourth quarter 2023 run rate (excluding Providence and Acclara contributions), with expected low single digit year-over-year cash collection growth offset by customer attrition and facility divestitures.
- Modular and Other revenue assumes revenue growth in the low teens.
- We anticipate Acclara and Providence to contribute revenue of approximately
$290 to 295 million, and$45 to 50 million, respectively.
- Capital expenditures of approximately 5% of revenue for the fiscal year.
- Other expenses for the fiscal year of approximately
$105 to$125 million , including integration expenses in connection with the Acclara acquisition. - Interest expense in the range of
$160 to$165 million for the fiscal year, including the impact of$575 million in additional Term B Loans and the$80 million draw on the Company’s senior revolving credit facility related to the Acclara acquisition. - Depreciation and amortization expense of
$330 to$350 million .
Conference Call and Webcast Details
R1’s management team will host a conference call today at
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, 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.
The Company's 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 the Company's 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” 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 strategy, future operations, future financial position, prospects, plans, objectives of management, ability to successfully deliver on commitments to customers, ability to deploy new business as planned, ability to successfully implement new technologies, 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, 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 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 and third-party operated data centers; the volatility of the Company’s stock price; 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; 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
About
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:
Investor Relations:
516-743-5184
investorrelations@r1rcm.com
Media Relations:
678-895-9401
ycasey@acmarketingpr.com
| Table 1 | ||||||||
| Consolidated Balance Sheets | ||||||||
| (In millions) | ||||||||
| (Unaudited) | ||||||||
| 2023 | 2022 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 173.6 | $ | 110.1 | ||||
| Accounts receivable, net of | 243.3 | 235.2 | ||||||
| Accounts receivable - related party, net of | 26.1 | 25.0 | ||||||
| Current portion of contract assets, net | 94.4 | 83.9 | ||||||
| Prepaid expenses and other current assets | 95.9 | 110.3 | ||||||
| Total current assets | 633.3 | 564.5 | ||||||
| Property, equipment and software, net | 173.7 | 164.8 | ||||||
| Operating lease right-of-use assets | 62.5 | 80.5 | ||||||
| Non-current portion of contract assets, net | 37.7 | 32.0 | ||||||
| Non-current portion of deferred contract costs | 30.4 | 26.7 | ||||||
| Intangible assets, net | 1,310.7 | 1,514.5 | ||||||
| 2,629.4 | 2,640.3 | |||||||
| Non-current deferred tax assets | 10.9 | 10.4 | ||||||
| Other assets | 71.6 | 88.1 | ||||||
| Total assets | $ | 4,960.2 | $ | 5,121.8 | ||||
| Liabilities | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 22.7 | $ | 33.4 | ||||
| Current portion of customer liabilities | 39.8 | 57.5 | ||||||
| Current portion of customer liabilities - related party | 5.2 | 7.4 | ||||||
| Accrued compensation and benefits | 126.3 | 109.0 | ||||||
| Current portion of operating lease liabilities | 19.3 | 18.0 | ||||||
| Current portion of long-term debt | 67.0 | 53.9 | ||||||
| Accrued expenses and other current liabilities | 65.9 | 70.5 | ||||||
| Total current liabilities | 346.2 | 349.7 | ||||||
| Non-current portion of customer liabilities | 2.7 | 5.0 | ||||||
| Non-current portion of customer liabilities - related party | 11.8 | 13.7 | ||||||
| Non-current portion of operating lease liabilities | 77.8 | 94.4 | ||||||
| Long-term debt | 1,570.5 | 1,732.6 | ||||||
| Non-current deferred tax liabilities | 176.6 | 200.8 | ||||||
| Other non-current liabilities | 23.2 | 23.1 | ||||||
| Total liabilities | 2,208.8 | 2,419.3 | ||||||
| Stockholders’ equity: | ||||||||
| Common stock | 4.5 | 4.4 | ||||||
| Additional paid-in capital | 3,197.4 | 3,123.3 | ||||||
| Accumulated deficit | (136.7 | ) | (140.0 | ) | ||||
| Accumulated other comprehensive loss | (5.9 | ) | (3.4 | ) | ||||
| (307.9 | ) | (281.8 | ) | |||||
| Total stockholders’ equity | 2,751.4 | 2,702.5 | ||||||
| Total liabilities and stockholders’ equity | $ | 4,960.2 | $ | 5,121.8 | ||||
| Table 2 | ||||||||||||||
| Consolidated Statements of Operations | ||||||||||||||
| (In millions, except share and per share data) | ||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||
| Three Months Ended | Year Ended | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||
| Net operating fees | $ | 369.1 | $ | 344.9 | $ | 1,455.9 | $ | 1,309.7 | ||||||
| Incentive fees | 23.9 | 25.9 | 108.4 | 106.8 | ||||||||||
| Modular and other | 182.1 | 162.5 | 689.9 | 389.9 | ||||||||||
| Net services revenue | 575.1 | 533.3 | 2,254.2 | 1,806.4 | ||||||||||
| Operating expenses: | ||||||||||||||
| Cost of services | 441.6 | 435.5 | 1,769.7 | 1,446.9 | ||||||||||
| Selling, general and administrative | 55.7 | 54.3 | 220.0 | 172.5 | ||||||||||
| Other expenses | 28.7 | 47.3 | 116.6 | 189.8 | ||||||||||
| Total operating expenses | 526.0 | 537.1 | 2,106.3 | 1,809.2 | ||||||||||
| Income (loss) from operations | 49.1 | (3.8 | ) | 147.9 | (2.8 | ) | ||||||||
| Net interest expense | 31.6 | 28.7 | 126.9 | 64.0 | ||||||||||
| Income (loss) before income tax provision (benefit) | 17.5 | (32.5 | ) | 21.0 | (66.8 | ) | ||||||||
| Income tax provision (benefit) | 16.1 | 4.1 | 17.7 | (3.5 | ) | |||||||||
| Net income (loss) | $ | 1.4 | $ | (36.6 | ) | $ | 3.3 | $ | (63.3 | ) | ||||
| Net income (loss) per common share: | ||||||||||||||
| Basic | $ | — | $ | (0.09 | ) | $ | 0.01 | $ | (0.18 | ) | ||||
| Diluted | $ | — | $ | (0.09 | ) | $ | 0.01 | $ | (0.18 | ) | ||||
| Weighted average shares used in calculating net income (loss) per common share: | ||||||||||||||
| Basic | 419,440,458 | 416,680,429 | 418,587,390 | 352,337,767 | ||||||||||
| Diluted | 451,499,913 | 416,680,429 | 454,094,374 | 352,337,767 | ||||||||||
| Table 3 | ||||||||
| Consolidated Statements of Cash Flows | ||||||||
| (In millions) | ||||||||
| (Unaudited) | ||||||||
| Year Ended | ||||||||
| 2023 | 2022 | |||||||
| Operating activities | ||||||||
| Net income (loss) | $ | 3.3 | $ | (63.3 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operations: | ||||||||
| Depreciation and amortization | 278.3 | 172.0 | ||||||
| Amortization of debt issuance costs | 5.7 | 3.6 | ||||||
| Share-based compensation | 64.2 | 59.8 | ||||||
| CoyCo 2 share-based compensation | 7.3 | 5.1 | ||||||
| Loss/(gain) on disposal and right-of-use asset write-downs | 10.0 | 21.1 | ||||||
| Provision for credit losses | 34.6 | 11.8 | ||||||
| Deferred income taxes | (14.6 | ) | (6.8 | ) | ||||
| Non-cash lease expense | 11.5 | 14.0 | ||||||
| Other | 12.3 | 6.5 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable and related party accounts receivable | (44.0 | ) | (51.8 | ) | ||||
| Contract assets | (15.2 | ) | (24.1 | ) | ||||
| Prepaid expenses and other assets | 3.9 | (40.5 | ) | |||||
| Accounts payable | (10.9 | ) | (16.0 | ) | ||||
| Accrued compensation and benefits | 17.4 | (69.5 | ) | |||||
| Operating lease liabilities | (18.0 | ) | (18.9 | ) | ||||
| Other liabilities | 17.9 | (1.7 | ) | |||||
| Customer liabilities and customer liabilities - related party | (23.6 | ) | (11.2 | ) | ||||
| Net cash provided by (used in) operating activities | 340.1 | (9.9 | ) | |||||
| Investing activities | ||||||||
| Purchases of property, equipment, and software | (102.5 | ) | (93.5 | ) | ||||
| Payment for business acquisitions, net of cash acquired | — | (847.7 | ) | |||||
| Other | (0.3 | ) | (8.3 | ) | ||||
| Net cash used in investing activities | (102.8 | ) | (949.5 | ) | ||||
| Financing activities | ||||||||
| Issuance of senior secured debt, net of discount and issuance costs | — | 1,016.6 | ||||||
| Borrowings on revolver | 30.0 | 50.0 | ||||||
| Payment of debt issuance costs | — | (1.0 | ) | |||||
| Repayment of senior secured debt | (53.9 | ) | (25.5 | ) | ||||
| Repayments on revolver | (130.0 | ) | (30.0 | ) | ||||
| Payment of equity issuance costs | — | (2.0 | ) | |||||
| Exercise of vested stock options | 1.3 | 4.6 | ||||||
| Purchase of treasury stock | — | (39.3 | ) | |||||
| Shares withheld for taxes | (26.5 | ) | (30.2 | ) | ||||
| Other | 5.2 | (0.2 | ) | |||||
| Net cash (used in) provided by financing activities | (173.9 | ) | 943.0 | |||||
| Effect of exchange rate changes in cash | 0.1 | (3.6 | ) | |||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | 63.5 | (20.0 | ) | |||||
| Cash, cash equivalents, and restricted cash at beginning of period | 110.1 | 130.1 | ||||||
| Cash, cash equivalents, and restricted cash at end of period | $ | 173.6 | $ | 110.1 | ||||
| Table 4 | ||||||||||||||||||||||||||||
| Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted EBITDA (Unaudited) | ||||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||||
| Three Months Ended | 2023 vs. 2022 Change | Year Ended | 2023 vs. 2022 Change | |||||||||||||||||||||||||
| 2023 | 2022 | Amount | % | 2023 | 2022 | Amount | % | |||||||||||||||||||||
| Net income (loss) | $ | 1.4 | $ | (36.6 | ) | $ | 38.0 | (104 | )% | $ | 3.3 | $ | (63.3 | ) | $ | 66.6 | (105 | )% | ||||||||||
| Net interest expense | 31.6 | 28.7 | 2.9 | 10 | % | 126.9 | 64.0 | 62.9 | 98 | % | ||||||||||||||||||
| Income tax provision (benefit) | 16.1 | 4.1 | 12.0 | (293 | )% | 17.7 | (3.5 | ) | 21.2 | (606 | )% | |||||||||||||||||
| Depreciation and amortization expense | 72.7 | 64.2 | 8.5 | 13 | % | 278.3 | 172.0 | 106.3 | 62 | % | ||||||||||||||||||
| Share-based compensation expense | 15.3 | 15.8 | (0.5 | ) | (3 | )% | 64.2 | 59.7 | 4.5 | 8 | % | |||||||||||||||||
| CoyCo 2 share-based compensation expense | 1.9 | 2.1 | (0.2 | ) | — | % | 7.3 | 5.1 | 2.2 | — | % | |||||||||||||||||
| Other expenses (1) | 28.7 | 47.3 | (18.6 | ) | (39 | )% | 116.6 | 189.8 | (73.2 | ) | (39 | )% | ||||||||||||||||
| Adjusted EBITDA (non-GAAP) | $ | 167.7 | $ | 125.6 | $ | 42.1 | 34 | % | $ | 614.3 | $ | 423.8 | $ | 190.5 | 45 | % | ||||||||||||
(1) For details see Note 14, Other Expenses, to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K.
| Table 5 | |||||||||||||
| Reconciliation of GAAP Cost of Services to Non-GAAP Cost of Services (Unaudited) | |||||||||||||
| (In millions) | |||||||||||||
| Three Months Ended | Year Ended | ||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||
| Cost of services | $ | 441.6 | $ | 435.5 | $ | 1,769.7 | $ | 1,446.9 | |||||
| Less: | |||||||||||||
| Share-based compensation expense | 10.9 | 7.4 | 41.6 | 28.1 | |||||||||
| CoyCo 2 share-based compensation expense | 0.4 | (0.3 | ) | 1.8 | 0.7 | ||||||||
| Depreciation and amortization expense | 72.5 | 63.8 | 277.1 | 170.8 | |||||||||
| Non-GAAP cost of services | $ | 357.8 | $ | 364.6 | $ | 1,449.2 | $ | 1,247.3 | |||||
| Table 6 | ||||||||||||
| Reconciliation of GAAP Selling, General and Administrative to Non-GAAP Selling, General and Administrative (Unaudited) | ||||||||||||
| (In millions) | ||||||||||||
| Three Months Ended | Year Ended | |||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Selling, general and administrative | $ | 55.7 | $ | 54.3 | $ | 220.0 | $ | 172.5 | ||||
| Less: | ||||||||||||
| Share-based compensation expense | 4.4 | 8.4 | 22.6 | 31.6 | ||||||||
| CoyCo 2 share-based compensation expense | 1.5 | 2.4 | 5.5 | 4.4 | ||||||||
| Depreciation and amortization expense | 0.2 | 0.4 | 1.2 | 1.2 | ||||||||
| Non-GAAP selling, general and administrative | $ | 49.6 | $ | 43.1 | $ | 190.7 | $ | 135.3 | ||||
| Table 7 | ||||||||||||
| Consolidated Non-GAAP Financial Information (Unaudited) | ||||||||||||
| (In millions) | ||||||||||||
| Three Months Ended | Year Ended | |||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Net operating fees | $ | 369.1 | $ | 344.9 | $ | 1,455.9 | $ | 1,309.7 | ||||
| Incentive fees | 23.9 | 25.9 | 108.4 | 106.8 | ||||||||
| Modular and other | 182.1 | 162.5 | 689.9 | 389.9 | ||||||||
| Net services revenue | 575.1 | 533.3 | 2,254.2 | 1,806.4 | ||||||||
| Operating expenses: | ||||||||||||
| Cost of services (non-GAAP) | 357.8 | 364.6 | 1,449.2 | 1,247.3 | ||||||||
| Selling, general and administrative (non-GAAP) | 49.6 | 43.1 | 190.7 | 135.3 | ||||||||
| Sub-total (non-GAAP) | 407.4 | 407.7 | 1,639.9 | 1,382.6 | ||||||||
| Adjusted EBITDA | $ | 167.7 | $ | 125.6 | $ | 614.3 | $ | 423.8 | ||||
| Table 8 | |
| Reconciliation of GAAP Operating Income Guidance to Non-GAAP Adjusted EBITDA Guidance (Unaudited) | |
| (In millions) | |
| 2024E | |
| GAAP Operating Income Guidance | |
| Plus: | |
| Depreciation and amortization expense | |
| Share-based compensation expense | |
| Strategic initiatives, severance and other costs | |
| Adjusted EBITDA Guidance | |
| Table 9 | |||||
| Reconciliation of Total Debt to Net Debt (Unaudited) | |||||
| (In millions) | |||||
| 2023 | 2022 | ||||
| Senior Revolver | $ | — | $ | 100.0 | |
| Term A Loans | 1,162.5 | 1,211.4 | |||
| Term B Loan | 493.8 | 498.7 | |||
| Total debt | 1,656.3 | 1,810.1 | |||
| Less: | |||||
| Cash and cash equivalents | 173.6 | 110.1 | |||
| Net Debt | $ | 1,482.7 | $ | 1,700.0 | |
2024 GlobeNewswire, Inc., source
