RCM - Earnings call 4 2023

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Operator

Good day. My name is Ellie, and I will be your conference operator for today. At this time, I would like to welcome everyone to the R1 RCM Incorporated conference call. [Operator Instructions] Evan Smith, you may now begin the conference.

Evan Smith

Thank you, operator, and good morning. this safe be Private harbor Reform of during pursuant forward-looking Securities made Act the to provisions XXXX. statements call considered may statements Litigation Certain of the performance, our initiatives, cost-savings liquidity performance position, and growth about are strategic opportunities our statements growth future any about our particular, plans In and our including our forward-looking statements and future financial statements.

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

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

and Factors our or heading in synergies cycle development included within quality the report on our of limited financial market of and ability most acquisitions of customers, and Cloudmed or XX-K. conditions existing time the and from results a under these prospective variability customers of markets Form offering, our and discussed Risk our competition management of factors, market forward-looking the outcomes of successfully markets recent retain for to, including, acquire the to the customers, revenue factors timely new may ability Acclara, materially result inflation, of potential and the in anticipated our annual and lead the but including not benefits high the as downturns various differ those achieve to global Our economic control, statements beyond

to number. be this call that results referenced will nearest whole Certain rounded the may be on

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

to press Lee? For of please to non-GAAP refer GAAP metrics our metrics, release. the most a comparable closely reconciliation

Lee Rivas

Thank everyone. and good Evan, morning, you,

need company's history. share strongest provider of increasing strategies, about believe The value I over centered with and their As a and realize has also of a scale are partners value and time learning reflect the wide be they around on they deal time. time. challenges their great partner in in cost, position over future we and and the their are market to a by for my capabilities, last flexible improvements want needs that with I of I deliver while The faced learnings in the providers conversations current who how some ensure customers, revenue needing in dynamics. technology heightened has can yield quickly I year, why being confident breadth prospective spent involving quality to the

partner an with has a of build from scale with with this fits cycle. the Gen RX Customers overall technology them market, models patient anticipate can want platform sets application want AI automation labor-intensive accelerating is challenges apply and ability and domain AI over regulatory, data physicians role large that acute a to patients' technology We to them along time. and experience. a partner They expertise who their and to otherwise to and ability help believe the labor evolve needs revenue process, that improve the leveraging leverage in the structured data half unstructured almost of and language automation global the and our into to to the our

end-to-end the our onboarding I and execution continued an customer expanding new focused over area deployment and targeted cross-functional recent or a end-to-end comprehensive with to solution capable management end-to-end our on a that time. revenue Whether optimize customers of navigate cycle operations functional partnership modular to modular also time across and with of accelerate, teams solutions has highly revenue recovery. a the support wants solutions, with support, spent largest team including global RX customer. are performance and our of

into enter to This broader for managed to that set brings blended more also functional point that of are customers. higher address for which margins our solutions, already customers. partnership the We points deals while a modular also I significant have a modular portion out margins an with services the near-term drive deployed with flexibility higher capabilities embedded opportunities expand more would our EBITDA future. end-to-end potential into pain of and successfully than the adjusted XXX establishing are and in

a is opportunities. this cross-sell believe We for expansion anchor and great

metrics aligning increased we functional solutions spent global and costs reduce our have efforts believe value time will resources We new our also to our to our operations, scale for a technology on key leadership at and opportunities team, customers. growth. core focused our initiatives. to and As these create customers, enhance operating our advance stabilizing deliver deliver several continuing to further

been one we year a for believe over strong made progress coming have solid and and financial significant built has where It have sustainable and performance years. productive I foundation growth a the

customers highlights for full We strong customers. and revenue, Our our solutions billion of approximately million results our value in adjusted delivering our market new growth modular our of to EBITDA performance adjusted We to ability the in and delivered full global the with EBITDA XXXX leverage margins scale. solutions. demonstrate strong XX%. for $XXX double-digit $X.XX demand end-to-end by of driven our delivered operating effectively commitment ramp continued our This growth

EBITDA commercial both revenue to expect million Providence $X.XXX As $XXX and billion billion and including range Acclara million, $X.XXX contract. the adjusted $XXX we of the acquisition contributions consider in of XXXX, to we from

divestitures revenue. disclosed RX's continued in double-digit in XXXX growth our across our and offset low-single-digit growth modular reflects As base, outlook we growth earnings attrition, our our underlying existing previously as customer end-to-end customer well customer outlined continued in business, as including release, by facility

with acquisition from year X. year revenue provide million or other EBITDA XXXX that XXXX already million of more more last, than growth XX% the $XXX and modular and target $XXX in the booked than incremental expect adjusted recurring and entered will our contract We we and Providence and revenue in by in Acclara

But like to full XXXX and quick business financial in a achievement focus year quarter on update financial XXXX and first, results fourth more would XXXX our the cover will our XXXX areas. I and give Jennifer detail. outlook

to industry financial complexity remains continues First, labor as demand regulatory for face RX challenges. solutions the pressure, strong and

in Continued bookings, of ability our as continued the modular drive within our Acclara end-to-end as and increased acquisition to demonstrates diversification deal our business. well combined the growth, with strength Providence

acquisition relationship of partnership acquisition. resulting XX-year base. was investment and The cross-sell Acclara and the key a of with the a represents an opportunity Cloudmed first partner thesis Providence This Cloudmed the marks growth operating significant of into

may Providence While demonstrates opportunities scale, be this within base. significant at potential all relationship the customer the the current not the

add we traction embedded leveraging term activity, has opportunities RX initial our our believe go-to-market the near solid new potential in over seen will for time. In addition, growth with already model flexible which

path best of for both solutions and into back As additional we to The our smaller anticipate setup adding fourth a quarter, with office, determined an is solution. the by we modular year. who X forward interested includes their least and enter the full example, well in and signed at parties late of managed leadership, outsourcing end their as a RX closely services partnership. initially as their the was assessed operational Working end-to-end customer deal their offering team needs in the the modular financial NPR

and revenue the to revenue costs to cycle down to customers yield. Second, RX apply continues increase help drive our technology

customer global and continue than now leverage issues $X a and address solutions, for NPR, XXX scale expect patient encounters data set customers million annually. the With covered We trillion on to representing XXX critical base. based growing develop invest, deploy technology to new of we enhance to structured more our have over processes over and unstructured

data, more employees models, XX,XXX approximately our including footprint, incremental AI the of revenue will cost access global our enable automation to will yield at quickly. with optimized and along Philippines, provider and cycle. We specifically language large our throughout initiatives real-time more believe many performance India power this automation a across Gen deliver We business AI the lower revenue Gen and our believe U.S., and parts to

areas which in largest out focus spend. management automation, some our of denials improvement next which are action our teams, initial is most frequently, represents reading new before, perhaps account operator and oftentimes several intelligence the and of understand of AR the AR recent areas X prediction has automation rolled quarter, In the we details. for an rules models, been account revenue to to numbers. coding of our operational that operators follow-up X opens by Our our history available multiple times staff those worked of to begins thousands account When work,

the With appropriate be This operators next details action that this what the should relevant of foundation when immediately new feature, presented a the with action of and automating state predicting possible. for a that then and is summary current account.

customer potential I our map legacy will for Third, have our profitability, opportunity to accelerating the continue company's and road growth and a driver enhancing been and be a mentioned, with solutions larger technology as key Cloudmed base.

delivered synergy Acclara the deal. in Cloudmed Cloudmed from believe well. our provides XXXX. integration meet approximately additional the synergies million this progressing from We an addition, million anticipate synergies targets XXXX for very in our in the to or success exceed and In $XX in additional synergy is ability confidence realization $XX We

adjusted flow. initiatives We in a EBITDA and cash believe will growth free Finally, we service. our create these revenue, sustainable and several executed customer embedded operations have to strengthen initiatives strong and for foundation

to create growth company diversified of XXXX strengthened XXXX We synergies summary, the metrics, as reflected base, a delivered of In outlook. our next least execution, several outlook several while accomplished stabilized in the said was for in customer challenges solid business, signing and the addressing all at year which our a ahead last year, including positions priorities. Providence, this of on I beginning customer targets, which years. are several the of we at our and realized We base our

focus revenue shareholder are road executing order relationships provide functional wherever our have the and customer's customers' cycle excellence on deliver better one, needs. We and or which drive our our our in specific deliver flexibility aligns to our measurable their strategy performance, improved and believe RX; three, responsibilities. this aligns results two, capabilities by: In to platform focusing better drive map turn with continue to technology go-to-market have value. both meet improved will in operational and XXXX, which global they to managed long-standing excellent scale to of objectives journey; our recently full against who these models onboarded results; continuing needs with are upon our team services, leveraging areas each to to and leverage them resources, will four, deploying We address expand who will greater in customers ensuring financial

me to financials. let to discuss turn Jennifer Now over it

Jennifer Williams

morning, everyone. Thank you, good and Lee,

business. outstanding We XXXX of are well quarter year two, focused both three, growth; down full are progress very as continued for of with to the improved XXXX, execution making X financial as and debt. a pleased expansion; as and we generation margin results revenue we operational for cost our In the and forward the were on objectives: discipline and key cash one, financial drive pay fourth

This significant all not made We of would results I headwinds results shareholders. across for our to be business. our walk our XXXX XX,XXX then quarter and across their without spend progress despite results, contributions like some through possible our some our would the continued outlook. year team. financial X morning, plus associates full and efforts to the deliver I all XXXX would on thank results for global fourth like These overall to objectives customers our to our you time

quarter leverage. delivered $XXX.X million cost $XXX.X to Revenue business effectively our of operating with almost strength fourth the EBITDA of to drive demonstrating the million We ability in adjusted continued in manage solid revenue X% the year-over-year. results and across grew quarter and

a provide more me drivers. on detail Let the revenue little

fees in our million as quarter growth fourth the $XXX cash year-over-year. onboarding increased that new driven was continued Growth in from by existing annualized of X% net low-single-digit well business end-to-end base. Our customer as collections the operating of

$XX incentive line with million fees Our were and expectations. our in

primarily and solutions million. cross-selling other of Double-digit with our to modular was growth driven year-over-year existing another strong customers. posted Our revenue quarter revenue revenue by $XXX

receivables. expenses to was prior million driven decrease across the Cloudmed of year. services primarily customers down The for prior were from quarter. million, million Turning $XX.X the losses year-over-year million, maturity approximately onboarded from cost Non-GAAP the nearly quarter. QX combined provision year-over-year $X a SG&A expenses with margin by the credit quarter our Non-GAAP XX% The up $X.X included from of was in for and $XXX acquisition. in nearly XXXX, to down realization fourth synergy million $XX related

the for account the business factors due macroeconomic current customers specific in their X of the particular, environment. and majority In to charge

driven year-over-year, are the expenses investments the offset SG&A by technology. of making X% Excluding impact realization, by in down provision, were synergy we

integration cost with priorities with Our drove of continued quarter $XXX.X of EBITDA the discipline adjusted year-over-year in combined growth, and XX.X% fourth was XX%. Revenue growth execution million, these and our margins of results.

$X or million to facility Lastly, the $XX efforts million from in we transaction well early technology charges. includes the incurred roughly as our integration. through expenses other almost Acclara as decreased And by integration in we expenses announced of related and earlier, QX, in also Other almost the mentioned Other progressed we more teams than acquisition Lee related as XX% as December. in of $XX $XX for acquisition year. million expenses Cloudmed costs Cloudmed cost synergies realized million year-over-year

full Our quarter fourth billion year approximately EBITDA $XXX and bring results to to our revenue million. adjusted $X.XX

Our year revenue continued realization. across basis synergy growth, XXX revenue nearly of driven was our margin and full our XX%, up mix operating solutions, by points, discipline

of comments provide me couple cash let Now balance a the on sheet. and flow

and in significant generation equivalents been were $XXX.X September. $XXX.X Cash flow focus past the of a last has the million end December XXXX. at mentioned, compared million at of end improvement previously a and the over cash in I year, seen we've cash to As

full operations, pleased the in area. in million cash we generated are we and this our with For $XXX execution year, from very

also in our quarter year. the of We fourth the balance fully million $XX $XXX across paid the million full and revolver down totaling outstanding

billion, at result, the was ratio December X.XXx. of net net debt leverage a a of with As end $X.XX

the liquidity revolver. and sheet end with also remained on at balance approximately availability Our strong our on cash December, from million both $XXX our of

additional last expenses a borrowings the funded on company in we XX.X up to stock. the credit Acclara month, $XX million cash $XXX As shares the we million senior with hand, announced of on related draw $XXX acquisition The million acquire January and completed common of to of facility. for fees Term warrant and and an of in cash cash loans B million consideration revolving and

XXXX our to move outlook. me let Now

million and of reflect the of contribution income billion we with million and GAAP Providence. to $X.XXX billion, million, growth $XXX $X.XXX of Acclara $XXX of to operating adjusted expectations to XX% $XXX of XXXX million the the of EBITDA XXXX, contract X% impact revenue X% with $XXX For XX% year-over-year. to expect growing to new year-over-year. These both

related for rate Our were our guidance the rate their base and also cash go-forward and quarter, normal year-over-year impact In operating collections. of base million. seasonality of our growth Adjustments fees low-single-digit customers assumes net the $XXX generally run which customers, to well we improved expect were facility run include by at attrition the driven fourth the in to this divestitures expect XXXX. and we pediatrics attrition hospitals, facility as Health to impact APP Customer occur part AMITA of XXXX. is several divestitures AdventHealth Ascension as of X JV including in announced for and dissolution, as

contribute In Providence of year addition, fees operating the in $XX beginning million to second of expect for million XXXX. half we to net approximately the $XX

outlook. II we conversations timing, continue XXXX to we from leadership scope constructive in our have federal have any excluded and with While Sutter Phase on contribution

business. mid-teens We low-double RX expect modular modular for and following legacy low-single-digit grow the the growth growth excluding in includes other Cloudmed of assumptions: Acclara revenue, impact legacy solutions and to This the digits.

expect to million finally, million to Acclara And $XXX revenue. in $XXX we contribute approximately

Acclara classification more quarter and and fees we between results. determining net other revenue detail modular our we'll We and in report the the provide process revenue when first of are of operating

a business, be investment We XXXX. EBITDA. million ramp we expect adjusted the upfront million Within on EBITDA adjusted we of Providence Acclara the approximately to And $XXX million have in Providence the of new contribute outlook, negative EBITDA in to range to to on for adjusted the million. approximately expect this contract to $XX $XX of the based $XXX expect impact

increase points. of are the Providence, EBITDA approximately and expected impact margins basis adjusted XXX Excluding to Acclara core

acquisition includes range amortization revolver $XXX to million loans expense maturation capital million. in and of Interest This expenditures and contract outlook million, of of EBITDA $XXX million of also revenue, synergy the the of $XXX the to including approximately which adjusted of transaction million in $XXX $XXX the in Providence the on other expenses incremental expenses. assumes related impact Term million million, improvement to through margins significant expect B the Acclara. Depreciation also and $XXX to $XXX million We the X% the $XX Acclara XXXX. in and realization of expense draw XXXX integrated-related

and has purchase We amortization update in Acclara completed. been will depreciation future once acquisition allocation price quarters the guidance

we and three, for foundation opportunities growth four, for delivering stated, our number believe operating and Lee automation ahead future focused including in performance. areas: position of through new customers, As our have existing us on and value technology. we execution; with We new wins; key X a and the solid modular one, discipline remain customers; expanding two, established market other Providence

in to flow I turn to are We it our operating beyond. Operator, free over areas will and growth, optimistic profit sustainable you. focus revenue will that back cash XXXX us these allow in and now deliver

Operator

Our Instructions] Morgan first Stanley. Hettenbach from question [Operator Craig from comes

Craig Hettenbach

starting slowing that? in Just of on color the for Cloudmed, to some mid-teens synergies growth there's What's looks XXXX. this next but with or additional driving Cloudmed, million key then of also, good And year? phase any been growth $XX about moderating concerns

So terms drivers just and the to growth key help that you get of mid-teens mentioned visibility more could Lee, Cloudmed? color, in wanted some sustain in

Lee Rivas

Craig. Thanks,

Let level me highest start with the Cloudmed. at

in and and of a grown the and confidence and business and providers for strongly this leakage So area technology in many proxy which AR help our that growth to helps rate use XXX-plus is of growth technology in solutions Jennifer has receptive where NPR sources very which solutions, what on The years. I'll -- answer been to that year. the expand really is last the in last is year, comes of AI-driven which that know, as ways. increases very strong the has the we've providers bookings land post which our through has ARR, top customers denials had customers, COVID. across market a few others essentially from the broad data to particular the XXX solutions cuts with platform of seen base. business us XX all a you in deploy by platform highlighted this our some in your some place have systems our cross-sell And couple and gives into cases One, identify strategy, revenue focus been question very a

the feel rate. on the coming growth we into confident very So year

year to business. have progressing feel and another strong expect how good really that we're We bookings about of

gets run, Over the the growth but 'XX, 'XX, But long obviously, expect bit. the changing as we business guidance given rates continued long strong you on run, a growth. could haven't we over see bigger,

side, to up, the -- teams proud feel X very synergy they've the We've we back behalf years synergy accomplished on just what our the our On I'm customers. execution through the the has largely Acclara, way, achieved first related targets in dimensions. on multiple on a of the business, And business has of in worked that just us the across also of by lot gives playbook solid confidence experience integrating. execution, a it to

the detail targets. the But solutions Anything the the about also and driver a add, we very those year, of Jennifer? doing as good both as other resources this few of opportunity business, synergy of to $XX that go is opportunities resources, million, more $XX for in and -- drive later. rules of So incrementally feel costs automation, deployment our into synergy we to moving the continued overall, this. I hiring down That's can we customers quality identify million continued and feel like about marketing as biggest the really hire receptiveness for of The global well analytics the main areas facilities. us good and our

Jennifer Williams

of facility I functions, -- the the is systems driven all teams' et -- XXXX the synergies the add back-office more of and cetera. the rationalization, No, would only XXXX, were integration by in corporate G&A of most thing

most XXXX transitions. as integration come the will So from operational primarily the synergy realization in of related the to Lee global indicated

Craig Hettenbach

of follow-up. I evolved And That's kind on cash has helpful. touch approach want and leadership, of just this you on a under And quick balanced just shapes your your focus touch if growth, how and then flow. kind a that you how to can year on more priorities just Lee, beyond. between margins for strategy the seeing

Lee Rivas

Yes.

So Craig, great question.

diversified fundamental legacy look, we, our business, A The growth just we a me about first and and okay? business. business part good much we end-to-end lot prospects have the feel the a business in plus have lot back CEO right? business talked my modular That more the step very let today, for less say Cloudmed much business, is team more about So customer of year entire a concentration. the as the substantial said,

that So when means word they I wherever flexible, providers a times, you've me use heard that are. say couple of meeting

example revenue global services, of AR you use a and customer otherwise then in -- just know You resources, our scale where are all due the and integrity, they coding customer revenue look, of is thought And initial I our like say, not may we situation, end-to-end would more very say, follow-up or we Cloudmed, the may our as that engagement. fragmented powerful There processes customer, do gave, the heard sources a right? that the what given resources, many gave. given managed is situations their leakage accelerate the I example what technologies would to Which the dynamics, for significant maybe should it's financial see the the use yield our reasons. of for and solution of that better identifying their manage that technology, adoption is nature prospective that revenue we delivers customer a

main So in change strategy. the that's

business say the capabilities The around other lot data of experience, thing analytics, look, of has platform, a I a lot is, would AI. of Cloudmed deployment

continuation of strategy technology. of the and me AI a automation, hear talk about the deploying you'll and team So

language right Just to there, we large bit customer because have give and the are in embedded you workflow. we significant to of of in the models a win color little space AI a

what and in But deploy I back, the because we I you'll in gave other all about increased the and we access generally billing can to is talk -- unstructured, which hear the structured examples. more denials see and greater and Jennifer we EMRs, see denial me can middle, turn in host any data models end, to more just of be an AI, So know rates we just have respond example, the the space confidence like, you'll AI think systems, of the could expansion. to systems, our give end growth cost yield, you denials, satisfaction lower to margin drives claims and front, revenue XX adoption and successful example those as looks customer

Operator

from from comes Singh Securities. Jailendra Truist question Next

Jailendra Singh

question is health. first on My customer

You guys had another in $XX.X for of million allowance losses XQ.

these You that. big called out portion share customers representing total of how of you NPR X Lee, contribution customers customer how in these X or Can 'XX? reversal contracts, customers are allowance And or thinking your and about you Are you on those represent? generally a revenues X of much beyond you assuming from particular. this comment health, any if can even your increase in

Lee Rivas

out do But seen kind our denials. actually last let give lot certain in COVID, 'XX, a Jailendra, time start remaining XXXX, Jennifer with have flat done across made we I'll pressure, in what stabilized you've metrics, which on to over hand broadly, you the high metrics, core of clearly, then of heard areas, We've our question, of or moderate in more looked to growth. level incentives scorecards, and So set okay? been we progress the Jennifer. payments. Okay. me there's it changes on in what increases payer lines to part said just your about We post is

progress. of we a overall, lot made So

that HDR, Now you the challenge Jailendra, metric which take across is a industry. said, X

we've while customer, et on individual some cetera. across stabilize, So elevated depending seen they're right? an payable, variance You data can post-COVID customers. lot days seen look those we've at post-COVID, on a still of points

say, we not would So on what customers. for performing Jailendra, are I done is our

drive continue I of to have in 'XX, work adoption Sutter, and technology, where to the onboarded technologies We to mature customers. of to onboarded the some to with to the customers. Large there's of 'XX we accelerate performing good and we improve well hot about customers, processes [indiscernible] feel integrating for customers we're need customers' some of our very progress largest, more do continue most areas where some Phase Jailendra, in newly our newly automation,

how is around a of I are good customer things is metrics. of much So rated say lots class engagement solutions Jailendra, there. scale just to lots things would set our we even And the more couple deploying technologies I Cloudmed approach business on through the thinking also side, business, changing detail and which adopt our automation solutions. to the go doing how possible, really as end-to-end with of just pull our more can we, but One on new customer-centric as a in we as and in engage can customers. we also continue we're AI there, about enterprise. high be

So that's is still 'XX, to Jennifer? the in level. of would in lot What progress a I work do say at high 'XX. more

Jennifer Williams

Sure.

modular On assumes, the customer, do in other do that allowance X expect or And continue what with would customer size outlook as we'll specifically we them and still the XXXX. the is as customer. them guidance to small and and to say, is I end-to-end X with and It X of far the midsize. the business is continuing do business

of However, in doing their businesses they -- the a are restructuring bit business. both of

our into guidance. factored that's so And

Jailendra Singh

Mountain and you're now successfully on a guys Jennifer, running filing that's and of I experience to but might -- helpful. completely company. public then And And my new running company, had follow-up, the and not comment you be Lee willing understand then a private you

to about your public views company near-term an Just create general executing curious options on creating and value? strategy other contemplating value shareholder as RX's versus and shareholder long-term on approach independent

Lee Rivas

comment you're What Yes. I'd can't specifics. on say, I lot right. a the of Jailendra,

pressure, and a level of the adoption providers prospects Here's financial the of demand high payer business. services what Look, for cetera. as market who growth end-to-end is the industry high especially confident with of pressure, needs, may et end There both very in we across struggling of are say. and team a managed be labor, I'd technology, inconsistent Cloudmed macro

letter respond So letter, context, this the our So the the on I team a confident feel to would that very specifically came, I business received any of and in running reviewing okay? the board what question is request.

our will that of We shareholders, customers company beneficial advisers to a we with the would, as proposal, to determine any public as our action is letter and that employees. course work and evaluate most

Operator

next from from Stephanie comes Our question Barclays. Davis

Stephanie Davis

let LLM is because, us to Lee, build of on engineering be questions hiring want could get AI you -- much cost of it with that. side kind or versus really have look investment you as the little start could have get to much how you have a more bit what yields you and And investments Sutter. the I as like like But talk as feel on the tell going can cost AI structure to don't I side question to out your you some out? near-term about of an kind to me more about solutions build your I'll

Lee Rivas

Yes.

So a Stephanie. and unlock me tools the all Jennifer, is cost we start excited, then are I very shareholders value add have the strategy reason on in. massive exciting, team am the large and structure deploying they Look, Stephanie, questions on the systems, excited technology. The you any language is gave our our I let customers if and models into and for see surface, and barely stress examples with

business pass, that have our our collections to has value we cost automating are AR and but auditing for large time value has claims that model language customers appeals, good things. feel following and structure. on cost own immediate system, increased in benign, thousands and couple to that and these our we our AR collection, Automating sounds reducing follow-up, in immediate accelerating in are having charts person to workers So coating work very Stephanie, the the the We on for additional from about related of cost and the cash structure. with that on partnered follow-up, follow-up revenue need denials, running up deploying Microsoft. in individual summarize and first implications claims cash that other that through leads that setting, to to claim geography revenue, partnership. speed overall reduces obviously, of ability see that a payer directly the structure. A We any our to summarizing

it's confidence has very our time thoughts robust of data innovation haven't cost automation, lot customers area a net Cloudmed map gives we product of new with But talking operating the along continued products, have on with about. that just a our our into at products our deployment to something along more business structure? this road spent any and that This systems road about, of shipping We and and analytics of rapid become Jennifer, much excited map. Stephanie. on us deployment we're top from new

Jennifer Williams

Longer the you're where make deploy that we deploy in build be auditing be to payers. to these getting we to opportunity they're large good that incremental going as the in then operating, days, term, but end And specific and grow as of it be see benefits clean in still we in make As we that on the monitoring the back X Lee then about engineering coding whether people language out closely, sure have to be model early we early able and be follow-up mentioned and the feel far to we we'll can largest in in of so to AR and capacity, and denials, have those areas: the people cases much and use it. on -- back as in the models of the doing and sure follow-up margin there. to be number some and opportunities the it's models have with some is very higher. we're We're that follow-up thousands the it where will able we we're very are responding automate the of able to data right, consolidate investments Stephanie, investments, data data to that could

Stephanie Davis

then of a And lot EPIC They're deployment makes give system. kind little be of over. helpful. keep unique, time end front on you the more on what and That's that what the a for Phase right? there's Could And the color had biggest that to could change there's little some have line would They Health an a II they are? any in-house? the management potential a us side, holdups their bit want Sutter if

Lee Rivas

talk this -- topic. Yes, Stephanie, a let me about is great just

first a the that to fulsome phase with engagement. Providence start phase me the dissimilar looks too is Let not

-- So is to and engagement. back, remind first just So the I okay? middle entirety of that's the very thing the everyone. just a and want comprehensive This

not articulated purpose. forward Stephanie, it Providence, notice, with on did that we we're phase we as how moving You'll

customer. learnings to how lot contract, a a new have how of deploy, net integrate We to with on

you'll hear -- going forward. us hear You'll do that

EPIC. through I operational to and I'd business, thing experience has deployment second leadership from is advantages, The and -- standpoint Phase very if say have, was is revenue particular, support, of always we already will, of couple Cloudmed an metric But with centralized improve. there's strong our progressed that well. a room we you A -- in executive it cycle,

I'd dialogue continue simply just is possible to most at Phase regarding the as Sutter. and senior we II, So what as executives, the executives with say

in but an at news. -- assumed customer with our look are no in we'll I keep and our just customers. as have of quarter, Stephanie, We anything 'XX each opportunities you end-to-end But kind as overall, opportunity there this not numbers base of I updated our all there's new other

Operator

from comes next question Cowen. from TD Our Charles Rhyee

Charles Rhyee

parts should expect wanted least in think, or we the your plus this Jennifer, Lee, and to for dive of year. AI, assuming at nothing we coming in a then what lot can at some out sort targets. fundamental continued that on Gen guidance from of lot imagine about these and when is particularly all Gen with -- here a particularly Maybe actually maybe still happened here talking think AI, expansion. around EBITDA this faster pause could Obviously, just you into frame margin -- of give growth opportunity that Sutter XX% we underlying mind would about us would think moving growth your see a EBITDA the of with business. sort were you growth the sense with businesses? I to point and margin long-term a over Lee, side. kind and with for X how But of I I I time? sort here that see post Is customers Jennifer, of changes guys Because comments discussion you should said

Lee Rivas

go. Jennifer and start, Why I Charles, you then don't

heard additional you're the addition long-term maturity. way frame of said the all into and Cloudmed. you And but Cloudmed me adoption and you base is other and modular is very this I for services, a the have continued way margin. we And customers which it's business I'd of of talked is it with before, Providence. it, Just is prospects heard then the unlock adoption hearing our business topic and The significant the get optimistic just the following, continued incremental kind for growth. say okay? services of -- just Cloudmed end-to-end, be this to you've we to EBITDA us about across about Charles, And areas, synergies, Jennifer, and Then Stephanie -- last managed value what about think So the it Acclara about technology you're is other end-to-end synergies, business. The and the you which then that's base and frame factor. right, is

we really, So you in business, the year, to and in for in combination 'XX, know, onboarding better there said, synergy a and from potential assumptions and as is do high but Acclara, what 'XX of we 'XX in acute both made but realization then confidence physician ton even 'XX. this certainly the for which us the a 'XX, not confidence

business. we've Overall, about said parts. confidence and feel and the a of in But good any pieces we the very Jennifer, what in lot have guidance are those So specifics?

Jennifer Williams

of Specific the on RX side synergy EBITDA on bit synergy guidance, And on of is. couple continued modular investment at is then as which we improving. realization business core growth year indicated. admittedly other where over XXXX a at I the margin and business, lower doing and Providence if where think margin the the business, what maturity, significant next we is operating with years. realization today margins you the side, the new look the to the Acclara for significant in margins a drivers we're are indicative And core there's higher And of investment growth, that's a our the than expect

lot As the will lot far pay business right investments we're XXXX. of making now. A AI, of in as back to a begin in investments those

confident XXXX a investments and very of we're contribution in reason not long-term will significant AI, from So and which there's from we that the in good that beyond, 'XX, making lot most in growth. is of that part come the of feel those contribution AI

Charles Rhyee

And could up. if I follow

rebasing to Is growth we far So we're as half if and we we think there's kind jump going year Obviously, of tailwind not contribution. ahead. have through to margin related fee to operating that going costs next year? the some sort think Providence, net that, to from we're to out in uplift of sort to right, synergies But related going to get get a no if Acclara. back this year, hard to not it -- we're too onboarding of get think of to another significant

Jennifer Williams

future. given see coming but the that's we longer-term for 'XX, haven't the we're automaton then thinking some as There will and this benefits, start about a of benefits the generally. of We and of way incremental of year business the some maturity we're to guidance on the the of in annualize investments AI the growth Providence some from lot be contract making

Operator

comes from question next Our Grosslight Daniel from Citi.

Daniel Grosslight

the visibility how that the really point you on cadence I'd pediatrics have progresses? about the then like at do year, on as think cadence, this to recognition should investment focus the attrition? and year revenue we Providence any And of this

Lee Rivas

Yes.

handover of cover start and me anything the So I'll kind has if pediatrics high-level with Jennifer let Providence, also add. then and to just Jennifer to

a in So contract flagship very experienced commercial just and executive very to that remind a win, that buyer, strong, closed -- sophisticated everyone, was this team a January.

physician and the NPR, acute comprehensive the For the engagement business, of billion middle for Swedish not of $XX back. and business, the including entirety

regard very We are much onboarding. to track on with

well. other last Sutter. was onboarding, are applying from the working EPIC large learned lessons very which The are teams -- We

Jennifer operational that Guidance on our assumes goals. confidence a daily, are any all we comments the We points additional half, And checkpoints meeting of a level sure on onboarding timing have just have on lot second to of timing? goes well. really making meeting revenue high data

Jennifer Williams

Yes.

net As do be revenue will deploy expect far in that ready the $XX so half. happen a as ramp resources that far expect of transitions We're the second $XX perspective, revenue we're million and that to the ramp right we million fees that investments half making, the as And as out midyear. second operating gate. we the the can starting to investments of for phasing, to to we of we're year, starting from make

investments So those in will QX. start

time close. at existing the be the As That's obviously, will far revenue business. as of begin Acclara, to an recognized

So the close $XXX timing million million and for estimate adjusted we've seasonality million not $XXX there's that for of to the ton revenue there. $XXX begin mid-January And to in the of of $XXX million a will year.

So you that can year. across the phase

Daniel Grosslight

sorry. -- remind you can And

Jennifer Williams

midyear just transition transition. as assumes in to but going transition, the is I earlier reality as The was little the be a that pediatrics far go a some guidance year, say our longer. and may things there

think everything of going to the I at be QX. transitioned end it's don't So

but think will will will things it transition go second the some that half begin be in QX, the as to I there well. into of year

Daniel Grosslight

-- it. Right got

Okay.

how employees have there margin the you And juice you squeeze Philippines out remind the many Can in how more to now us in 'XX? a to shifting is much Okay. left folks by Philippines? further

Lee Rivas

Yes.

Daniel. we that So to get don't look, an that talk area this is about much,

question, center is very us global the helps brought you India. glad a of I'm for this valuable So but diversify outside that

and on on. actually some some deploying with We front facility of service, mostly We've that had so good successes in historically customers, patient focused technology, customer large really end, have the our people facility. leveraging registration X,XXX just over

a front end, -- to our is, also we're we So expand deploy outside And customer diversifying for this deliver not value areas. for opportunities lot just to an of customers but that also sure, area other will continue service. of will and

did we matures, So of the as realizing years are facility take able diversified value ago like it parts that to it workflow. and as facility on India more just customer of XX-plus is matures, that

good So there. the really overall, strategy feel about

Operator

Dodge from comes from Sean question next Capital Markets. RBC Our

Sean Dodge

free I we laid bake CapEx that in you year of how this earlier to both you've mentioned in, your expect years? the over performance we the 'XX, be? then what give that we much we flow, for should guidance to you be the couple thinking items. of on guess into EBITDA XXXX. And this cash of If And big on flow unfold drivers that maybe all update should about EBITDA how should Jennifer, out bridge then and detail trajectory next if So stronger into and more other comments cash growth. any

Jennifer Williams

we year as core flow cash this strong last that's the of expectation. flow said in percentage year. RX EBITDA, and a and still cash mid-XXs a second the the Providence be we front, business flow flow conversion very percent from to that cash the On We the before of expect cash in had Acclara for half

confident with for in indicated cash very will And Providence free business some the integrating cash costs So on flow to as to down as drag on we revenue year, execute associated we we're be the we then Providence first in integration, costs we expect going that. There synergies XXXX investments, have will we XXXX that it are and in contract. be flow feel and began conversion that. we on on that in bring business debt, with the the Acclara, invest a in as new half realizing that we as the higher early transaction expense the that of with have interest associated

flow cash plus in beyond, would into So XX%-plus continue increase we free flow conversion core And conversion of what the for as that. the expect and would that XXXX. we XXXX we've a continue that in that, to as flow mid-XX% range. at XXXX to the look to is move XX% improve the said on target in range we cash is we cash But

why flow that think don't we rates. those be still we conversion reason get So wouldn't to to cash there's able any

Sean Dodge

guidance be of allowances? XXXX now share you Okay. going think Should you then this of does there and what XXXX. in normal Great. lot in terms There's there year's in normal credit or assumed noise forward? guidance, you've -- can more a what XXXX baked then look like for And

Jennifer Williams

will It improved. be

the a assumes year But bit the I a that be improved looks in of normal assumed historical million guidance new off a and what's do range probably range, Our still will guidance. in $XX it will XXXX think of from that be What in XXXX. that's is like elevated number.

still higher but XXXX, historical of off XXXX, higher or coming improvement than some than historical. but So --

Operator

Partners. comes next Our from question Evercore

Elizabeth Anderson

question It would bit details One that. little change Anderson. about that hear Elizabeth your helpful It's approach in more about question? you customer a other maybe talk I to had, referenced can you be

Lee Rivas

it's expand harder some go-to-market just Yes. the how Cloudmed expansion contracting, specifically Could meet some about being on on do to But is, has market have into an Elizabeth, the Elizabeth, phasing of the a continuing have is to business harder being I anything to more later. The wanted the front lot what look, and mentioned position not sure. Three to manage and opportunities it's we leaving position as is flexible scale is just tailwinds the natural Providence, the we business to expand we right? standpoint, this on customer is expansion on imagine flexible for $XX simple. a One market from flexible scaled, of operations over next of services, than you for end? -- standpoint, Two think customer leverage how phase from needs billion opportunities? being could For and thing so end-to-end. time at Could NPR, kind lot customers. of a really just thinking about pushed we the the more NPR, right? our With level. pushed

we customer-specific has more what on been at to level historically do So side. can be centralized how we operational the a operation. continue scale what And

customer-facing the On scaled. we've side, also

other customers that them and is a macro is that the processes our address macro can best in highlighting how help happening have. picture and how dynamic, through the are, systematic a factor that to sure, a be these, be we to in that's some would our But RX analytic talent highlight, and of executive payer Elizabeth, control. I for it's customer-centric is about engage there them in mix more is engages pool less hiring help more So extent, approach, systemic lot equipped or payer we the more on escalation maybe control of approach dynamic to paint be means this for around are is thing with some about a macro didn't arm aggressive mention this to customers we data our talent I really and have we with our dynamics but level customers, deploying somewhat to and that is our expanding customer-facing, this and that more

So I'm level, I could the talking go that deeper at that's about. but high Elizabeth, what in

Elizabeth Anderson

of detail Got potential can in you XQ pipeline it. that on more was incremental deals That's you for XXXX And how that? the the color as the super about new I appreciate helpful. the win. think I on feel any provide there's additional about if and wondering timing we terms

Lee Rivas

Elizabeth, interest the very in just of time, Yes, good.

do of we strong the of of phase Cloudmed couple $X partners. of the the But end-to-end on end-to-end, a both up have think healthy I in and deal billion expect next RX is the billion range. side. on bookings good something to color year pipeline and modular another I modular. So -- those a across all less We've lot lessons as billion of fronts, of deals, pieces and large less projecting a end-to-end last $XX-plus learned large, some about is The of a of deal, land color. not but from choose year couple

Operator

next Vikram Kesava Our from comes question from Baird.

Vikram Kesavabhotla

then some some I sequentially fees. the talk just But broadly on more lines. payer curious I terms in XXXX. conference to get we time know about color assumes wanted your and incentive in could onetime wondering there. like previous the you just related can how you just stepped ultimately It to reimbursement topic, observing incentive on quarter. fourth ask relative the talk what out And down if the expectations about a you're called you the call. looks was could fees drivers I guidance wondering for those in in factors that what of out if played if about

you've I think of you're past, to in signs the see stabilization. that suggested starting

case it getting leave any particularly or or you're I'll that's the there. worse? if And signs curious Just still better of if it seeing

Jennifer Williams

some incentive On had the quarter. items that incentive quarter, in fees. fees Sure. Last we onetime increased our

a quarter-over-quarter so landed we we expectations. decrease had with fees fees. And line in knew Incentive we in reflected have that our right incentive would

contract And there One that really of QX. ended an in surprise to no related a were accelerated. was So it there. incentive fees for acceleration twofold. some was fees onetime Those

you just reclass And a then we incentive we fees contractual So will, a extra, X on out where was a if QX. had and of in change fees fees. operating had it's reclass based net into incentive where

was to a that or no either total it but change So from revenue perspective. EBITDA just movement

So that's the change.

a that's they quarter, puts We all, kind XXXX, first the modest do As timelines, little some improvements bit of of saw XXXX. to modest of across that we be improvement look payer expect same there's we year-over-year. And takes significant reimbursement don't to be it think I stabilized XXXX. pleasantly would would but in very love but payer lines. quarter-over-quarter, very what not the and surprised assuming. improvement what time for expect I we're to I going -- in there,

those QX saw a So then base in existing I remain expect expect kind we what rate, with where were expect given our of stable for our XXXX. result, run to that is will that we are stable and as they relatively would fees run incentive rate in And in consistent XXXX. a at I customer

Operator

Our comes of Bank America. next question from

Allen Lutz

BofA. Lutz This is at Allen

core recent like in broadly. nice your we that to for largest How seems compare And embedded quarter. customers revenue growth guide? that's in about growth be most with environment low-single-digit of your the think it the utilization of really seems guidance One should improving customers the How XXXX? more reported does

Lee Rivas

answer, I'd Allen, say the saying. kind short of what Look, is you're

to is expect unique. to volumes or very XXXX, We provider utilization each similar be

a providers. related level, of see the macro have than might We business at especially of different what public a to some base you

We said mix have which, volume customer we base. in as acuity growth projected before, low-single-digit blends our throughout and cash collections,

So low-single 'XX. see, as our there in pretty is we digits, we've we're confident were just in We'll been but projections upside? --

Allen Lutz

greater now way then, that there force Has the is And Lee, like on speaking services changed Great. and guess, in with is modular. seems XXXX? sales it managed a prospects I focus on strategy, the

Lee Rivas

we prospective haven't very think on. thoughtful is about asked the I customers think Allen, articulated I'm -- you customers. question, way take change is it's Look, this glad I being major about what the Yes. And changed we and the

going scale AR. essentially problem important which could and AR areas around technology but coding, we which thoughtful but around integrity revenue customer let our being onboarding. and with X of with we the probably isn't We project aggressive that X more very a be deploy on resources doesn't we may be very managed highly customer systems, deployment has can't technologies, to the control bigger and cycle denials global and take centralized keep how on. if drives other may err revenue fragmented from we longer Cloudmed, complexity that has handle a help So on It of metric services, mean are towards processes, those thoughtful them

Operator

This question-and-answer you. Thank to for Lee back right. All to like hand our closes the today. close session. over session I'd now to

Lee Rivas

you, say everyone. solid focused established performance. want closing We Thank on we've for remain a to future foundation and in of we What believe us. is, I opportunities ahead growth

and that global our technology and delivering is is automation you'll want continue our on Jennifer As We on to with more a this me existing customers. the about market is Providence footprint. for And deploying, other modular with value AI. wins; our lot focus customer is part existing focus base hear satisfaction, business new customers; Jennifer discipline to specific articulated, and expand as expand and execution is expanding really three, with through continuing fourth, we X position to talk two, customers, our new including operational

So sustainable confident as EBITDA you. first flow and our are shareholders. we growth, for these we on our customers, deliver we execute foremost, Thank areas, deliver will and cash and for

Operator

conference today's concludes call. This

now You Thank all you. may disconnect.

R1 RCM (RCM) 27 Feb 242023 Q4 Earnings call transcript