RCM - Earnings call transcript Q2 2024

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Operator

Thank you for standing by. My name is Eric, and I will be your conference operator today. At this time, I would like to welcome everyone to the Second Quarter 2024 R1 RCM Inc. Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Evan Smith. ahead. go Please

Evan Smith

Certain considered operator. provisions during call of this the Thank statements statements pursuant be XXXX. Act Reform forward-looking Securities harbor to may Private you, Litigation made the of safe

future our about impacts position, and Ascension performance cost-saving our the cyberattacks, financial cyberattacks statements any our recent opportunities, integration, particular, future plans our and statements of Healthcare and Change the statements. liquidity strategic business forward-looking initiatives, our growth growth including on our about performance and our are results, In financial

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

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

other development and achieve XX-K. Our of Acclara; to, the existing conditions from access result markets transaction ability including acquisitions discussed or anticipated or and vendors' for provided ability security under market limited customers; downturns and revenue markets; synergies not of our or of Cloudmed of to outcomes the of factors offering; or terms acquire statements failures quality Risk XXXX, those Factors retain but in with of or the X, by of inflation; and breaches unsuccessful the of the customer's AI; economic measures to or all; recent competition of other our various the parties; the annual market data; management and the including to actual global services information control, delayed the a financial August global variability forward-looking operated business to these or centers third-party data unauthorized our may customers; lead a at third including our prospective announced damages in disruptions on completion the take-private as results beyond potential on our service centers, in timely factors, our included materially benefits cycle on successfully most new technologies, timing Form anticipated customers implementation in and time heading our and high our report differ

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

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

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

week, the definitive we and execution or the XXXX agreement will stock TowerBrook CD&R, following the that of the we the remarks. acquire for outstanding not TowerBrook transaction, pending As the providing of a announced guidance of currently are own. common questions last our In company light not with prepared where reminder, taking X does firms all

me go let over the Now turn ahead. call to Lee. Lee,

Lee Rivas

and everyone. morning, Evan, you, Thank good

Change Healthcare indicated one in we delivered resulting well largest as operational cyberattack outage. of impacts As transformation, advance addressing our customers to the the from the continue technology strong our results and our on while as release, press

revenue million business resulting positive, quarter. EBITDA $XXX million in Underlying $XXX trends are in approximately in adjusted the second for and

providers. our the in platform to and be Before choice to reinforce our our want the in strategy belief I our provide in detail progress more and position I growing quarter, on commitment of industry for a

which increased the are improved our technology The data breadth best-in-class access, drivers power with provider in customers. our patient global serve value deliver unmatched and teams main economics, and operate of scale currently space. and XXX XXX customers. revenue and health satisfaction, of technology scale the We the platform XX of for of service our any we systems our over to enables most our yields We the over unit top

company customer the continued technologies events, We with the and recent ability our to agility response will our keep relationships believe innovation of to and deployment significant growth. support demonstrated high-impact collaborative scale, industry by of operational at organizations. and forefront RX drive close the its Gen AI evidenced the our rapid and As approach around continued customer-centric our

Now on priorities of let through half the the me first shift year. execution to our

execution. operational First,

onboarding supportive to First, a weeks let and am been over customer's me report are X,XXX the we transition team year. our seamless end-to-end begin last the of of track I revenue second half that of leadership cover in largest the new has completed associates pleased ramping the RX. onboarding customer. successfully The very execute to the on to several over to

members work perform team to are outstanding These technology. continuing implementing our

playbook onboarding our our which has objectives successful operational in stated the for contract. gives an this ability achieve to us large using are customers, confidence financial been other with We and that acute we

Acclara The to integration progress. of continues

integration We our time in confident are into business line, achieve existing our remain we the impressed we we to stated opportunities with continue our of our and are ability the synergy ahead We team advance integrate to at or as objectives. to offerings. believe

focused we While with provide the are our also opportunities to cross-selling going additional the believe strategy meeting our approach will disciplined and commercial customer growth a Acclara support to we integration, on forward. actively have base, which

Ascension cyberattack to some early in operations want I to color Last, announced surrounding provide related RX's May. the

cycle teams deeply our mobilized revenue operating are operations, technology we embedded quickly. Ascension's Given and across

of safety Our and the with patient care combined been security the continuity, priority systems. RX has outset from

procedures processes After records, corresponding which of and all the disconnecting hundreds we functions thousands registrations to the in the from need of systems, systems. have outage. into be resulted clinical paper manual during These implemented loaded across electronic downtime

systems, resume reconnected operations coming [ the weeks. report to that over normal expect and we We gradually to are have ] PAS happy we

the cycle throughout year. dedicated and in quarter cash of additional paper continue leading remainder claims in industry. scanning posting. in coding in resources additional our operational of assist the resolution, including the believe our documentation, brought in partner the bolsters support our outstanding to began and and to the have to as recover backlog continuity approach expected We costs We customers position These revenue are second

to me priority, growth. move Now our second let

execute of of The teams consists health to a continue expanding modular our engaged plan, to have on selection large-sized growth opportunities. We to including pipeline in explore partnership with commercial end-to-end and systems deeply our end-to-end diverse opportunities bookings our new new who pipeline. mid-

In continue cross-selling base, DRG to XXX-plus have addition customer customer transfer to to our we quarter A expansion an success adding this included core within a our example long-standing base. validation customer. notable with

dollars capture solutions, During quarter, annual we to are added revenue. which underpayment the million additional several charge add anticipated in and

functional new bookings gaining onboardings, also are traction this with solution. through We model our in continued interest successful and

expansion for a additional denials, in for a offering. CDI our or managed functional we discussions opportunities, were quarter, with partnership that Total mentioned million hospital service NPR an $XXX including regional inpatient clinical Last solution we and deal Performance for

by CDI functional relationship management and adding signing -- During the we quarter, denials partnership modular solutions. coding expanded the and this

expand base, We our in solutions. further believe the this we discussions growth for example to core and relationship include demonstrates are modular X within long additional to this runway

revenue enable to enable costs, Albert Gambs, and of and ecosystem, our further our Finally, Technology we believe Chief are solution new as executing well top technology Chief Officers on RX AI With with Product June, which priorities investors, shared our and automation will technology as of development In and access patient improve remains strategy, we satisfaction. Brian yield cornerstone a includes road data platform, drive our a large-scale Steve to innovation. down map. which

for operational foundation and base results. to also the is platform for user our how increase efficiencies improving we while satisfaction our are customer drive able employee First,

ecosystem. high with modernization You allow a the efforts, our us heard with important discuss scale data improvements our these infrastructure migration. to which started increasingly reliability, cloud degree team which is We our believe given of

use advanced technologies, associates. and our many Automation to work aspects continues Intelligent by our of Generative of Second, transform AI including performed

automation self-service. which drafting quarter, us We assists denied discuss and our heard clinical are appeals clinically by medical you focused our records and on automated AI-infused claims AI assistance, then application, experts an clinical appeal. for Last reading enhanced task

spent reduced members by XX% team to XX by this from time hour down minutes. X This our

to time In annually in this prior addition, long cycles, billion process delays most we preventing such We by the add the spent save and for revenue providers up to the potential auth. $XX some continually as the problems automation requests. in complex has care reducing believe to multistep task term of

develop to insurance receivable for serve solutions, discovery, and our scale expands each include Recent to patient and lower leverage which of revenue and coding our we examples products modular ways our customers. data, to Lastly, and cost expertise continue providers. new enables

commercial these revenue to team bookings started results solutions RX. anticipate Our discussing has with and our future providers, further growth for in we and assist

the the platform believe automation to for achievable. choice and industry of In summary, is provider clear be our we vision

diversify are expect our Our large will today and to they grow to their business. growing and us continue help meet in where matches further we market, a strategy and needs providers

scale global proposition and the best to provider the Lastly, strong, our is people industry technology, combining in industry. the value

to call with turn Jennifer And I'll that, you. discuss financials. our the Thank to quarterly over

Jennifer Williams

you, good morning, Thank and Lee, everyone.

demonstrate business ahead impact recent of business our outages, strength Our second Despite our we to our our progress disruptions continue the quarter to financial the of to and underlying objectives. underlying Ascension and related making Change of are financial against Healthcare both continues the perform results expectations.

discipline million, results million our second cost in infrastructure. solid as with further the well operational delivered enhance EBITDA initiatives global to $XXX.X of continued our adjusted as and technology-driven We demonstrating and and $XXX.X capabilities quarter of revenue

was grew million mentioned partially volumes the Acclara attrition partially in year-over-year, divestitures. million offset of driven as the Total or growth revenue continued operating Net contribution slightly This by by enterprise This disclosed business. approximately well the customer This $XXX.X divestitures. base. customer primarily was offset XX% our $XX.X as impact customer and X% year-over-year. our better-than-expected in physician base of of was by contribution attrition in and our primarily previously by and of grew Acclara fees Modular our facility driven by previously

metrics $XX.X to cash was a due the quarter. primarily outages. were impact at $X fees incident end A/R the below of negatively slightly impacted to Incentive balance million related to related sheet measured the This our and million. This expectations,

XX% growth and services existing Our expansion as customer or contracts. in our $XXX.X revenue of customers Other Modular approximately revenues million by the continued Modular Acclara of as driven million by grew business new primarily year-over-year, addition well $XX the and of to from

of expenses $XXX year-over-year, the was services up roughly the million, cost inclusion for QX quarter. Turning to million Acclara. approximately Non-GAAP of related primarily to in $XX

to in of align flat business operational Excluding in was our were services of Physician in Acclara, cost lower investments offset reductions by that to the in revenue technology business. the costs as impact

approximately cost and expenses assist million Healthcare Change year. Ascension Non-GAAP included also $XX.X with of prior were million expenses SG&A million, Non-GAAP second approximately the quarter the $X of cyberattacks. incurred to operational from incremental $X both services in down

to credit quarter first the SG&A of related acquisition for essentially were Acclara offset the losses. remained year. compared by the lower allowances expenses Other to and non-GAAP flat more Expenses than year-over-year

the after impact mentioned Our adjusted the EBITDA slightly was million, for incidents the quarter of we from $XXX.X even quarter. which internal was the our ahead for expectations

discipline that Healthcare to across Our Ascension enhance year. operational focus helped to impact revenue on both continued and mitigate costs the and cost cyber and events Change initiatives the performance related the has industry experienced this additional organization

Other announced services is with of including Lastly, we fee in complete. essentially to included that incurred expenses. related the Acclara $X.X onetime expenses million $XX now actions our severance included integration-related migration vendor million $XX.X costs, to a Other termination cloud million related This integration. to

approximately also disclosed. million $X review the strategic related incurred in to process advisory previously special fees We we committee

me the to June balance sheet. and let $XXX.X equivalents flow comments the the of on compared provide Now million at were million $XXX cash at and a of cash couple of end December. end Cash

Net $XX.X million to the $X.X revolver debt quarter $XX early April generated related in includes cash of in we borrowed quarter, at Change a the operations. paydown the and the Healthcare was that end from in million we the billion of incident. For

with capacity $XXX strong cash of end the at and Our liquidity on our remain our approximately continues from on borrowing June, revolver. million sheet both to balance

providing of will announced In mentioned and transaction also week we be as guidance for earlier, light Evan XXXX. the last not

I provide to want our Ascension year expectations for some the cybersecurity color half to do the However, the related incident. of impact second on the of

based be to timing into XXXX. be the of million between of revenue of of the to this to delay is of on seen $XX half of year impact $XX impact million. timing will operating full the Ascension the of outage first a in expect impact majority our Most fees XXXX collections. revenue from the be in expected second half cash base We net fees The or

cash As our of the collections. timing fees lag a reminder, base

So after August in XXXX Ascension be fees. net recovered will any by cash operating collected our

to and their does impact outage. platform other some Ascension expect also contract we material, less Although to some modular fee and our for was to our of during transmit modular as unable volumes revenue our solutions

increase the Ascension an related see also in will to outage. We expenses

million $XX year. to million $XX half incremental incur in cost the second to of expect We in the

incremental several critical claims driven of manual We facilities and as effort of expect onshore many backlog recover processing. this will Ascension have in to of on-site mostly assist This we outage. across paperwork from the the overtime contractors to backlog hundred added accumulated labor during created be the by is

to and Through our to locations customers. of to ability we to were large is assist of a partners, network in help. talent rapid able our scale of third-party This testament in deployment our serve need

to fully to recovered, all expect technology costs are incur some also operating We secure ensure and systems effectively.

the business impact near-term return over do will course that outage the believe the of to of impact the calendar We operations half XXXX, XXXX create that our most will financials cash and While results cycles collection a will recovery impact year. second we in long-term occur significant of that not normal the our XXXX in to the a the Ascension of the and the create of expect will on business. core outage

U.S. largest is an important care plays Ascension part customer. health of and RX's

We through their serve are with partnering able committed patients to they are recovery across care to all to their settings. continue of them efforts to ensure

over the months worked around outage the Ascension few to recovery have support Our process. clock and the the both through tirelessly employees last

have I'm we're serving quarter, our we focused closing, work proud had behalf done, global XX,XXX with the I pleased on doing incredibly our good and we In our we a of work of over are customers. to for customers. employees want personally remaining on very thank the and

value this look throughout remain the that technology continuing vendor deliver the we in front customers and our ever, to provide remainder more customer the The events scale have forward and the year We year. health on results Providers proven need the we cyber of to industry. care to services, and than of to our excellent opportunities us. focused

you. joining. for turn will call everyone, back you, the to Thank I now Operator, over

Operator

concludes all gentlemen, call. joining, Thank and that today's and you you Ladies disconnect. now for may

R1 RCM (RCM) 7 Aug 242024 Q2 Earnings call transcript