Earnings call transcript Q1 2023

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the R1 RCM First Quarter 2023 Earnings Call. I would now like to turn the call over to Atif Rahim, Head of Investor Relations. Please go ahead.

Atif Rahim

Good morning, everyone, and welcome to the call. Certain statements made during this call may be considered forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. our about our growth, our strategic or opportunities statements including and liquidity any are growth about performance statements and and particular, our plans future performance, position forward-looking In statements. financial future cost-saving initiatives,

statements undue use statements. variations. often believe, on as uncertainties. not Investors made intend, may, are the expect, All and would place words plan, such cautioned These statements project, involve by reliance similar call of forward-looking risks are designed, identified forward-looking on anticipate, such estimate, expressions today's to or and

at elect point no While update so required we may to of law. intention the these except have forward-looking we applicable statements the extent by some future, to doing in current

these but risk as the factors, the control, forward-looking of December Factors various Our beyond limited market inflation not for result and statements other ended factors on Form materially actual results and in may a including, XXXX. outcomes economic periods XX, XX-K of year our differ in conditions report under downturns to, including our and annual Risk included from heading those

referencing be non-GAAP on this also will We call. metrics

release. a non-GAAP of mentioned press to reconciliation equivalent amounts, please to our For GAAP amounts refer their the

Now, call to I over will Lee. turn the

Lee Rivas

was of morning, EBITDA Good XXX.X Thank you, million, with million of XXXX costs. us. and a the due for ahead you lower strong to expectations operating adjusted performance am joining for and quarter. Atif. everyone, pleased thank I start report to XXX.X EBITDA corporate Adjusted to revenue and solid first of

and our pleased to guidance. our deliver results are positioned well with We are XXXX

financials. to it Jennifer topics, key three then me Let hand we'll over to our cover cover

activity. seeing in third, and technology automation; business; our operational second, commercial and the First, in trends are and performance we progress

operation. We are making progress our across good

still We people dynamics. technology are impact and proactively requires but showing environment improvement, of progress manage payer is the making to that steady an in

clear. is proposition value Our

over billion we in with of end-to-end have representing cycle managing experience revenue customers XX First, deep NPR. the

allows for which reduces focuses high-quality global our care results, customers and to a what their have patients. model, costs best, we Second, on do achieve they

deploy to our we will are continue to us acquisition, dependency in million operation. patient us labor our with data we on Cloudmed XXX-plus in we and and This customers' predictability last, the to customers workflow. on our annually, And reduce have technology over as allow interactions automation which time. drive over embedded Third, XXX more deeply customers' allow

get on operating me let metrics the in Now, in some detail first quarter. our

in of our We second continue relative half year. operating to improvement last to see the modest metrics

directly note as yielding and efforts, area positive reimbursement are to internal turnaround One Our well via engagement payers both our with results. customers particularly as is payer times.

seen down work we improving which, evidenced many last improvement While a side, payable on as days payer ensure resources providers. increased conversion to requires cases, few to accounts we have cash for the in backlog in months continue of the in receivable to

into Our modular focus of our opportunity had I an at since to year. I stepped meet in-person our on of customers role of resonates execution well the all and have many with end-to-end the start customers. the almost CEO our

actions the longer we've taken regarding turnaround The positive to feedback has been address times.

performance to have customers control. by deconstruct found it RX's dynamics our helpful in what's environmental Our versus explaining

presented are their when of within our work appreciative on payer example, with data trends highly For our geographies. customers

analytics these our refine broader to trends versus continue will in market. We the to benchmark performance

part via scale of position customer a billion strategy unique we and patient to data will in our annually. be engagement touch XXX million of are of NPR these our to forward. the provide encounters going and This us We available analytics XXX the given

impact continue year-over-year and operating financials. to AR improving, costs to providers' overall While up within driving financial days industry the metrics, our incredible we improvements payer under seeing are and are significant the some are in be with pressures. but own their industry customers dynamics and our still

customers understand well certainly operational positioned of global of are the our very given challenges providers to to and platform. close unit address revenue model believe economics our our we accessible our face the and our automation Our RX capabilities not easily through capabilities, industry technology. not that our the combination and expertise, skilled independently cycle are in We investments technology,

small net several workflow use balance optimal used [Indiscernible] authorizations, the across cases about the first I'd our into and existing to automation automation AR automation, Now, new scaling We in including expanded areas, quarter. in RX like QX, talk invest while to capabilities and our data. our initiative and automation the cases rebilling, In business. technology, we the ecosystem. continue Cloudmed integrating legacy in

As is reminder, deep automated work this and and by automated seamlessly revenue cycle fully together. to allow be to rules cannot that initiative expertise, workflows our for a focused algorithms efficiency human-centric operate on leveraging

ultimately enhanced systems. Our We standard the This turnaround reimbursement. to to fingertips accelerate between information team at their specialists leading need to interoperability leads new increased suggest necessary increase accuracy, our for have and our revenue corrections hire they and an accurate customers. onboarding, fewer denials, payment to faster tools times productivity, higher

data work find revenue customer for we RX our to standards terms by new automatically to machine to uncover and enhance our customers. competitive more and advantage deploy enabling Collectively, us models analytics investments missing map Lastly, on the these more learning-based front, to better charges. prioritize

billion with providers annually like commercial for XX% presents Commercial would long-term roughly us a a end-to-end modular in activity. runway their over both growth. in-house. growing This where manage operate processes remains still cycle robust $XXX activity and across market deals. revenue at XX% discuss to sizable end Next, We I of and

top of pipeline, into pipeline. leverage the continue And access to we businesses. progression entrants the side, the to the systems and Cloudmed to cross-sell end-to-end end-to-end commercial to and XX XXX engine new customers our of in partnerships opportunities the as as On modular across saw our well we drive

up. customers where solutions they starting meet in seeing side, activity with demand modular is equally pick cycle We're our denials On journey. from payer activity ongoing their driving customers to increased end-to-end and are for modular strong Cross-sell that challenges the remains revenue AR interest solutions. also and

We physician QX. in advisory for offering Cloudmed modular have in base, the uptick particularly an also legacy services sold seen the RX into

closing, In business. optimistic is our about our team

a great highly customers' have mission part We a complex operation. of our managing

We opportunity value offering we best a of a proposition, ahead most highly more grow and strong them. the to the our dedicated than serve importantly, us, large differentiated to Health team have providers highly have and services offering ever market a before, need a believe we company. care

over review Now, to to call turn I'd like the to financials. Jennifer the

Jennifer Williams

everyone. you, and good Thank Lee, morning,

the We million. grew Organically, adjusted million, revenue grew XXX.X almost XX%. year-over-year, EBITDA are and was RX report with year-over-year results and Cloudmed to up up quarter quarter X% XX% $XXX.X first revenue pleased of year-over-year. solid Cloudmed in million, of XXX.X revenue revenue XX%

operational to growth. with discipline was some and million fees grew costs XXX detail on expectations shortly. EBITDA ahead revenue or of for last more of which I benefits, timing of on Adjusted of Starting outlined earnings call, on year-over-year. our our color Net will million XX.X first we cost due XX% provide operating approximately

year million, calls. and fees on year-over-year by of payer driven a lines compared end-to-end year-over-year with at On X.X QX down million. the Onboarding time longer of in totaled million, as decline The Sutter XX.X transitioned was customers. prior basis, low primary growth driver XX.X mid-QX last QX. other compared which expected down of Incentive and is Health, physician to we QX combined X.X single-digit million last revenue up to sequential discussed year, was

by very are few the we time months. modest, improvements in in While lines recent the reimbursement encouraged payer last

the of XXXX. of start at incentive continues Nonetheless, million expect However, the by of fees the AR of to to to historical the certain aged than we decline our quarter incentive to fees XX metrics year reset continue customers the the normal QX XXXX. This, KPI balance resulted higher a for year trends. relative of for be in to along ramp with per in the end

XXX.X XXX.X Cloudmed, by AR, XXX Modular driven Cloudmed legacy was QX, denials, and low our quarter, million Demand which and offering single year-over-year. business up first for the is of solutions our the [DRGV] legacy other in RX [ph] which drove physician growth revenue advisory the for digits. services. means in was growth million grew for while RX revenue contributed million

million, costs new driven Turning partially to Non-GAAP the customers, global to services of workforce new Savings our investments was increases. This cost for rationalization, $XX.X from automation, increase transitions, expenses Cloudmed, onboarding offset operational growth. $XXX.X up QX our support to in year-over-year. net was by and related and quarter. these of million vendor

is synergies; On and timing expense operational paid a finally, reasons: health and timing cost cost expectations basis, of three, three due two, care of half Approximately non-GAAP sequential services $X.X and to declined number discipline number costs in favorability cost off of benefits to time realization accruals. the number related. for compared certain of functions; QX million, one, our

the expect in these favorability quarters. same continue incur future in costs to we expect Therefore, at year. not do the rate will We

$XX.X expenses were estate as Compared of to these Cost expenses SG&A reductions. Non-GAAP year-over-year, and primarily down or part functions X.X corporate to SG&A up efforts million. in were our the X% real of due million $XX.X drove savings non-GAAP integration last synergies million quarter, Cloudmed.

On EBITDA million, the incremental offset for a investments adjusted which cost. contribution customers. revenue basis, year-over-year, was to XXX.X quarter was to from the by Adjusted lower sequential new due was EBITDA million driven $XX.X XX.X up million, implement up Cloudmed, in primarily by and part

Lastly, expenses of in the were Cloudmed. XX.X These incurred million related to expenses. primarily other we integration

the achieve call, on towards earnings cost last in to high still the of $XX our on $XX million mentioned to I As we range million are XXXX. end synergies track

$XX.X the in employee were million million pay We end XX to taxes generated compared quarter. Turning and related debt and cash the cash cash for equivalents the from XX to down, million of We for to million of operations sheet. million vesting $XXX.X March at used CapEx, awards. end in equity XX the million, of balance for Cash $XXX.X XXXX. at

We also QX. in voluntarily revolver million of our repaid XX

Net with end was of X.XX the quarter improving debt billion our expectations. net in-line the at with leverage

to over leverage to decline debt course continue net expect year. We the of the

with million the continue cash from availability approximately also on at available cash to both end and revolver. liquidity March, and equivalents maintain XXX our of We ample

on adjusted outlook. in XXX X.XX million. financial to X.XX to track billion our EBITDA XXX and of billion revenue remain to turning Now, million generate of to We XXXX,

April. consensus. For our roughly adjusted benefits increase to the expect EBITDA to health awarded to QX current care we expect from be in slightly, the and structure due the we Overall, cost with of favorable second merit in-line annual timing increases QX quarter,

will I one, we're with number optimistic in confident in ability In future results. plans leave our the of pleased calls. updating to industry are our remainder we seeing trends on our progress we progress the you you forward the QX operational in business; on remain our execution; closing, cautiously are we're and the making look to we and in comments: year. I three execute for the we three, in encouraged in are with with two, very our

Operator? Now, I'll Q&A. turn the operator over to the call for

Operator

of line Cowen. Please Rhyee the from comes question first Charles from Our Instructions] [Operator proceed. TD

Charles Rhyee

Thanks on for taking congrats quarter questions the guys. and the

wanted walk to Jennifer, just maybe help us could through Just a start bit. and Lee if you little

bit think working results what lagged terms operating I of claims some in on, fees in a is of seeing timing, posted. you are of My right, markets right? sort your we're the little growth understanding, of there's the versus of confusion that strong a that off

at this claims You're quarter's last revenues. of really into quarter's up kind showing looking that's

you If that That kind as there, what incentive comes base start. to mechanics operating helpful for would that? recognition as the of from can both of drives fees? just fees and some Where be the walk for well the through

would your – we dynamics then Thanks. then in growth very is through seen – where And lastly, on would earning AR claims walk secondly, rebound might we've you incentive sort the keep from fees? how in we issue, any forward? – aged strong obviously And maybe that you just claims the moving industry-wide of there see results that because here, can when

Jennifer Williams

Thanks, Great. Charles.

As you're our right. fee goes, far as base

base and So the quarter in that way arrears. cash collections our on fee it's are based the cash is works a collections,

on operating based net So, from QX. cash QX there's fee, our base fees are

it a a lag. of bit is So,

On performance. KPIs, in-quarter the it's

are it's metrics, statement, So, or metrics on the sheet balance depending for quarter. it's income if those first

so year. at statement the of beginning Obviously, reset the beginning of they reset the the income metrics metrics those and are of Some cumulative year. at

normal a where with the just they expectations the dip we're a comfortable of for quarter. beginning the in-line with KPIs our see at They year, but typically were seasonality we why that's are. So, of

half for as see expect some cash would claims public As the comes far result base as providers seeing would revenue. those our in, – and the cash claims that really that for we have go, the in second we're volumes of are those fees our to or QX, paid which released for our volumes

also of it's a that's mix claims, way kind acuity combination the ultimately would So and flow volume of that for But is means volumes us, the claims cash, then through. which payer not and remember, but growth it’s dynamics. just any

goes, AR down our as seeing our but improvement as and in AR AR has. historical overall higher aged and AR time And aged still we're lines, as than days is those has much come aged then far not as overall

that's Typically, those So something continuing to complex anyway. we're items are we're working just that watch. more through

that that something still So is than we're watch. continuing trends higher to one metric is that and historical

Charles Rhyee

[ph] this fees? in Is that So something level guidance year-end [ph] that AR, aged be [delta] into to the million] if get the already baked on incentive improves current other upside? you've the given words, [XX would

Jennifer Williams

Yes.

Charles Rhyee

Okay. Great. Thanks.

Operator

from Our the RBC from next Dodge comes Capital proceed. Markets. of question Please line Sean

Sean Dodge

time earnest Lee lines all Good in congratulations on client to morning. guess, put I'll QX thanks. Yes, added address last place the these of help I began Jennifer, the kind my of in in in to quarter. issues maybe that and you add resources ramp payer progress or the the year.

are lines, can you Or kind looked Lee, somewhere removed? normalizing. to time help The of Maybe in begin an those mentioned organization? there, issues you individuals added to the these else the and to just be be opportunity fixed is that As allocate there headcount

– much size of incremental to happens to begin those with had And then those. to of how help costs? those kind add once you kind what or us to, spend off, taper help

Lee Rivas

We take need can any would if have color. it. over to I time Sean, less you Jennifer, expect headcount.

point I'd at off what where say specifically customers building we However, added few a incremental addressing headcount. just have Jennifer's and

clients continue we onboarding in down the to expect next several through AR, the have to example, the We onboard work least to phase months. at aged for continue

first talk next combination is scale, more We of of Once efficiency, investment in after but getting onboarding two. And thing our X then application of So, global or a important. being lot we I customers. the the technology the drive the those efficient, get we super where enough, combination automation not more the and technology, months don't as it's year it see our is would so in continued that course but a last part And applied. our probably longer that, just takes our teams the about of of little that's embedded, or really Sean.

Jennifer Williams

that add there we to to start that as resources point one Sean, And metrics assumes would those take is stabilize. our guidance down

EBITDA growth embedded in quarter-over-quarter. what's XXXX of guidance that's So, our and part driving

Sean Dodge

extra there? added offer us Okay. size to you can Then of anything kind help the you've resources

Jennifer Williams

of as I mean we to haven't in it's that help investment stabilize. given a number resources there, we've added but as hundreds the far

Sean Dodge

Okay, great. Thanks again.

Operator

Bank the question Our America. next comes from line of Michael Please from of Cherny proceed.

Michael Cherny

question. the Appreciate question, Thanks ask similar to improvement seeing to morning. the turnaround flow but on in utilization. Maybe what payer see and modest Good terms a the taking of you the color, timing you're for from times. relative too, in type where

guidance curious you've payer And embedded incentive for also give don't that improve, you those incentive fee how visibility with of control you doing revenue work terms As far does the of you in incentive get on specifically? the that fees of some turnaround what into in see side, particular? fee helping much that the what's you factors out terms visibility? but in seen visibility changes any in so know revenue guidance, which within on the how the you're you're break times, I incentive fees the

Jennifer Williams

Sure.

interrelated AR a would the somewhat little aged XXXX and metrics, combination depending cash. customer, that they in but lot and days, obviously, have payer of time different all this AR we lines, AR, drives the bit we guidance, our So, have to metrics, our which all quarter-over-quarter they're improvement assumed on of a cash,

slowly. the AR will So, come that we down days expect

a our assumed quarter-over-quarter, there's magical to going to be the year. that be to going over by of improvement the growth We level that's different are shift end we quarter as stabilization and such fees but per be And $XX quarter-over-quarter that materially year. improvement don't million that such, slow the a believe get modest to

Michael Cherny

Great. Thanks.

Operator

Please Davis SVB proceed. Our from of next Stephanie line the comes Securities. question from

Stephanie Davis

going Hey automation a in Lee, do hoping on you more outsourced folks. the of investments on as in-house, in you remarks. to market prepared this to little an [ph] something go tech with an remain Is number opportunity my given focus now? more of just I Or maybe want you’ve Thanks this question. see want taking project? engineers this to And come [leapfrog] sophisticated touched the an you or the for bit in kind to still more a function depth. Do was do project? out RPA some else? you can for AI

Lee Rivas

Yes. Stephanie, question. thanks the for

Let make integrated me as I the highest to that. we're customer make the I'll advance framework end-to-end priorities, our make come you where when was we on if operational technology the know, laid it tech platform, It improvement, was and was and modular and sure It then our synergies. This, was to level teams, both just back and step commercial through just at integrate – the ensure of on we metrics. to our side going. investments the on back we you on out sure talk and on progress deliver the realization pipeline, sure deliver our

So, laid those four four my are first the things the for in months. team out I've

plan The me So, into Cloudmed of main are let deeper components our this tech. integration. year go

It's integrating cycle they theme revenue overriding – of platform a and the already we that. intelligent go before this last spent through automation, purpose-built the that preventing the So, it's Cloudmed occur. years through is is is I'll And what details building. problems X

any that health system, in manual just way let's the this to EMR. people has customers' and the so pick is So, embedded process our about think points touch

doing. there that's routine what processes apply for a to way repeatable technology, we're is exactly If through

your of dive at is application, agenda. just I the is AI the in our intelligent question before highlight, and I'd experience around forefront point answer other patient technology The automation

Entri a super need i.e., end, the is front team which technology to and patient more the for reduce registration, that and when about the it more me our customers intake. way hear talk to and apply Pay, visible to you'll So, to is comes labor scheduling

So, the technology. kind themes those are big of around

of Let asked talk components couple of you've machine ChatGPT, last I RPA, is, forefront there's models. learning, know question our answers few thinking, you And about application there's to large AI. There's of intelligent question. that at me time a us the on language around heard automation, which a which There's times. sure, some touch the directly for this, the of your

RPA So, piece, major That incremental Process a The of is of has reduce of apply Automation for platform. has the labor. to – been still also Robotic the accelerated technology historically need the part Cloudmed the application with while, priorities for learning been RX priority primary is agenda. which piece our part a major, machine the

all as U.S. to is us means So, the be might allow way we claims, and mentioned comments, see accelerate, about have, to where us data accuracy where all might I've access care think the models conversion. that customers, to sets data cause predict more to across and have states, XX and patient We're interactions. helps cash payer when we to that errors root able build types, settings. there be and then of able example, in early accelerate XXX-plus And with all access for denials, that then this be there said to predict and the volume the we issues on

of language models. newest last there's a call obviously technologies, around on a around last application you thing large out asked the and the discussion lot The the point question of I'd is

couple potentially a that just application on components, is, that. think me there's powerful internal huge opportunity business customers. our a reason a to those So, for our across operators apply close for the business that's of for make our And of themes very We couple this tools. and let

need data. our access. to is, modular you customers' data embedded apply across order RX are One models, to end-to-end We across and have in our and workflow those at in access

with quality second health care, some bar and a there from things different The high, is in applications, for accuracy. you hear consumer-facing of the is high more

there record. codes [indiscernible] clinical anything electronic think an or Just related and about to medical

is I'd say care. zero privacy key. thing error health is third for is in room There The

business team's through customers' view these components our huge to – is, a make our is technology drive opportunity all more for this even workflow. our So,

Stephanie. So, that there, let your me stop questions. hope I answered

Stephanie Davis

that then tie guidance. let's So, to the

You is year sounds like [read] had beat. more to some accelerate de-risking XQ. margin expectation of [ph]? these read-through some for a the is dollars tech this of in-line this massive Is of of these that there the investments? taking the extra in you're It Or EBITDA

Jennifer Williams

the of we're No, some we're timing original assuming incrementally or – QX of to and of compared intact, to just that going was not accelerate PTO. – timing our spend care guidance. health primarily the beat Part of

the quarter – really we're quarter in. half favorability in year. the So, first a early that about quarter. it's feel the about first We was in of good the And We're results.

good providers, time to monitor stay volume year. to will throughout and and and We optimistic, volumes the trends cautiously in continue cash, are the customers continue increases claims lines, stable seeing we're should, the feel to increased that it we'll will the payer update about and we'll assuming seeing that and that in stabilize we're into monitor our turn and and improve claim and continue it

Stephanie Davis

you. Thank Helpful.

Operator

Our question the from line from Guggenheim Jack of Please Securities. Wallace next comes proceed.

Jack Wallace

back a that guidance half And beyond. thanks the the wanted potential activity pertains and in the I bit of the it great next visibility, for for quarter. then to question as talk to on could year were comment year. if specifically this and for little Hey, anticipated deals pipeline deals about for just you

the reported macro impacted what idea that how idea to there looked Thank has when you. an the activity conditions Just have is, to and last that? you get the like quarter, trying relative for may

Lee Rivas

Jack, I'll things couple here. This that. of Lee. A take is

pipeline. reiterate the me opportunity get let First, just specifics for me let on market into business. And our just the then

about, revenue we've cycle still growing opportunity providers with XX% $XXX that billion XX% in in-house. as the a – roughly is you talked we as operate So, handling

And but talk the end-to-end, not love about just backdrop. that's modular. to talk Jack, So, I'd also

on both. touch I'll So,

around this into NPR visibility On of last the have of the back end-to-end side, X half we year. articulated end-to-end pipeline the what the clear months billion we've few and is strong,

you themes of let we're seeing. couple me of what give So, a

and of the So, the are are the we The of specifically providers, CEOs, conversations cycle things. a with heads team having board. revenue CFOs, couple same across

pressure, Continued or but been Cloudmed continued so and running not the and really having business that, in the need – business the key on continued side, technology is cycle. And revenue pressure financial for cost on the that putting for so end-to-end before complexity, year surprising, integrated has been their pressure, reimbursement integrity the revenue last a theme. the

providers solutions with may today around operation. point So, the technology often and and not be integrated need middle integrated other front, across each with that theme each back-end. purchase a component, this real the is there's their for And

us are So, deliver global right kind those is same the scaled a value of themes which RX allows the cost. at which quality higher or proposition, the lower model build that a into to

that in through in that the us our and certainly our cycle customers experts providers technology in with of clients a care number settings. and continued that all industry and and historic investment of systems embed of the allows have anyone team technology host sizes our experience go to any revenue toe-to-toe Our end-to-end experience with can of with all

The a balanced. and in to is about X target seeing this is of We're very visibility year. good X achieving back range feel the billion So, half of strong. activity billion NPR pipeline our lot

we've talked a want the in cross-sell key I just but modular highlight theme have to conviction even business. across and also more that about, opportunity our I talk about to

here. examples of So, a couple

to clients. least of systems. opportunities the into across XXX XX with whenever sold get across solution Cloudmed end-to-end deployed top the one XXX visibility business all That geographies, allows potential with customers are there have we that So, at team

that's first that So progress good thing seeing the we're on.

a is to business. end-to-end base legacy last cross-sell Cloudmed opportunity solutions Cloudmed the deploy into other modular RX The to the place the the our opportunity legacy significant RX for into is And is solutions base.

multiple there's avenues for cross-sell. So,

is seeing business, is which and What we're the modular strong denials the clinical accurate we're make traction pressure RX AR modular in coding solutions are in business as seeing Cloudmed Cloudmed and in a lot underlying legacy our would as traction, of business, as under well traction sense solutions. of customers continued the the our some continued where

is modular very this line opportunities team next very broadly has and several targets over and just the the into sight years end-to-end clear So, on bullish year. of

Jack Wallace

to Thank Sutter other terms Jennifer, of had any an and ramping, were nicely collections fee ramping call you. that let's of contributing the NPR Thank better helpful. in a And the or That's outside deals had same-store thinking some fees weaker been for just base sequentially? it really one The of, there historically have XQ growth, the for base pretty quarter you. up then extra you're impact company. quarter-over-quarter seasonally say, or the whether it, expected, benefit new would you. was than Was

Jennifer Williams

No, the it Sutter driven base by quarter-over-quarter largest as for fees impact was transitioned mid-QX.

our Outside the low a physician full base QX. it's you've collectively fee that, So got for end-to-end and in revenue Sutter for quarter customers. of other of a single-digit growth other – end

Jack Wallace

you. Thank

Operator

Stanley. the Craig proceed. Morgan from Hettenbach from comes of Our Please next line question

Craig Hettenbach

see XX% growth robust Yes, to thanks. in really Cloudmed, Good QX. in the

talked for think the I XX% XXXX. you've about full-year expectations for

and comps? So, as go on, kind year-on-year of just you you cadence about think the curious terms in anything of year how to the note through

Jennifer Williams

in first that our we the full-year around XX% modular We're strong. that year quarter, given and the about good there's business, starting in opportunity Cloudmed for we're seeing specifically the We're business, excited certainly growth. start We and we're But of the continue the about going like to Cloudmed about growth. have and the performance excited feel that to off modular it. we're we feel really year growth good in the there, monitor

based bit a about excited for first some cautiously and it but it. be continue higher We're we'll what like. extremely the quarter on opportunity monitor see results, the may to There though, growth, look little optimistic remaining and quarters

Lee Rivas

needed revenue on coding coding, the in either a have specific model as reminder inability One not very a errors Craig, human hire that solving of for the which drive of we've this just, reasons. they the we're example, grown otherwise in incremental a providers, add we to couple problem because business I'd and thing or error, to Cloudmed realized back-end. is for The resources solutions. is a in value for as fast This – way the is is, proposition would have

is we applied go the for market of on that our essentially the example, let's one revenue of to is And that data allows into the solutions. then collecting we sale, customer, with go post access pre drives to customer we're cash that our solutions of we're claim solutions, total the way And – in all getting of one to time to coding solution to to say, first one for that putting collections us our customer nine incremental that able the any clinical next filed. be or cross-sell

And where because the revenue have can the show we additional pass there implementation across opportunities frictionless solution and data on is are the customer the cycle. then first

are So, a payer, provider. allows we across reimbursement that prop, data just that level it apply state models strong predict technology. platform with us prop. add see this on have any Once charges country that data and a the made in of point, a and across of I just there matter to errors in then where I our system And value we as essentially clinical very earlier in a is codes same would value in

positive strong customers of thing go to solutions. extreme I'd is reason very network us to another effect why such and customers There to model say effects a had our So, very talk The each of value that powerful growth. with we other. is, a allow and last solutions cross-sell it's the our reputational

Craig Hettenbach

second color for just EBITDA. in back just Jennifer. or the the on expectations kind QX you year, And of for keep maybe tailwinds I thinking for headwinds mind kind to, about the it. half? Got How of half appreciate of a adjusted the are follow-up

Jennifer Williams

Sure.

and will grow on quarter-over-quarter, four One So, base margin we’ve that maturity sequentially customers. fees EBITDA is new really by areas. driven said

So, the posting on half based collections, some have as the of back and of think about amount just we year seasonality you cash in cash. days the

So that or EBITDA will second of year higher the drive naturally. growth the half in

that costs, XX vendor we as happen that new won margins With of last transitions, global will margin mature of begin maturity quarter-over-quarter. cetera, of to business vendor will billion consolidation et that new and we rationalization, just year, normal wins those continue

those as growth will and new The Cloudmed just on EBITDA in implemented, we bookings last and third about see therefore the incremental are quarter-over-quarter. will is wins and realization. Cloudmed, which new revenue is drive then what come board that drive it we'll talked XX% And synergy growth on

we integrate cost that realization, EBITDA will quarter-over-quarter. as and the drive to business So, synergy growth continue drive

for half loaded more those is it reasons. So, back

Craig Hettenbach

you. Thank it. Appreciate

Operator

line Our comes ISI. next Please proceed. the of Anderson Evercore from from Elizabeth question

Elizabeth Anderson

guys. single-digit so forward year-over-year that I of month one me. Thanks on customers. much sort customer as One, rate we about of in base on XQ the utilization? independently one getting the for accelerate like Jennifer, of seeing is, side the sort of or low mentioned I question. implemented the that for core growth questions you're from in questions, collections already increases seen the sort your given think just think, should payer Hi, guess prior you two One of

that in sort us any, can update consumer then you is an pay you indications distressed changes of seeing self-pay of like kind patient of give And patient on two, of Thanks. the or How portion? sort that area? Are or the any trending?

Jennifer Williams

Sure.

take As far the patient self-pay. I'll maybe as the –

on any We distress changes there drive would mix the aren't or the that on numbers. really seeing any changes

seeing really or far far the as the not that cash and we're as impact concerned there, significant about the volumes, as impact. growth something something far then So, we're that volume And we're as collections quarter-over-quarter. seeing a as the any utilization as that's not and financial

quarters. growth but volume of half back just seasonality based we've overall, year, There in slight some the the on single-digit growth across that assumed is the

the those that and it's the and works. the in because likely point impact in, So, cash payer lag base our way the lag again, the to more part utilization extent collections of a it, on to also kick fee of XXXX or your contracts of

by impact next the in XXXX it's on kicks comes to in really us because pricing beginning time pushed we and quarter a kicks midyear, pricing cash payer for if the year. becomes that claims lag, if the a out So, have in really of the

Elizabeth Anderson

it. so much. Got Thanks

Operator

comes Our Schoenhaus from of next Scott KeyBanc. question the from line proceed. Please

Scott Schoenhaus

up follow modular on execution cross-selling and Hi solutions commentary results. wanted your the congrats on Lee and Jennifer, and opportunities. to I

this So, driven quarter? if Thanks. the you opportunity advisory RCM accelerate an and be Did growth should near grew expect growth care see on comments to color by helpful. this mentioned see systems? services. prepared for this environment I low-single-digits, you we that solutions think Just continue improving health to throughout modular we in And physician any legacy accelerate the longer-term would

Lee Rivas

thematically year. if to just I'm what rest of what touch Let on assume want then Jennifer, and seeing questions the the me just answer just on you the we

before, with So area. by Scott, results a I'm And This a our personally Xs] as that very cycle modular RX [Class customers. that made solutions legacy excited our about of [ph] revenue reputation I is experts the opportunity to has cross-sell the team in point delivering high-quality for the have base. into team experience evidenced Cloudmed

of on services The areas comment is RX several physician we to solution. modular applied advisory made

in services, to our ability book So, are see about help advisory we excited pipeline opportunities end that is traction that our market. that where teams modular physician

where increased of business, payments the activity other piece. our see The place is level we VisitPay an in patient

delivering RX of – and have the day to talking customers, every we the We're introducing are is them technology model look, revenue modular that the this to value is heads legacy cycle departments. to about access And teams teams. them and essentially

So, overall, strong modular having business. that on and RX net to with essentially legacy continuing for legacy side, at opportunities AR of of are i.e., specifically RX some new rate, what grow solutions more denials the the at needs, customer conversations we we're then And see Jennifer? the more the Cloudmed a and with are business. forefront

Jennifer Williams

Sure.

digits. bookings, through some based go as assume, assume revenue business, expected to through be just growth the there, We – on bookings modular on did legacy year in single the modular the as still improvement year. we As but far RX did the we cross-sell growth

Scott Schoenhaus

Appreciate the for Thanks color. it.

Operator

the comes Truist Singh question next Please of from Jailendra Securities. from proceed. line Our

Jailendra Singh

back around improving. time my Thanks your to go for to lines comment I and good Thanks morning. payer taking questions. reimbursement want

Just macro trying trends this labor how like driven much understand of by better having is talked to like payers about shortage. you've and

been what behind would better temporary? say us your permanent you versus the payer is terms themselves drivers provider and lines? back provider that out time parse MCOs. claims And like like of understand Your these clients have tech to pushing likely Trying clients is in initiatives, helping you the worst

Lee Rivas

can high that the add. but improvement. we we we Let themes. see to steady what which anything me know, don't trends see are, then, the give And if but have Jennifer, is, you We're around Jailendra, year, issue. of still back hopefully, seeing to an normal the gets improvement. assume by dollar end some this steady being trends We still claims we the you see

aged already the – So Jennifer and then AR. mentioned

So, about how still year. the between high of the Aged back claims, you about and some challenges, which and is thoughtful AR we're being why us thinking half there's hear conservative dollar

make payer The in getting from is, what's more providers for lines, we're and become sets very more insight I'd point reimbursement has our payer by around geographies. that data time Cloudmed other our useful with those happening

as with into So, enter going able us and payers, they're improve to therefore, negotiations more forward. they to happening. and add? more it's to you'd data with armed allowing what's insight more deliver And be Jennifer, these anything insight

Jennifer Williams

Yes. I what's mean we've mix macro the resources as perspective it's both. as just of happening far versus of a a from the applied, combination

If at claims days public slightly. large down payable, payers the you their coming and look it's

as efforts benefits as there's some perspective is there Lee But of against a that well. mentioned, there from resource think trends adding we're some macro improvement. also some are I the So, it putting

optimistic is, worst trend we're continues. we're that and quarter We're the behind that slow that, seeing. and and it steady we so expect to improvement want into believe in a guidance, year. We assumed see about we our we year, the one that But we'll through sure us. trends the the It's cautiously make

Jailendra Singh

quick question. Okay. earlier, the One [ph] about beat] million in talked quarter. the [XX Jennifer, you clarification

you some management? versus remaining beat exactly bit – benefits, the million like what X by maybe referring there? was half [PTO] there. [ph] I care you're a clarify Can forward. little And getting color Just of was what believe driven cost and health you timing Some more said pulled like the general

Jennifer Williams

Sure.

primarily So, balances when just timing-related as claims. work were at taken it, PTO how of timing as the when end and well accruals, the of care each is quarters of items those PTO measure the we health

at haven't of the oftentimes, hit their So, just payments And about and deductibles, behalf. of there's self-pay the on it's before beginning more year, our the kick-in utilization. still people

on expense it's just believe a of more claims timing don't are our favorable really for We timing. to it's We benefits those full-year. the expect hitting. when So, be overall

– And so, back just later expect the those expenses we in year. in will come year

the expenses and that's of it's piece favorable the we are really there, expected. payroll on timing what And around more the other than favorability and So, costs then labor it.

we of expected, is Some sooner able had than that and we to based on expected. were initiatives execute

favorability driven there, payroll. really we so, it's And get but some were by able to

Jailendra Singh

a Got it. Thanks lot.

Operator

of Santangelo Our next Glen Please line Jefferies. from the question from comes proceed.

Glen Santangelo

you about, And of labor taking the for It and to about thanks favorable just I actually certainly question. something Hi, follow-up kind environment. curious I costs. my more just talking seems to stabilizing. on want payroll Jennifer, the were be macro was

softening And that pandemic, Because is kind outsourcing in seeing so, in time? obvious but Is you diminish demand of this I'm it that now struggling, to curious are any during outsourcing at point it things are hospitals normalizing, pretty were if way? the that starting like demand? overall guys it any seems in was

Lee Rivas

a an if where piece believe our systems a sweet There's why mix, anything add. but our on touch interesting has this, pipeline large-scale billion that just me will, Let system. billion of X of dynamic if if have I to X is and Jennifer purchasing from spot, you good negotiation power, power systems. and midsized to will, you of The the payers kind some very different with these look with of you large

So, geography I'd in that still in there on the there's may be not geography. that start hospitals systems, especially pressure that leaders three ones be may market that a

first there's So that. I'd that's the element point an make is of

point make It's large The just not systems. also pipeline I'd is Physician Group. other is our

to – of And a we have the making feel the of side why doing this, don't financial on other may if we recognition even they're this technology the we able pressure, to cases, invest look other it's And confident then what also year. but that's in profit the or back be many that you've not be may point pieces what working. half. in So, got are doing capacity we're the a

systems, hear systems. to some I I your terms comes midsized of pressure – don't in means woods when of the any there's So, the we're point. financial by on those just think especially it out of

Glen Santangelo

if Maybe could follow-up. that. for Thanks comments. I those appreciate I just Lee, right. All

you control the pipeline, potential way talked maybe issues the And the have maybe last to issues too those of and just into a or into while have over fade curious really lot big seems if it background selling way? like – kind I'm On those any a we it about the little maybe are a integration with seems Street do like any your that clients of issues the feel discussions quarters, in new make impacted with your that? of comfortable spilled those in efforts on integration under several we with some deal you're issues bit. starting

Lee Rivas

customers, areas. hasn't do generally my answer and very those but of it are for for is no. customers cognizant especially same what's that making we making right the specialty those sure No, we in sure like-for-like Glen, market, impacted, seeing happy short they're good in things they're

say, I focused on making sure any little So, would happy. positive, very are very you impact, if chatter, customers will. we're not But those also

Glen Santangelo

comments. the for Thanks Okay.

Operator

Please Baird. comes proceed. line Kesavabhotla the of from question next Our Vikram from

Vikram Kesavabhotla

to just up Yes. question. Thanks for I comments some the on taking NPR. on follow those wanted of

maintaining And think what then you to that year normalize in Is of is I XXXX. think Thanks. your level seeing to to I $X sign forward still separately, in billion. And the about capacity Are justify going onboarding point the do of now NPR expect you in your X you another some fiscal activity that at those to deals? point? do expect at up that previously So, expectation? or you adding capacity about pipeline billion talked enough

Lee Rivas

then you can timing, but predict any half. on answer, It's confident these to short the tough about feel the X in end-to-end a billion. good back So, is deals on in Jennifer, we we feel of add large point, capacity

Jennifer Williams

it. XXXX billion is capacity, rest onboarding NPR wins, XXXX. of to on far that expect last the new as that XX X announced XX And in we and to begin of currently The XXXX. we year of as then billion XXXX of won so we're we and remaining for deploying And X Sutter as into billion billion, had

XXXX. drive about the need billion we X that year the billion plus in will So, win X the capacity think for into half onboarding second Sutter remaining in range X to X as capacity, expect billion a to the of you of billion onboarding

We to still what visibility have onboard XXXX we on we addition those the the invested in to constantly ramp So, pipeline. one on we need to onboarding monitor, it's wins that we in through need based that of an and levels the to monitor current do won That's and we we that in those capacity last to our we'll capacity. down? we've future. additional ramp need investment to take we and level based we'll that can for the at something Do continue year, So, – the expect remain of into already expect win onboarding? right

Vikram Kesavabhotla

Okay, you. thank

Operator

question from final Garro comes line Our Jeff Stephens. from of the Please proceed.

Jeff Garro

is morning on are Also, and the lag the curious then good And And what of customer on about Yeah, ecosystem. capabilities and new capabilities the driving integration it just deployment Cloudmed needed? we any impact? Or between think intuitive in users? batches. how these capabilities the RX RX's is squeezing versus and lastly, of kind progress Thanks. should for of ask training financial the incremental extent to about thanks into for coming to just in. want I incrementally me

Lee Rivas

and on me the you Jeff, Sure. quick framework let I have just think integration. we a as Jennifer businesses. integrating we give Cloudmed – how And experience just a the backdrop, of about lot

businesses and a then. we're together working the XX we started similar path I pretty on think you know we this, years ran with integration ago

synergies. learned commercial. say very The on where of would we what we've on operations, based what today. track I say, big technology, I'd integration, buckets, and realization are are and Here's three much We're including on

front, the pretty have path and having any On the a always go we're you Cloudmed to how on as well unified methodical purpose-build be these pre you on take technology with platform. that. integration, the platform about technology But time, based things on data to

opportunity an over India, the RX some capabilities to to of On apply the is in Philippines, operations side, Cloudmed. time there

And on something commercial back very the be will much working side, on the integrated So already. that year. are this that of is teams half we

capabilities. see sales And that's opportunities. leader, a leader, as the commercial legacy ton the cross-sell So, modular, of both well RX the we as running Cloudmed modular for example, the where is

back the and And done it the frame say, like with the all components big or technology, by organizational are is would on pieces office, there's that we're always piece, this done. most, ongoing largely So, culture are the I'd just I of so time. although year, way integration end through

very integration feel good general. we the in So, about

Operator

I to like over the Rivas call closing now would remarks. for Lee to turn

Lee Rivas

joining thank you, today. us and operator, you, Thank for everyone,

comments. closing few a Just

for First, we very to our ability commitments about XXXX. deliver on feel good our

and that heard from Jennifer me. think clear I you loud and

execution is, focused point second for we're on operational customers. The delivery and our very

and dynamics on you significant theme, the questions believe and the end-to-end strong, both modular the on side third on commercial we end both our all The around think market opportunities, I in as side. pipeline modular heard end-to-end remain the side

theme on very advancing to We're focused other our is The value agenda technology to and drive efficiencies our technology. customers. on cost today

forward on So, thank updating look you to future all for today. our joining We you us progress on calls.

Operator

and today's you Thank call. your gentlemen. Thank you, conclude participation. ladies This does for

You may disconnect. now

R1 RCM (RCM) 4 May 232023 Q1 Earnings call transcript