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): February 20, 2020

____________

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 February 20, 2020, R1 RCM Inc. (the “Company”) announced its financial results for its fiscal year ended December 31, 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 February 20, 2020
	99.2	February 20, 2020 Slide Presentation
	104	Cover Page Interactive Data File - the cover page iXBRL tags are embedded within the Inline XBRL document.

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:	February 20, 2020
		R1 RCM Inc.
		By:	/s/ Richard B. Evans, Jr.
			Richard B. Evans, Jr.
			Interim Chief Financial Officer

EX-99.1

Exhibit 99.1

R1 RCM Reports Fourth Quarter and Full Year 2019 Results

CHICAGO - February 20, 2020 - 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 and year ended December 31, 2019.

Fourth Quarter 2019 Results:

• Revenue of $314.0 million, up $51.1 million and 19.4% compared to the same period last year

• GAAP net income of $7.8 million, compared to GAAP net loss of $5.7 million in the same period last year

• Adjusted EBITDA of $45.1 million, up $18.0 million compared to the same period last year

Full Year 2019 Results:

• Revenue of $1,186.1 million, up $317.6 million and 36.6% compared to 2018

• GAAP net income of $12.0 million, compared to GAAP net loss of $45.3 million in 2018

• Adjusted EBITDA of $168.0 million, up $111.0 million compared to 2018

“2019 was an excellent year for R1. We added $4.1 billion in new net patient revenue under management from a diverse customer base, and our continued focus on operational execution drove meaningful bottom-line growth. At the same time, we made significant investments in technology and mobilized our physician offering to capture the market opportunity ahead of us,” said Joe Flanagan, President and Chief Executive Officer of R1. “We enter 2020 with good momentum across the business. Market demand for our offerings continues to grow, and the investments we are making in expanding our functionality and capabilities continue to improve our competitive position and extend our lead in the market.”

“We generated significant earnings growth in 2019, driven by solid execution across our contracted book of business,” added Rick Evans, Interim Chief Financial Officer and Chief Accounting Officer. “We remain focused on operational execution to deliver on our financial goals for 2020, while making investments to drive growth beyond 2020.”

2020 Outlook

For 2020, R1 expects to generate:

• Revenue of between $1,300 million and $1,400 million

• GAAP operating income of $145 million to $165 million

• Adjusted EBITDA of $260 million to $275 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 4276889. 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/benefit, depreciation and amortization expense, share-based compensation expense, expense arising from debt extinguishment, strategic initiatives costs, transitioned employee restructuring expense, digital transformation office expenses, and certain other items. Net debt is defined as debt less cash and cash equivalents, inclusive of restricted cash.

Our board 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.

Tables 4 through 9 present a reconciliation of GAAP financial measures to non-GAAP financial measures, including adjusted EBITDA. 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 acquired businesses as planned and to realize the expected benefits from acquisitions, our ability to successfully deliver on our commitments to our customers, 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, our quarterly reports on Form 10-Q and any other periodic reports that the Company files with the Securities and Exchange Commission.

About R1 RCM

R1 RCM is a leading provider of technology-enabled RCM services which transform and solve revenue cycle performance challenges across hospitals, health systems and group physician practices. R1’s proven and scalable

operating models seamlessly complement 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:

Media Relations:

Natalie Joslin

678.585.1206

media@r1rcm.com

Table 1
R1 RCM Inc.
Consolidated Balance Sheets
(In millions)
	(Unaudited)
	December 31,
	2019			2018
Assets
Current assets:
Cash and cash equivalents	$	92.0		$	62.8
Current portion of restricted cash equivalents	—			1.8
Accounts receivable, net	52.3			42.2
Accounts receivable, net - related party	30.8			55.2
Prepaid expenses and other current assets	41.6			34.8
Total current assets	216.7			196.8
Property, equipment and software, net	116.9			95.2
Operating lease right-of-use assets	77.9			—
Intangible assets, net	164.7			180.5
Goodwill	253.2			254.8
Non-current deferred tax assets	64.2			57.5
Non-current portion of restricted cash equivalents	0.5			0.5
Other assets	35.0			22.2
Total assets	$	929.1		$	807.5
Liabilities
Current liabilities:
Accounts payable	$	20.2		$	9.9
Current portion of customer liabilities	14.0			14.7
Current portion of customer liabilities - related party	34.1			51.1
Accrued compensation and benefits	95.1			77.0
Current portion of operating lease liabilities	12.8			—
Current portion of long-term debt	16.3			2.7
Other accrued expenses	40.0			40.8
Total current liabilities	232.5			196.2
Non-current portion of customer liabilities - related party	18.6			17.7
Non-current portion of operating lease liabilities	82.7			—
Long-term debt	337.7			251.0
Long-term debt - related party	—			105.0
Other non-current liabilities	10.4			22.9
Total liabilities	681.9			592.8
Preferred stock	229.1			208.4
Stockholders’ equity:
Common stock	1.3			1.2
Additional paid-in capital	372.7			361.0
Accumulated deficit	(277.8		)	(289.8		)
Accumulated other comprehensive loss	(4.5		)	(3.5		)
Treasury stock	(73.6		)	(62.6		)
Total stockholders’ equity	18.1			6.3
Total liabilities and stockholders’ equity	$	929.1		$	807.5

Table 2
R1 RCM Inc.
Consolidated Statements of Operations
(In millions, except share and per share data)
	(Unaudited)		(Unaudited)			(Unaudited)
	Three Months Ended December 31,					Year Ended December 31,
	2019		2018			2019			2018
Net operating fees	$	276.6	$	230.8		$	1,037.4		$	760.2
Incentive fees	14.3		11.5			56.2			38.3
Other	23.1		20.6			92.5			70.0
Net services revenue	314.0		262.9			1,186.1			868.5
Operating expenses:
Cost of services	262.6		222.7			987.8			770.6
Selling, general and administrative	27.8		28.8			104.4			97.9
Other	9.3		7.5			36.2			30.4
Total operating expenses	299.7		259.0			1,128.4			898.9
Income (loss) from operations	14.3		3.9			57.7			(30.4		)
Loss on debt extinguishment	—		—			18.8			—
Net interest expense	4.0		10.7			29.1			26.3
Income (loss) before income tax provision (benefit)	10.3		(6.8		)	9.8			(56.7		)
Income tax provision (benefit)	2.5		(1.1		)	(2.2		)	(11.4		)
Net income (loss)	$	7.8	$	(5.7	)	$	12.0		$	(45.3	)
Net income (loss) per common share:
Basic	$	0.01	$	(0.10	)	$	(0.08	)	$	(0.60	)
Diluted	$	0.01	$	(0.10	)	$	(0.08	)	$	(0.60	)
Weighted average shares used in calculating net income (loss) per common share:
Basic	112,954,725		109,299,653			111,505,993			108,175,159
Diluted	168,857,622		109,299,653			111,505,993			108,175,159

Table 3
R1 RCM Inc.
Consolidated Statements of Cash Flows
(In millions)
	(Unaudited)
	Year Ended December 31,
	2019			2018
Operating activities
Net income (loss)	$	12.0		$	(45.3	)
Adjustments to reconcile net income (loss) to net cash used in operations:
Depreciation and amortization	55.7			38.8
Amortization of debt issuance costs	1.6			1.5
Share-based compensation	18.6			18.4
Loss on disposal	0.1			0.4
Loss on debt extinguishment	18.8			—
Provision for doubtful receivables	2.9			0.8
Deferred income taxes	(5.1		)	(14.0		)
Non-cash lease expense	11.4			—
Changes in operating assets and liabilities:
Accounts receivable and related party accounts receivable	11.5			(39.1		)
Prepaid expenses and other assets	(17.9		)	(17.0		)
Accounts payable	9.9			(3.0		)
Accrued compensation and benefits	18.2			31.9
Lease liabilities	(11.8		)	—
Other liabilities	4.8			9.8
Customer liabilities and customer liabilities - related party	(16.8		)	35.1
Net cash provided by operating activities	113.9			18.3
Investing activities
Purchases of property, equipment, and software	(61.0		)	(33.5		)
Acquisition of Intermedix, net of cash acquired	—			(462.8		)
Net cash used in investing activities	(61.0		)	(496.3		)
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	—			105.5
Borrowings on revolver	60.0			—
Payment of debt issuance costs	—			(0.4		)
Repayment of senior secured debt	(276.8		)	(1.3		)
Repayment of subordinated notes and prepayment penalty	(112.2		)	—
Repayments on revolver	(20.0		)	—
Issuance of common stock and stock warrants, net of issuance costs	—			19.2
Exercise of vested stock options	13.7			4.3
Shares withheld for taxes	(11.0		)	(3.0		)
Finance lease payments	(0.8		)	—
Net cash (used in) provided by financing activities	(25.3		)	377.4
Effect of exchange rate changes in cash	(0.2		)	(0.7		)
Net increase (decrease) in cash, cash equivalents, and restricted cash	27.4			(101.3		)
Cash, cash equivalents, and restricted cash at beginning of period	65.1			166.4
Cash, cash equivalents, and restricted cash at end of period	$	92.5		$	65.1

Table 4
R1 RCM Inc.
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted EBITDA (Unaudited)
(In millions)
	Three Months Ended December 31,					2019 vs. 2018 Change					Year Ended December 31,						2019 vs. 2018 Change
	2019		2018			Amount			%		2019			2018			Amount		%
Net income (loss)	$	7.8	$	(5.7	)	$	13.5		237	%	$	12.0		$	(45.3	)	$	57.3	126	%
Net interest expense	4.0		10.7			(6.7		)	(63	)%	29.1			26.3			2.8		11	%
Income tax provision (benefit)	2.5		(1.1		)	3.6			327	%	(2.2		)	(11.4		)	9.2		(81	)%
Depreciation and amortization expense	15.8		11.2			4.6			41	%	55.7			38.8			16.9		44	%
Share-based compensation expense	5.7		4.5			1.2			27	%	18.4			18.2			0.2		1	%
Loss on debt extinguishment (1)	—		—			—			—	%	18.8			—			18.8		100	%
Other (2)	9.3		7.5			1.8			24	%	36.2			30.4			5.8		19	%
Adjusted EBITDA (non-GAAP)	$	45.1	$	27.1		$	18.0		66	%	$	168.0		$	57.0		$	111.0	195	%

(1) Loss on debt extinguishment represents the loss associated with the repayment of the credit agreement and subordinated notes in June 2019.

(2) Other costs are comprised of strategic initiatives costs, transitioned employee restructuring expense, Digital Transformation Office expenses, and certain other costs.

Table 5
R1 RCM Inc.
Reconciliation of GAAP Cost of Services to Non-GAAP Cost of Services (Unaudited)
(In millions)
	Three Months Ended December 31,				Year Ended December 31,
	2019		2018		2019		2018
Cost of services	$	262.6	$	222.7	$	987.8	$	770.6
Less:
Share-based compensation expense	1.8		1.4		6.1		5.8
Depreciation and amortization expense	14.5		10.0		51.7		33.1
Non-GAAP cost of services	$	246.3	$	211.3	$	930.0	$	731.7

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 December 31,				Year Ended December 31,
	2019		2018		2019		2018
Selling, general and administrative	$	27.8	$	28.8	$	104.4	$	97.9
Less:
Share-based compensation expense	3.9		3.1		12.3		12.4
Depreciation and amortization expense	1.3		1.2		4.0		5.7
Non-GAAP selling, general and administrative	$	22.6	$	24.5	$	88.1	$	79.8

Table 7
R1 RCM Inc.
Consolidated Non-GAAP Financial Information (Unaudited)
(In millions)
	Three Months Ended December 31,				Year Ended December 31,
	2019		2018		2019		2018
Net operating fees	$	276.6	$	230.8	$	1,037.4	$	760.2
Incentive fees	14.3		11.5		56.2		38.3
Other	23.1		20.6		92.5		70.0
Net services revenue	314.0		262.9		1,186.1		868.5
Operating expenses:
Cost of services (non-GAAP)	246.3		211.3		930.0		731.7
Selling, general and administrative (non-GAAP)	22.6		24.5		88.1		79.8
Sub-total	268.9		235.8		1,018.1		811.5
Adjusted EBITDA	$	45.1	$	27.1	$	168.0	$	57.0

Table 8
R1 RCM Inc.
Reconciliation of GAAP Operating Income Guidance to Non-GAAP Adjusted EBITDA Guidance (Unaudited)
(In millions)
	2020	2021
GAAP Operating Income Guidance	$145-165	$205-225
Plus:
Depreciation and amortization expense	$65-75	$75-85
Share-based compensation expense	$20-25	$20-25
Strategic initiatives, severance and other costs	$25-30	$20-25
Adjusted EBITDA Guidance	$260-275	$320-340

Table 9
R1 RCM Inc.
Reconciliation of Total Debt to Net Debt (Unaudited)
(In millions)
	December 31,		December 31,
	2019		2018
Senior Revolver	$	40.0	$	—
Senior Term Loan	316.9		268.7
Notes (primarily with related parties)	—		110.0
Total debt	356.9		378.7
Less:
Cash and cash equivalents	92.0		62.8
Current portion of restricted cash	—		1.8
Non-current portion of restricted cash	0.5		0.5
Net Debt	$	264.4	$	313.6

EX-99.2

Exhibit 99.2 Fourth Quarter and Full Year 2019 Results Conference Call February 20, 2020

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, the expected  timing of onboarding new business deployment, our ability to integrate acquired businesses as planned and to realize the expected benefits from  acquisitions, our ability to successfully deliver on our commitments to our customers, 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, our quarterly reports on  Form 10‐Q 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, adjusted cost of services, adjusted SG&A expense 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 measures. 2

Q4 and Full Year 2019 Financial Highlights Fourth Quarter Financial Highlights . Revenue of $314.0 million, up $51.1 million and 19.4% compared to the same period last year . GAAP net income of $7.8 million, compared to GAAP net loss of $5.7 million in the same period last year . Adjusted EBITDA of $45.1 million, up $18.0 million compared to the same period last year Full Year 2019 Financial Highlights . Revenue of $1,186.1 million, up $317.6 million and 36.6% compared to 2018 . GAAP net income of $12.0 million, compared to GAAP net loss of $45.3 million in 2018 . Adjusted EBITDA of $168.0 million, up $111.0 million compared to 2018 3

2019 Business Highlights Strong Operational Execution on Contracted Book of Business . Faster margin progression relative to our model targets for customers in the margin‐ramp phase New Business Wins . $4.1 billion in new end‐to‐end net patient revenue (NPR) under management from net new customers,  the highest level in eight years.  . Quorum Health: $1.6B NPR . New Physician Group: $700M NPR . Rush University: $1.8B NPR  . 91 modular agreements signed Technology Investments . New innovation center in Salt Lake City, UT . Automation via Digital Transformation Office (DTO) . Patient Experience (PX) platform and SCI acquisition 4

2020 Priorities New Business Growth . Market dynamics remain favorable and pipeline continues to grow . Deals in late‐stage pipeline at the end of 2019 continue to progress  . Anticipate signing $3 billion in new NPR in 2020 Integrate SCI and commercialize PX platform . Integrate SCI’s digital patient interface and referral/scheduling technology with R1 Access and R1 Insight . Offer PX platform on a modular basis  Grow Physician Footprint . Formally launched physician offering, R1 Professional, in January . Opportunity to grow market share meaningfully with our comprehensive, differentiated offering Continued Execution, Successfully Onboard New Business . Fully mobilized to onboard Quorum, physician customer and Rush . Finalize deployment of DTO and ensure ongoing effort through Automation Center of Excellence 5

4Q’19 non‐GAAP Results –Q/Q and Y/Y Comparison ($ in millions) 4Q’19 3Q’19 4Q’18 Key change driver(s) • Q/Q: Contribution from Quorum Revenue $314.0 $301.2 $262.9 • Y/Y: Contribution from new  customers onboarded in 2019 • Q/Q: Quorum onboarding costs • Y/Y: New customer onboarding  Adjusted Cost of Services1 $246.3 $227.7 $211.3 costs, offset partly by productivity  improvement Adjusted SG&A expense1 $22.6 $24.6 $24.5 • Q/Q: Timing of corporate expenses • Q/Q: Quorum onboarding costs and  higher incentive compensation Adjusted EBITDA1 $45.1 $48.9 $27.1 • Y/Y: Continued progression of  operating partner customers along  the profitability curve Note1: Adjusted cost of services, adjusted SG&A expense and adjusted EBITDA are non‐GAAP measures.  6 A reconciliation of non‐GAAP to GAAP measures is provided in the Appendix of this presentation.  

2019 vs. 2018 Results (non‐GAAP) ($ in millions) 2019 2018 y/y chg. Key change driver(s) • Onboarding of new customers and  Revenue $1,186.1 $868.5 36.6% a full year of Intermedix • Onboarding of new customers,  offset in part by productivity  Adjusted Cost of Services1 $930.0 $731.7 27.1% improvement in the delivery of our  services • Investments in corporate IT and  Adjusted SG&A expense1 $88.1 $79.8 10.4% human resources infrastructure;   sales and marketing • Continued progression of operating  partner customers along the  Adjusted EBITDA1 $168.0 $57.0 194.7% profitability curve, offset partly by  onboarding costs for new  customers Note1: Adjusted cost of services, adjusted SG&A expense and adjusted EBITDA are non‐GAAP measures.  7 A reconciliation of non‐GAAP to GAAP measures is provided in the Appendix of this presentation.  

Additional Commentary . Net debt1 of $264.4 million as of 12/31/19, including restricted cash . Repaid $14 million in Q4’19; $28 million in 2H’19 . Expect to fund $150 million of SCI acquisition with incremental Term Loan A . Net interest expense of $4.0 million in Q4’19; $29.1 million in 2019 . Down $1.0M sequentially due to debt repayment and favorable LIBOR rates . Quarterly interest expense declined by ~50% after refinancing in June . Capex of $17.9 million in Q4’19; $61.0 million in 2019 . Primarily related to continued IT investments to support growth, as well as our DTO effort Note1: Net debt is a non‐GAAP measure. A reconciliation of non‐GAAP to GAAP measures is provided in the Appendix of this presentation. 8

Financial Outlook 2 2020 2021 1 Cash flow from operations expected to grow ~$100M in 2020 Note1:  Adjusted EBITDA is a non‐GAAP measure. Pease refer to the Appendix for a reconciliation of non‐GAAP financial measures. 9 Note2: Long‐term is defined as 3‐5 years post‐2020. 2020 guidance continues to assume addition of $3B in new end‐to‐end NPR under management.

Appendix 10

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 cost of services, adjusted SG&A expense and net debt. Adjusted EBITDA is defined as GAAP net income before net interest  income/expense, income tax provision/benefit, depreciation and amortization expense, share‐based compensation expense, expense arising from debt  extinguishment, strategic initiatives costs, transitioned employee restructuring expense, digital transformation office expenses, and certain other items.  Adjusted cost of services is defined as GAAP cost of services before share‐based compensation expense and depreciation and amortization expense.  Adjusted SG&A expense is defined as GAAP SG&A expense before share‐based compensation expense and depreciation and amortization expense. Net  debt is defined as total debt less cash and cash equivalents,  and 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 cost of services to non‐GAAP cost of services, GAAP SG&A expense to non‐ GAAP SG&A expense, total debt to net debt, and GAAP operating income guidance to non‐GAAP adjusted EBITDA guidance is provided on the following  slides. Adjusted EBITDA, adjusted cost of services, adjusted SG&A expense and net debt should be considered in addition to, but not as a substitute for,  the information presented in accordance with GAAP. 11

Reconciliation of GAAP to non‐GAAP Financials $ in millions Reconciliation of GAAP Net Income (Loss) to non‐GAAP Adjusted EBITDA Three Months Ended  Year Ended  Three Months Ended  December 31, December 31, September 30, 2019 2018 2019 2018 2019 Net income (loss)  $                             7.8  $                            (5.7)  $                           12.0  $                         (45.3)  $                             9.2  Net interest expense  4.0  10.7  29.1  26.3  5.0  Income tax provision (benefit) 2.5  (1.1) (2.2) (11.4) 9.4  Depreciation and amortization expense 15.8  11.2  55.7  38.8  14.1  Share‐based compensation expense 5.7  4.5  18.4  18.2  3.8  Loss on debt extinguishment — — 18.8  — ‐ Other expenses(1) 9.3  7.5  36.2  30.4  7.4  Adjusted EBITDA (non‐GAAP)  $                           45.1  $                           27.1  $                         168.0  $                           57.0  $                           48.9  Reconciliation of GAAP Cost of Services to Non‐GAAP Cost of Services Three Months Ended  Year Ended  Three Months Ended  December 31, December 31, September 30, 2019 2018 2019 2018 2019 Cost of services  $                         262.6  $                         222.7  $                         987.8  $                         770.6  $                         241.9  Less: Share‐based compensation expense 1.8 1.4 6.1 5.8 1.5 Depreciation and amortization expense 14.5 10.0 51.7 33.1 12.7 Non‐GAAP cost of services  $                         246.3  $                         211.3  $                         930.0  $                         731.7  $                         227.7  Reconciliation of GAAP SG&A to Non‐GAAP SG&A Three Months Ended  Year Ended  Three Months Ended  December 31, December 31, September 30, 2019 2018 2019 2018 2019 Selling, general and administrative  $                           27.8  $                           28.8  $                         104.4  $                           97.9  $                           28.3  Less: Share‐based compensation expense 3.9 3.1 12.3 12.4 2.3 Depreciation and amortization expense 1.3 1.2 4.0 5.7 1.4 Non‐GAAP Selling, general and   $                           22.6  $                           24.5  $                           88.1  $                           79.8  $                           24.6  administrative Note (1): Other expenses are comprised of reorganization‐related, strategic initiatives costs, a portion of DTO costs and certain other costs.  12

Reconciliation of GAAP to non‐GAAP Financials $ in millions Reconciliation of GAAP Operating Income Guidance to Non‐GAAP Adjusted EBITDA Guidance 2020 2021 GAAP Operating Income Guidance $145‐165 $205‐225 Plus: Depreciation and amortization expense $65‐75 $75‐85 Share‐based compensation expense $20‐25 $20‐25 Strategic initiatives, DTO, severance and other costs $25‐30 $20‐25 Adjusted EBITDA Guidance $260‐275 $320‐340 Reconciliation of Total Debt to Net Debt December 31, 2019 Senior Revolver  $    40.0  Senior Term Loan 316.9  Total debt 356.9  Less: Cash and cash equivalents 92.0  Current portion of restricted cash ‐ Non‐current portion of restricted cash  0.5  equivalents Net Debt  $  264.4  13

XML

Document and Entity Information Document	Feb. 20, 2020
Cover page.
Document Type	8-K
Document Period End Date	Feb. 20, 2020
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
Title of 12(b) Security	Common stock, par value $0.01 per share
Trading Symbol	RCM
Security Exchange Name	NASDAQ
Entity Central Index Key	0001472595
Amendment Flag	false