CHICAGO, Aug. 09, 2018 (GLOBE NEWSWIRE) -- R1 RCM Inc. (NASDAQ:RCM), a leading provider of technology-enabled revenue cycle management services to healthcare providers, today announced results for the three months ended June 30, 2018.

Second Quarter 2018 Results:

-- GAAP net services revenue of $207.9 million, up $108.5 million compared to the same period last year -- GAAP net loss of $2.9 million, compared to net loss of $6.7 million in the same period last year -- Adjusted EBITDA of $9.2 million, up $12.5 million compared to the same period last year

“Our second quarter results reflect the continued momentum in our business, driven by the successful onboarding of customers,” said Joe Flanagan, President and Chief Executive Officer of R1. “We remain focused on onboarding additional new customers in the second half of 2018 while continuing to serve our customers and drive innovation to further differentiate our value proposition.”

“Our growth in revenue and adjusted EBITDA this quarter is driven by continued execution across the business,” added Chris Ricaurte, Chief Financial Officer and Treasurer of R1. “The new customers we have already onboarded, as well as those planned to be onboarding in the balance of the year, give us a high degree of confidence to deliver on our financial commitments.”

2018 OutlookSubject to finalization of purchase accounting for the Intermedix acquisition, for 2018, R1 expects to generate:

-- Revenue of between $850 million and $900 million -- GAAP operating loss of $30 million to $50 million -- Adjusted EBITDA of $50 to $55 million

Conference Call and Webcast DetailsR1’s management team will host a conference call today at 8:00 a.m. Eastern Time to discuss its financial results and business outlook. To participate, please dial 866-393-4306 (734-385-2616 outside the U.S. and Canada) using conference code number 2190285. A live webcast and replay of the call will be available at the Investor Relations section of the Company’s web site at ir.r1rcm.com.

Non-GAAP Financial MeasuresIn order to provide a more comprehensive understanding of the information used by R1’s management team in financial and operational decision making, the Company supplements its GAAP consolidated financial statements with certain non-GAAP financial performance measures, including adjusted EBITDA and net debt. Adjusted EBITDA is defined as GAAP net income before net interest expense, income tax provision, depreciation and amortization expense, share-based compensation expense, reorganization-related expenses, transaction-related expenses and certain other items. Net debt is defined as debt less cash and equivalents, inclusive of restricted cash.

Our board of directors and management team use adjusted EBITDA as (i) one of the primary methods for planning and forecasting overall expectations and for evaluating actual results against such expectations and (ii) a performance evaluation metric in determining achievement of certain executive incentive compensation programs, as well as for incentive compensation programs for employees.

Table 4 presents a reconciliation of GAAP net income to non-GAAP adjusted EBITDA. Table 8 presents a reconciliation of GAAP operating income guidance to non-GAAP adjusted EBITDA guidance. Adjusted EBITDA should be considered in addition to, but not as a substitute for, the information prepared in accordance with GAAP.

Forward Looking StatementsThis press release includes information that may constitute “forward-looking statements,” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to future, not past, events and often address our expected future growth, plans and performance or forecasts. These forward-looking statements are often identified by the use of words such as “anticipate,” “believe,” “designed,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “will,” or “would,” and similar expressions or variations, although not all forward-looking statements contain these identifying words. Such forward-looking statements are based on management’s current expectations about future events as of the date hereof and involve many risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Subsequent events and developments, including actual results or changes in our assumptions, may cause our views to change. We do not undertake to update our forward-looking statements except to the extent required by applicable law. Readers are cautioned not to place undue reliance on such forward-looking statements. All forward-looking statements included herein are expressly qualified in their entirety by these cautionary statements. Our actual results and outcomes could differ materially from those included in these forward-looking statements as a result of various factors, including, but not limited to, the expected timing of onboarding new business deployment, our ability to integrate the Intermedix business as planned and to realize the expected benefits from the acquisition, our ability to successfully deliver on our commitments to Intermountain and Ascension, fluctuations in our results of operations and cash flows, and the factors discussed under the heading “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2017 and any other periodic reports that the Company files with the Securities and Exchange Commission.

About R1 RCMR1 is a leading provider of technology-enabled revenue cycle management services which transform a health system’s revenue cycle performance across settings of care. R1’s proven and scalable operating model, the R1 Performance Stack℠, seamlessly complements a healthcare organization’s infrastructure, quickly driving sustainable improvements to net patient revenue and cash flows while reducing operating costs and enhancing the patient experience. To learn more visit: R1RCM.com

Contact:R1 RCM Inc.Investor Relations:Atif Rahim312-324-5476investorrelations@r1rcm.com

Media Relations:Natalie Joslin678-585-1206media@r1rcm.com

Table 1 R1 RCM Inc. Consolidated Balance Sheets (In millions) June 30, December 31, 2018 2017 --------- --------- (Unaudited ) Assets Current assets: Cash and cash equivalents $ 38.8 $ 164.9 Current portion of restricted cash equivalents 2.0 — Accounts receivable, net 40.9 8.2 Accounts receivable, net - related party 40.3 15.4 Prepaid income taxes 0.5 0.6 Prepaid expenses and other current assets 26.6 13.2 ------- - ------- - Total current assets 149.1 202.3 Property, equipment and software, net 90.7 48.3 Intangible assets, net 199.4 — Goodwill 244.7 — Non-current deferred tax asset 47.6 70.5 Non-current portion of restricted cash 1.5 1.5 Other assets 20.1 13.4 Total assets $ 753.1 $ 336.0 - ----- - - ----- - Liabilities and stockholders’ equity (deficit) Current liabilities: Accounts payable $ 14.6 $ 7.2 Current portion of customer liabilities 8.5 1.1 Current portion of customer liabilities - related party 23.3 27.1 Accrued compensation and benefits 53.0 37.8 Current portion of long-term debt 2.7 — Other accrued expenses 35.4 16.7 ------- - ------- - Total current liabilities 137.5 89.9 Non-current portion of customer liabilities - related party 17.4 11.5 Long-term debt 255.6 — Long-term debt - related party 101.1 — Other non-current liabilities 19.2 11.9 Total liabilities 530.8 113.3 ------- - ------- - Preferred Stock 198.6 189.3 Stockholders’ equity (deficit): Common stock 1.2 1.2 Additional paid-in capital 359.8 337.9 Accumulated deficit (270.7 ) (244.5 ) Accumulated other comprehensive loss (4.1 ) (1.6 ) Treasury stock (62.5 ) (59.6 ) ------- - ------- - Total stockholders’ equity (deficit) 23.7 33.4 Total liabilities and stockholders’ equity (deficit) $ 753.1 $ 336.0 - ----- - - ----- -

Table 2 R1 RCM Inc. Consolidated Statements of Operations (In millions, except share and per share data) Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 --------- --------- --------- --------- (Unaudited) (Unaudited) Net operating fees $ 181.7 $ 80.1 $ 309.3 $ 150.8 Incentive fees 9.9 7.1 17.9 12.7 Other 16.3 12.2 28.0 22.8 Net services revenue 207.9 99.4 355.2 186.3 Operating expenses: Cost of services 189.9 96.4 328.6 177.3 Selling, general and administrative 22.5 12.2 39.5 26.5 Other 13.2 1.0 15.6 1.2 ------- - ------- - ------- - ------- - Total operating expenses 225.6 109.6 383.7 205.0 ------- - ------- - ------- - ------- - Income (loss) from operations (17.7 ) (10.2 ) (28.5 ) (18.7 ) Net interest (expense) income (5.8 ) — (5.6 ) 0.1 ------- - ------- - ------- - ------- - Income (loss) before income tax provision (23.5 ) (10.2 ) (34.1 ) (18.6 ) Income tax provision (benefit) (20.6 ) (3.5 ) (7.9 ) (3.6 ) Net income (loss) $ (2.9 ) $ (6.7 ) $ (26.2 ) $ (15.0 ) - ----- - - ----- - - ----- - - ----- - Net income (loss) per common share: Basic $ (0.07 ) $ (0.11 ) $ (0.33 ) $ (0.23 ) Diluted $ (0.07 ) $ (0.11 ) $ (0.33 ) $ (0.23 ) Weighted average shares used in calculating net income (loss) per common share: Basic 108,157, 102,467, 107,001, 101,918, 583 078 002 797 Diluted 108,157, 102,467, 107,001, 101,918, 583 078 002 797

Table 3 R1 RCM Inc. Consolidated Statements of Cash Flows (In millions) Six Months Ended June 30, 2018 2017 --------- --------- (Unaudited) Operating activities Net income (loss) $ (26.2 ) $ (15.0 ) Adjustments to reconcile net income (loss) to net cash used in operations: Depreciation and amortization 13.4 7.0 Amortization of debt issuance costs 0.4 — Share-based compensation 9.0 5.9 Loss on disposal 0.7 0.2 Provision (recovery) for doubtful receivables 0.2 0.1 Deferred income taxes (10.5 ) (4.1 ) Changes in operating assets and liabilities: Accounts receivable and related party accounts receivable (21.6 ) (13.2 ) Prepaid income taxes (0.8 ) 3.5 Prepaid expenses and other assets (7.3 ) (9.2 ) Accounts payable 1.4 (2.3 ) Accrued compensation and benefits 7.9 (0.4 ) Other liabilities 11.4 (0.4 ) Customer liabilities and customer liabilities - related party 0.9 5.0 ------- - ------- - Net cash used in operating activities (21.1 ) (22.9 ) ------- - ------- - Investing activities Purchases of property, equipment, and software (15.3 ) (23.2 ) Acquisition of IMX, net of cash acquired (465.3 ) — ------- - ------- - Net cash used in investing activities (480.6 ) (23.2 ) ------- - ------- - Financing activities Issuance of senior secured debt, net of discount and issuance costs 253.1 — Issuance of subordinated notes, net of discount and issuance costs 105.9 — Issuance of common stock and stock warrants, net of issuance costs 19.3 — Exercise of vested stock options 2.8 — Purchase of treasury stock — (1.2 ) Shares withheld for taxes (2.9 ) (1.9 ) ------- - ------- - Net cash provided (used in) by financing activities 378.2 (3.1 ) ------- - ------- - Effect of exchange rate changes in cash, cash equivalents and restricted cash (0.6 ) 0.4 ------- - ------- - Net increase (decrease) in cash, cash equivalents and restricted cash (124.1 ) (48.8 ) Cash, cash equivalents and restricted cash, at beginning of period 166.4 182.7 ------- - ------- - Cash, cash equivalents and restricted cash, at end of period $ 42.3 $ 133.9 - ----- - - ----- -

Table 4 R1 RCM Inc. Reconciliation of GAAP net income to Non-GAAP adjusted EBITDA (In millions) Three Months Ended 2018 vs. 2017 Six Months Ended 2018 vs. 2017 June 30, Change June 30, Change 2018 2017 Amount % 2018 2017 Amount % -------- -------- -------- -------- --------- --------- --------- --------- (Unaudited) (Unaudited) Net income (loss) $ (2.9 ) $ (6.7 ) $ 3.8 (57 )% $ (26.2 ) $ (15.0 ) $ (11.2 ) 75 % Net interest expense 5.8 — 5.8 100 % 5.6 (0.1 ) 5.7 (5,700 )% (income) Income tax provision (20.6 ) (3.5 ) (17.1 ) 489 % (7.9 ) (3.6 ) (4.3 ) 119 % (benefit) Depreciation and 8.5 3.8 4.7 124 % 13.4 7.0 6.4 91 % amortization expense Share-based compensation 5.1 2.2 2.9 132 % 9.0 5.8 3.2 55 % expense Other 13.2 1.0 12.2 1,220 % 15.6 1.2 14.4 1,200 % ------ - ------ - ------ - ----- -- ------- - ------- - ------- - ------ -- Adjusted EBITDA (non-GAAP) $ 9.2 $ (3.3 ) $ 12.5 (379 )% $ 9.5 $ (4.7 ) $ 14.2 (302 )%

Due to rounding, numbers presented in this table may not add up precisely to the totals provided.

Table 5 R1 RCM Inc. Reconciliation of GAAP Cost of Services to Non-GAAP Cost of Services (In millions) -------- ----------------- -------- --------------- Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 -------- ----------------- -------- --------------- (Unaudited) (Unaudited) Cost of services $ 189.9 $ 96.4 $ 328.6 $ 177.3 Less: Share-based compensation expense 1.5 1.0 2.8 2.1 Depreciation and amortization expense 7.3 3.5 11.9 6.4 ------- ------ ---------- ------- ------- ------- Non-GAAP cost of services $ 181.1 $ 91.9 $ 313.9 $ 168.8 - ----- - ---- ---------- - ----- - ----- -------

Table 6 R1 RCM Inc. Reconciliation of GAAP Selling, General and Administrative to Non-GAAP Selling, General and Administrative (In millions) ------- ------------------ ------- ---------------- Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 ------- ------------------ ------- ---------------- (Unaudited) (Unaudited) Selling, general and administrative $ 22.5 $ 12.2 $ 39.5 $ 26.5 Less: Share-based compensation expense 3.5 1.1 6.1 3.6 Depreciation and amortization expense 1.2 0.3 1.5 0.6 ------ ------ ----------- ------ ------ --------- Non-GAAP selling, general and administrative $ 17.8 $ 10.8 $ 31.9 $ 22.3 - ---- - ---- ----------- - ---- - ---- ---------

Table 7 R1 RCM Inc. Consolidated Non-GAAP Financial Information (In millions) Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 -------- -------- -------- --------- (Unaudited) (Unaudited) RCM services: net operating fees $ 181.7 $ 80.1 $ 309.3 $ 150.8 RCM services: incentive fees 9.9 7.1 17.9 12.7 RCM services: other 16.3 12.2 28.0 22.8 Net services revenue 207.9 99.4 355.2 186.3 Operating expenses: Cost of services (non-GAAP) 181.1 91.9 313.9 168.7 Selling, general and administrative (non-GAAP) 17.8 10.8 31.9 22.3 ------- ------ - ------- ------- - Sub-total 198.9 102.7 345.8 191.0 Adjusted EBITDA $ 9.2 $ (3.3 ) $ 9.5 $ (4.7 ) - ----- - ---- - - ----- - ----- -

Due to rounding, numbers presented in this table may not add up precisely to the totals provided.

Table 8 R1 RCM Inc. Reconciliation of GAAP Operating Income Guidance to non-GAAP Adjusted EBITDA Guidance (In millions) 2018 2020 ----------- --------- GAAP Operating Income Guidance ($30)-($50) $115-$155 Plus: Depreciation and amortization expense $25-$30 $30-$40 Share-based compensation expense $15-$20 $20-$25 Amortization of intangibles $10-$15 $25-$40 Transaction expenses, severance and other costs $25-$30 $5-$10 Adjusted EBITDA Guidance $50-55 $225-$250 ----------- ---------

Table 9 R1 RCM Inc. Reconciliation of Net Debt (In millions) June 30, 2018 (Unaudited ) Current portion of long-term debt $ 2.7 Long-term debt 255.6 Long-term debt - related party 101.1 ------- - 359.4 Unamortized discount and issuance costs (20.6 ) ------- - Total Debt (gross of discount and issuance costs) 380.0 Less: Cash and cash equivalents 38.8 Current portion of restricted cash 2.0 Non-current portion of restricted cash equivalents 1.5 Net Debt $ 337.7 - ----- -