8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________________

FORM 8-K

________________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 6, 2019

____________

R1 RCM Inc.

(Exact Name of Registrant as Specified in Charter)  

 ____________

Delaware	001-34746	02-0698101
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

401 North Michigan Avenue	60611
Suite 2700
Chicago
Illinois
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (312) 324-7820

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))     

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	RCM	NASDAQ

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐        

Item 2.02 Results of Operations and Financial Condition.

On August 6, 2019, R1 RCM Inc. (the “Company”) announced its financial results for its fiscal quarter ended June 30, 2019. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K. The slide presentation to be used in conjunction with the investor conference call referenced in the press release is furnished as Exhibit 99.2 to this Current Report on Form 8-K and will be posted on the Company’s website.

The information in this Form 8-K (including Exhibits 99.1 and 99.2) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

(d)	Exhibit Number	Description
	99.1	Press Release of R1 RCM Inc., dated August 6, 2019
	99.2	August 6, 2019 Slide Presentation
	101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
	101.SCH	XBRL Taxonomy Extension Schema Document
	101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
	101.LAB	XBRL Taxonomy Extension Label Linkbase Document
	101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
	101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:	August 6, 2019
		R1 RCM Inc.
		By:	/s/ Christopher S. Ricaurte
			Christopher S. Ricaurte
			Chief Financial Officer and Treasurer

EX-99.1

Exhibit 99.1

R1 RCM Reports Second Quarter 2019 Results

CHICAGO - August 6, 2019 - 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, 2019.

Second Quarter 2019 Results:

• Revenue of $295.0 million, up $87.1 million and 41.9% compared to the same period last year

• GAAP net loss of $5.2 million, compared to net loss of $2.9 million in the same period last year

• Adjusted EBITDA of $40.6 million, up $31.4 million compared to the same period last year

“Our second quarter results reflect strong execution across our customer base, and we remain very optimistic about our growth prospects given the current progression of deal in our pipeline,” said Joe Flanagan, President and Chief Executive Officer of R1. “We continue to invest in the business to further differentiate our value proposition and position the company for growth, while simultaneously providing our customers with sustained improvement in their financial performance, and a better experience for the patients they serve.”

“I’m pleased with our team's ability to deliver on our operational and financial commitments. With a strong start to the first half of 2019, we remain confident in our ability to deliver on our performance and growth goals,” added Chris Ricaurte, Chief Financial Officer and Treasurer of R1.

2019 Outlook

For 2019, R1 expects to generate:

• Revenue of between $1,150 million and $1,250 million

• GAAP operating income of $45 million to $65 million

• Adjusted EBITDA of $155 to $165 million

Conference Call and Webcast Details

R1’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 6189055. 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 Measures

In order to provide a more comprehensive understanding of the information used by R1’s management team in financial and operational decision making, the Company supplements its GAAP consolidated financial statements with certain non-GAAP financial performance measures, including adjusted EBITDA and net debt. Adjusted EBITDA is defined as GAAP net income before net interest income/expense, income tax provision, depreciation and amortization expense, share-based compensation expense, expense arising from debt extinguishment, strategic initiatives costs, transitioned employee restructuring expense, digital transformation office expenses, facility exit costs, and certain other items. Net debt is defined as debt less cash and cash 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 Statements

This 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, 2018 and any other periodic reports that the Company files with the Securities and Exchange Commission.

About R1 RCM

R1 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 Rahim

312-324-5476

investorrelations@r1rcm.com

Media Relations:

Brenda Stewart

312-255-7786

media@r1rcm.com

Table 1
R1 RCM Inc.
Consolidated Balance Sheets
(In millions)
	(Unaudited)
	June 30,			December 31,
	2019			2018
Assets
Current assets:
Cash and cash equivalents	$	80.1		$	62.8
Current portion of restricted cash equivalents	—			1.8
Accounts receivable, net	42.7			42.2
Accounts receivable, net - related party	28.4			55.2
Prepaid expenses and other current assets	43.5			34.8
Total current assets	194.7			196.8
Property, equipment and software, net	113.4			95.2
Operating lease right-of-use assets	78.4			—
Intangible assets, net	171.7			180.5
Goodwill	253.2			254.8
Non-current deferred tax assets	74.9			57.5
Non-current portion of restricted cash equivalents	0.5			0.5
Other assets	26.5			22.2
Total assets	$	913.3		$	807.5
Liabilities
Current liabilities:
Accounts payable	$	18.4		$	9.9
Current portion of customer liabilities	13.2			14.7
Current portion of customer liabilities - related party	46.0			51.1
Accrued compensation and benefits	64.2			77.0
Current portion of operating lease liabilities	11.3			—
Current portion of long-term debt	16.3			2.7
Other accrued expenses	46.7			40.8
Total current liabilities	216.1			196.2
Non-current portion of customer liabilities	—			—
Non-current portion of customer liabilities - related party	16.8			17.7
Non-current portion of operating lease liabilities	85.4			—
Long-term debt	365.5			251.0
Long-term debt - related party	—			105.0
Other non-current liabilities	6.6			22.9
Total liabilities	690.4			592.8
Preferred Stock	218.5			208.4
Stockholders’ equity:
Common stock	1.3			1.2
Additional paid-in capital	367.9			361.0
Accumulated deficit	(294.8		)	(289.8		)
Accumulated other comprehensive loss	(2.7		)	(3.5		)
Treasury stock	(67.3		)	(62.6		)
Total stockholders’ equity	4.4			6.3
Total liabilities and stockholders’ equity	$	913.3		$	807.5

Table 2
R1 RCM Inc.
Consolidated Statements of Operations (Unaudited)
(In millions, except share and per share data)
	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net operating fees	$	252.9		$	181.7		$	494.2		$	309.3
Incentive fees	17.4			9.9			29.6			17.9
Other	24.7			16.3			47.1			28.0
Net services revenue	295.0			207.9			570.9			355.2
Operating expenses:
Cost of services	246.1			189.9			483.3			328.6
Selling, general and administrative	25.8			22.5			48.3			39.5
Other expenses	10.7			13.2			19.5			15.6
Total operating expenses	282.6			225.6			551.1			383.7
Income (loss) from operations	12.4			(17.7		)	19.8			(28.5		)
Loss on debt extinguishment	(18.8		)	—			(18.8		)	—
Net interest (expense) income	(9.9		)	(5.8		)	(20.1		)	(5.6		)
Income (loss) before income tax provision (benefit)	(16.3		)	(23.5		)	(19.1		)	(34.1		)
Income tax provision (benefit)	(11.1		)	(20.6		)	(14.1		)	(7.9		)
Net income (loss)	$	(5.2	)	$	(2.9	)	$	(5.0	)	$	(26.2	)
Net income (loss) per common share:
Basic	$	(0.09	)	$	(0.07	)	$	(0.14	)	$	(0.33	)
Diluted	$	(0.09	)	$	(0.07	)	$	(0.14	)	$	(0.33	)
Weighted average shares used in calculating net income (loss) per common share:
Basic	110,956,014			108,157,583			110,382,509			107,001,002
Diluted	110,956,014			108,157,583			110,382,509			107,001,002

Table 3
R1 RCM Inc.
Consolidated Statements of Cash Flows (Unaudited)
(In millions)
	Six Months Ended June 30,
	2019			2018
Operating activities
Net income (loss)	$	(5.0	)	$	(26.2	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operations:
Depreciation and amortization	25.8			13.4
Amortization of debt issuance costs	1.2			0.4
Share-based compensation	9.0			9.0
Loss on disposal	—			0.7
Loss on debt extinguishment	18.8			—
Provision for doubtful receivables	1.0			0.2
Deferred income taxes	(17.3		)	(10.5		)
Non-cash lease expense	5.6			—
Changes in operating assets and liabilities:
Accounts receivable and related party accounts receivable	25.4			(21.6		)
Prepaid expenses and other assets	(10.1		)	(8.1		)
Accounts payable	7.2			1.4
Accrued compensation and benefits	(12.9		)	7.9
Lease liabilities	(5.5		)	—
Other liabilities	8.3			11.4
Customer liabilities and customer liabilities - related party	(7.5		)	0.9
Net cash provided by (used in) operating activities	44.0			(21.1		)
Investing activities
Purchases of property, equipment, and software	(32.3		)	(15.3		)
Acquisition of Intermedix, net of cash acquired	—			(465.3		)
Net cash used in investing activities	(32.3		)	(480.6		)
Financing activities
Issuance of senior secured debt, net of discount and issuance costs	321.8			253.1
Issuance of subordinated notes, net of discount and issuance costs	—			105.9
Borrowings on revolver	60.0			—
Repayment of senior secured debt	(268.7		)	—
Repayment of subordinated notes and prepayment penalty	(112.2		)	—
Issuance of common stock and stock warrants, net of issuance costs	—			19.3
Exercise of vested stock options	7.7			2.8
Shares withheld for taxes	(4.7		)	(2.9		)
Finance lease payments	(0.4		)	—
Net cash provided by (used in) financing activities	3.5			378.2
Effect of exchange rate changes in cash, cash equivalents and restricted cash	0.3			(0.6		)
Net increase in cash, cash equivalents and restricted cash	15.5			(124.1		)
Cash, cash equivalents and restricted cash, at beginning of period	65.1			166.4
Cash, cash equivalents and restricted cash, at end of period	$	80.6		$	42.3

Table 4
R1 RCM Inc.
Reconciliation of GAAP net income to Non-GAAP adjusted EBITDA (Unaudited)
(In millions)
	Three Months Ended June 30,						2019 vs. 2018 Change					Six Months Ended June 30,						2019 vs. 2018 Change
	2019			2018			Amount			%		2019			2018			Amount			%
Net income (loss)	$	(5.2	)	$	(2.9	)	$	(2.3	)	79	%	$	(5.0	)	$	(26.2	)	$	21.2		(81	)%
Net interest expense (income)	9.9			5.8			4.1			71	%	20.1			5.6			14.5			259	%
Income tax provision (benefit)	(11.1		)	(20.6		)	9.5			(46	)%	(14.1		)	(7.9		)	(6.2		)	78	%
Depreciation and amortization expense	12.9			8.5			4.4			52	%	25.8			13.4			12.4			93	%
Share-based compensation expense	4.6			5.1			(0.5		)	(10	)%	8.9			9.0			(0.1		)	(1	)%
Loss on debt extinguishment	18.8			—			18.8			100	%	18.8			—			18.8			100	%
Other expenses	10.7			13.2			(2.5		)	(19	)%	19.5			15.6			3.9			25	%
Adjusted EBITDA (non-GAAP)	$	40.6		$	9.2		$	31.4		341	%	$	74.0		$	9.5		$	64.5		679	%

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 (Unaudited)
(In millions)
	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Cost of services	$	246.1	$	189.9	$	483.3	$	328.6
Less:
Share-based compensation expense	1.5		1.5		2.8		2.8
Depreciation and amortization expense	12.1		7.3		24.5		11.9
Non-GAAP cost of services	$	232.5	$	181.1	$	456.0	$	313.9

Table 6
R1 RCM Inc.
Reconciliation of GAAP Selling, General and Administrative to Non-GAAP Selling, General and Administrative (Unaudited)
(In millions)
	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Selling, general and administrative	$	25.8	$	22.5	$	48.3	$	39.5
Less:
Share-based compensation expense	3.1		3.5		6.1		6.1
Depreciation and amortization expense	0.8		1.2		1.3		1.5
Non-GAAP selling, general and administrative	$	21.9	$	17.8	$	40.9	$	31.9

Table 7
R1 RCM Inc.
Consolidated Non-GAAP Financial Information (Unaudited)
(In millions)
	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
RCM services: net operating fees	$	252.9	$	181.7	$	494.2	$	309.3
RCM services: incentive fees	17.4		9.9		29.6		17.9
RCM services: other	24.7		16.3		47.1		28.0
Net services revenue	295.0		207.9		570.9		355.2
Operating expenses:
Cost of services (non-GAAP)	232.5		181.1		456.0		313.9
Selling, general and administrative (non-GAAP)	21.9		17.8		40.9		31.9
Sub-total	254.4		198.9		496.9		345.8
Adjusted EBITDA	$	40.6	$	9.2	$	74.0	$	9.5

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)
	2019	2020
GAAP Operating Income Guidance	$45 - 65	$140-170
Plus:
Depreciation and amortization expense	$50-60	$50-60
Share-based compensation expense	$15-20	$15-20
Strategic initiatives, DTO, severance and other costs	$30-35	$5-10
Adjusted EBITDA Guidance	$155-165	$235-260

Table 9
R1 RCM Inc.
Reconciliation of Net Debt (Unaudited)
(In millions)
	June 30,		December 31,
	2019		2018
Senior Revolver	$	60.0	$	—
Senior Term Loan	325.0		268.7
Notes (primarily with related parties)	—		110.0
	385.0		378.7
Less:
Cash and cash equivalents	80.1		62.8
Current portion of restricted cash	—		1.8
Non-current portion of restricted cash equivalents	0.5		0.5
Net Debt	$	304.4	$	313.6

EX-99.2

Exhibit 99.2 Second Quarter 2019 Results Conference Call August 6, 2019

Forward-Looking Statements and Non-GAAP Financial Measures This presentation 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, 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, our ability to deploy new business as planned, our ability to successfully implement new technologies, fluctuations in our results of operations and cash flows, and the factors discussed under the heading “Risk Factors” in our most recent Annual Report on Form 10-K and any other periodic reports that the Company files with the Securities and Exchange Commission. This presentation includes the following non-GAAP financial measures: Adjusted EBITDA and net debt. Please refer to the Appendix located at the end of this presentation for a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measure. 2

Q2 2019 Financial Highlights ▪ Revenue of $295.0 million, up $87.1 million and 41.9% compared to the same period last year ▪ GAAP net loss of $5.2 million, compared to net loss of $2.9 million in the same period last year ▪ Adjusted EBITDA of $40.6 million, up $31.4 million compared to the same period last year ▪ 2019 Outlook Updated to: • Revenue of between $1,150 million and $1,250 million • GAAP operating income of $45 million to $65 million • Adjusted EBITDA of $155 to $165 million 3

Operational Highlights and Additional Commentary 1. Commercial Update • Anticipate closing out 2019 with at least $3 billion in new NPR on an end-to-end basis inclusive of Quorum • Increased market momentum, manifested in an increase in opportunities we are invited to participate in • Continue to make structural investments to position the company for further growth 2. Physician Group Solution • Being deployed at Ascension Medical Group, Intermountain and AMITA; Early results are encouraging with double- digit declines in A/R; Broader market launch expect in the fall • Physician aggregators and groups of more than 25 physicians are also attractive target markets. Non-acute footprint today spans: • Over 27,000 providers across more than 80 specialties • $7 billion in NPR under management • 30 million patient encounters • Vendors serving these sub-markets have limited scale and tend to be specialty-focused. We can bring an extensive set of capabilities to this market, including: • Technology architecture integrated across the physician and acute environments • A dedicated physician team within our deployment function • Sophisticated analytics capabilities • Contract pricing aligned with customer performance 4

Operational Highlights and Additional Commentary (continued) 4. Digital Transformation Office (DTO) • Robotic Process Automation (RPA) • Launched four automations into production in Q2, expected to remove more than 500,000 manual touches annually • Ten additional automations in various phases of development • Early results are in line with performance expectations • Collectively, we now have the equivalent capacity of 700-1,000 FTEs in our digital workforce, automating 10 million manual tasks on an annual basis • PX Platform • Expanding from inpatient setting into the Emergency Department and walk-in setting 2. Execution on our Contracted Book of Business • Across our Operating Partner customers (excluding Quorum), we have: • Transitioned 90% of work that can be performed from centralized locations • Rationalized 78% of targeted third-party vendor spend • Implemented the R1 technology stack at 85% of customer sites 5

2Q’19 non-GAAP Results – Q/Q and Y/Y Comparison ($ in millions) 2Q’19 1Q’19 2Q’18 Key change driver(s) • Q/Q: Continued onboarding of Revenue $295.0 $275.9 $207.9 Presence/AMITA and AMG • Y/Y: New customers and Intermedix • Q/Q: Presence/AMITA onboarding costs Adjusted Cost of Services $232.5 $223.5 $181.1 • Y/Y: New customer onboarding costs and Intermedix • Q/Q: Investments in corporate IT and HR infrastructure Adjusted SG&A expense $21.9 $19.0 $17.8 • Y/Y: Growth in Sales & Marketing, corporate IT and HR infrastructure • Q/Q: Progression along profitability curve at customers onboarded over the past two years Adjusted EBITDA $40.6 $33.4 $9.2 • Y/Y: Improved profitability at customers and contribution from Intermedix 6

Financial Outlook $m 2019 2020 Revenue 1,150 – 1,250 1,250 – 1,400 GAAP Operating Income 45 – 65 140 – 170 Adjusted EBITDA 155 – 165 235 – 260 $m Contracted Growth1 Revenue 1,250 – 1,300 1,300 – 1,400 Adjusted EBITDA 245 – 260 235 – 245 Note: Adjusted EBITDA is a non-GAAP measure, please refer to the Appendix for a reconciliation of non-GAAP financial measures. 7 Note1: Growth scenario assumes addition of new $3B in NPR under management in mid-2019 and mid-2020.

Appendix 8

Use of Non-GAAP Financial Measures ▪ In order to provide a more comprehensive understanding of the information used by R1’s management team in financial and operational decision making, the Company supplements its GAAP consolidated financial statements with certain non-GAAP financial performance measures, including adjusted EBITDA. Adjusted EBITDA is defined as GAAP net income before net interest income/expense, income tax provision, depreciation and amortization expense, share-based compensation expense, expense arising from debt extinguishment, strategic initiatives costs, transitioned employee restructuring expense, digital transformation office expenses, facility exit costs, and certain other items. Net debt is defined as debt less cash and cash 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. ▪ A reconciliation of GAAP net income to non-GAAP adjusted EBITDA, GAAP operating income guidance to non-GAAP adjusted EBITDA guidance, and debt to net debt is provided in this appendix. ▪ Adjusted EBITDA and net debt should be considered in addition to, but not as a substitute for, the information presented in accordance with GAAP. 9

Reconciliation of GAAP to non-GAAP Financials $ in millions Reconciliation of GAAP Net Income (Loss) to non-GAAP Adjusted EBITDA Reconciliation of GAAP Cost of Services to Non-GAAP Cost of Services Reconciliation of GAAP Selling, General and Administrative to Non-GAAP Selling, General and Administrative Note (1): Other costs are comprised of strategic initiatives costs, transitioned employee restructuring expense, Digital Transformation 10 Office (DTO) expenses, facility exit costs, and certain other costs.

Reconciliation of GAAP to non-GAAP Financials $ in millions Reconciliation of GAAP Operating Income Guidance to non-GAAP Adjusted EBITDA Guidance Reconciliation of Net Debt 11

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Document and Entity Information Document	Aug. 06, 2019
Cover page.
Document Type	8-K
Document Period End Date	Aug. 06, 2019
Entity Registrant Name	R1 RCM Inc.
Entity Incorporation, State or Country Code	DE
Entity File Number	001-34746
Entity Tax Identification Number	02-0698101
Entity Address, Address Line One	401 North Michigan Avenue
Entity Address, Address Line Two	Suite 2700
Entity Address, City or Town	Chicago
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60611
City Area Code	312
Local Phone Number	324-7820
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Entity Central Index Key	0001472595
Amendment Flag	false