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 4, 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 August 4, 2020, R1 RCM Inc. (the “Company”) announced its financial results for its fiscal quarter ended June 30, 2020. 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 4, 2020
	99.2	August 4, 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:	August 4, 2020
		R1 RCM Inc.
		By:	/s/ Rachel Wilson
			Rachel Wilson
			Chief Financial Officer

EX-99.1

Exhibit 99.1

R1 RCM Reports Second Quarter 2020 Results

CHICAGO - August 4, 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 ended June 30, 2020.

Second Quarter 2020 Results:

•Revenue of $314.7 million, up $19.7 million and 6.7% compared to the same period last year

•GAAP net income of $15.1 million, compared to net loss of $5.2 million in the same period last year

•Adjusted EBITDA of $65.3 million, up $24.7 million compared to the same period last year

“I want to thank all of our employees for supporting our healthcare provider customers and the patients they serve during these challenging times. From enabling contactless check-in to enhancing collections, R1 has been at the forefront of helping customers navigate the current crisis, and I am incredibly proud of the team,” said Joe Flanagan, President and Chief Executive Officer of R1. “We continue to be prepared for a variety of scenarios in the back half of the year while ensuring R1 is positioned for sustained long-term growth.”

“Our second quarter results demonstrate our team's commitment to successfully navigate the challenges presented by COVID-19 through disciplined overhead cost reduction while supporting growth,” added Rachel Wilson, Chief Financial Officer and Treasurer. “With the recovery in patient volumes experienced to date and the visibility in our business model, we are pleased to re-introduce 2020 financial guidance.”

Outlook

For 2020, R1 expects to generate:

•Revenue of between $1,220 million and $1,250 million

•GAAP operating income of $90 million to $110 million

•Adjusted EBITDA of $230 million to $240 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 833-968-2190 (778-560-2796 outside the U.S. and Canada) using conference code number 5343659. 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 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.

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. These forward-looking statements include, among other things, statements about the potential impacts of the COVID-19 pandemic, our strategic initiatives, our capital plans, our costs, our ability to successfully deliver on our commitments to our customers, our ability to deploy new business as planned, our ability to successfully implement new technologies, our future financial performance, and our liquidity. 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 severity, magnitude and duration of the COVID-19 pandemic; responses to the pandemic by the government and healthcare providers and the direct and indirect impacts of the pandemic on our customers and personnel; the disruption of national, state and local economies as a result of the pandemic; the impact of the pandemic on our financial results, including possible lost revenue and increased expenses; and the factors discussed under the heading “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2019 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 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:

Natalie Joslin

678-585-1206

media@r1rcm.com

Table 1
R1 RCM Inc.
Consolidated Balance Sheets
(In millions)
	(Unaudited)
	June 30,		December 31,
	2020		2019
Assets
Current assets:
Cash and cash equivalents	$	123.1	$	92.0
Accounts receivable, net of $5.1 million and $2.8 million allowance	64.3		52.3
Accounts receivable, net of $0.1 million and $0.0 million allowance - related party	25.3		30.8
Prepaid expenses and other current assets	48.0		41.6
Total current assets	260.7		216.7
Property, equipment and software, net	112.3		116.9
Operating lease right-of-use assets	68.3		77.9
Intangible assets, net	240.0		164.7
Goodwill	379.8		253.2
Non-current deferred tax assets	39.1		64.2
Non-current portion of restricted cash equivalents	1.0		0.5
Other assets	39.7		35.0
Total assets	$	1,140.9	$	929.1
Liabilities
Current liabilities:
Accounts payable	$	24.2	$	20.2
Current portion of customer liabilities	19.9		14.0
Current portion of customer liabilities - related party	23.4		34.1
Accrued compensation and benefits	52.4		95.1
Current portion of operating lease liabilities	13.4		12.8
Current portion of long-term debt	25.8		16.3
Other accrued expenses	46.4		40.0
Total current liabilities	205.5		232.5
Non-current portion of customer liabilities - related party	18.2		18.6
Non-current portion of operating lease liabilities	76.5		82.7
Long-term debt	538.6		337.7
Other non-current liabilities	15.9		10.4
Total liabilities	854.7		681.9
Preferred Stock	240.1		229.1
Stockholders’ equity:
Common stock	1.3		1.3
Additional paid-in capital	375.2		372.7
Accumulated deficit	(245.3)		(277.8)
Accumulated other comprehensive loss	(10.4)		(4.5)
Treasury stock	(74.7)		(73.6)
Total stockholders’ equity	46.1		18.1
Total liabilities and stockholders’ equity	$	1,140.9	$	929.1

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,
	2020		2019		2020		2019
Net operating fees	$	287.8	$	252.9	$	568.7	$	494.2
Incentive fees	1.3		17.4		18.1		29.6
Other	25.6		24.7		48.4		47.1
Net services revenue	314.7		295.0		635.2		570.9
Operating expenses:
Cost of services	248.3		246.1		502.2		483.3
Selling, general and administrative	23.3		25.8		48.8		48.3
Other expenses	18.0		10.7		26.7		19.5
Total operating expenses	289.6		282.6		577.7		551.1
Income from operations	25.1		12.4		57.5		19.8
Loss on debt extinguishment	—		18.8		—		18.8
Net interest expense	4.8		9.9		8.6		20.1
Income (loss) before income tax provision (benefit)	20.3		(16.3)		48.9		(19.1)
Income tax provision (benefit)	5.2		(11.1)		15.6		(14.1)
Net income (loss)	$	15.1	$	(5.2)	$	33.3	$	(5.0)
Net income (loss) per common share:
Basic	$	0.04	$	(0.09)	$	0.10	$	(0.14)
Diluted	$	0.03	$	(0.09)	$	0.08	$	(0.14)
Weighted average shares used in calculating net income (loss) per common share:
Basic	115,067,552		110,956,014		114,754,298		110,382,509
Diluted	165,887,964		110,956,014		167,809,324		110,382,509

Table 3
R1 RCM Inc.
Consolidated Statements of Cash Flows (Unaudited)
(In millions)
	Six Months Ended June 30,
	2020		2019
Operating activities
Net income (loss)	$	33.3	$	(5.0)
Adjustments to reconcile net income (loss) to net cash provided by operations:
Depreciation and amortization	33.6		25.8
Amortization of debt issuance costs	0.5		1.2
Share-based compensation	9.1		9.0
Loss on disposal and right-of-use asset write-downs	4.5		—
Loss on debt extinguishment	—		18.8
Provision for credit losses	1.7		1.0
Deferred income taxes	15.1		(17.3)
Non-cash lease expense	6.0		5.6
Changes in operating assets and liabilities:
Accounts receivable and related party accounts receivable	(5.4)		25.4
Prepaid expenses and other assets	(10.5)		(10.1)
Accounts payable	4.5		7.2
Accrued compensation and benefits	(44.2)		(12.9)
Lease liabilities	(5.9)		(5.5)
Other liabilities	12.7		8.3
Customer liabilities and customer liabilities - related party	(9.7)		(7.5)
Net cash provided by operating activities	45.3		44.0
Investing activities
Purchases of property, equipment, and software	(31.1)		(32.3)
Acquisition of SCI, net of cash acquired and earn-out provision	(189.0)		—
Net cash used in investing activities	(220.1)		(32.3)
Financing activities
Issuance of senior secured debt, net of discount and issuance costs	190.6		321.8
Borrowings on revolver	50.0		60.0
Repayment of senior secured debt	(10.5)		(268.7)
Repayment of subordinated notes and prepayment penalty	—		(112.2)
Repayments on revolver	(20.0)		—
Exercise of vested stock options	4.3		7.7
Shares withheld for taxes	(1.1)		(4.7)
Finance lease payments	(0.7)		(0.4)
Other	(5.0)		—
Net cash provided by financing activities	207.6		3.5
Effect of exchange rate changes in cash, cash equivalents and restricted cash	(1.2)		0.3
Net increase in cash, cash equivalents and restricted cash	31.6		15.5
Cash, cash equivalents and restricted cash, at beginning of period	92.5		65.1
Cash, cash equivalents and restricted cash, at end of period	$	124.1	$	80.6

Table 4
R1 RCM Inc.
Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA (Unaudited)
(In millions)
	Three Months Ended June 30,				2020 vs. 2019 Change				Six Months Ended June 30,				2020 vs. 2019 Change
	2020		2019		Amount		%		2020		2019		Amount		%
Net income (loss)	$	15.1	$	(5.2)	$	20.3	390	%	$	33.3	$	(5.0)	$	38.3	766	%
Net interest expense	4.8		9.9		(5.1)		(52)	%	8.6		20.1		(11.5)		(57)	%
Income tax provision (benefit)	5.2		(11.1)		16.3		147	%	15.6		(14.1)		29.7		211	%
Depreciation and amortization expense	17.9		12.9		5.0		39	%	33.6		25.8		7.8		30	%
Share-based compensation expense	4.3		4.6		(0.3)		(7)	%	9.1		8.9		0.2		2	%
Loss on debt extinguishment	—		18.8		(18.8)		(100)	%	—		18.8		(18.8)		(100)	%
Other expenses	18.0		10.7		7.3		68	%	26.7		19.5		7.2		37	%
Adjusted EBITDA (non-GAAP)	$	65.3	$	40.6	$	24.7	61	%	$	126.9	$	74.0	$	52.9	71	%

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,
	2020		2019		2020		2019
Cost of services	$	248.3	$	246.1	$	502.2	$	483.3
Less:
Share-based compensation expense	1.5		1.5		3.4		2.8
Depreciation and amortization expense	17.0		12.1		31.4		24.5
Non-GAAP cost of services	$	229.8	$	232.5	$	467.4	$	456.0

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,
	2020		2019		2020		2019
Selling, general and administrative	$	23.3	$	25.8	$	48.8	$	48.3
Less:
Share-based compensation expense	2.8		3.1		5.7		6.1
Depreciation and amortization expense	0.9		0.8		2.2		1.3
Non-GAAP selling, general and administrative	$	19.6	$	21.9	$	40.9	$	40.9

Table 7
R1 RCM Inc.
Consolidated Non-GAAP Financial Information (Unaudited)
(In millions)
	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Net operating fees	$	287.8	$	252.9	$	568.7	$	494.2
Incentive fees	1.3		17.4		18.1		29.6
Other	25.6		24.7		48.4		47.1
Net services revenue	314.7		295.0		635.2		570.9
Operating expenses:
Cost of services (non-GAAP)	229.8		232.5		467.4		456.0
Selling, general and administrative (non-GAAP)	19.6		21.9		40.9		40.9
Sub-total	249.4		254.4		508.3		496.9
Adjusted EBITDA	$	65.3	$	40.6	$	126.9	$	74.0

Table 8
R1 RCM Inc.
Reconciliation of GAAP Operating Income Guidance to Non-GAAP Adjusted EBITDA Guidance (Unaudited)
(In millions)
	2020
GAAP Operating Income Guidance	$90-110
Plus:
Depreciation and amortization expense	$65-75
Share-based compensation expense	$20-25
Strategic initiatives, severance and other costs	$45-50
Adjusted EBITDA Guidance	$230-240

Table 9
R1 RCM Inc.
Reconciliation of Total Debt to Net Debt (Unaudited)
(In millions)
	June 30,		December 31,
	2020		2019
Senior Revolver	$	70.0	$	40.0
Senior Term Loan	497.5		316.9
	567.5		356.9
Less:
Cash and cash equivalents	123.1		92.0
Non-current portion of restricted cash equivalents	1.0		0.5
Net Debt	$	443.4	$	264.4

EX-99.2

Exhibit 99.2 Second Quarter 2020 Results Conference Call August 4, 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. These forward-looking statements include, among other things, statements about the potential impacts of the COVID-19 pandemic, our strategic initiatives, our capital plans, our costs, our ability to successfully deliver on our commitments to our customers, our ability to deploy new business as planned, our ability to successfully implement new technologies, our future financial performance and our liquidity. 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 severity, magnitude and duration of the COVID-19 pandemic; responses to the pandemic by the government and healthcare providers and the direct and indirect impacts of the pandemic on our customers and personnel; the disruption of national, state and local economies as a result of the pandemic; the impact of the pandemic on our financial results, including possible lost revenue and increased expenses; and the factors discussed under the heading “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2019, 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, non-GAAP cost of services, non-GAAP 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

Q2 Financial Highlights and 2020 Outlook Second Quarter 2020 Financial Highlights ▪ Revenue of $314.7 million, up $19.7 million and 6.7% compared to the same period last year ▪ GAAP net income of $15.1 million, compared to net loss of $5.2 million in the same period last year ▪ Adjusted EBITDA of $65.3 million, up $24.7 million compared to the same period last year 2020 Financial Outlook ▪ Revenue of $1,220 million to $1,250 million ▪ GAAP operating income of $90 million to $110 million ▪ Adjusted EBITDA of $230 million to $240 million Note: Adjusted EBITDA guidance includes anticipated headwind of $5 million from the pending sale of the EMS business and assumes no contribution from the RevWorks acquisition. 3

COVID-19 Update and Volume Trends Health and Safety of Workforce ▪ Provide protective equipment for frontline employees and ensure a safe environment by increasing work-from-home ▪ Continue to serve our customers without any disruption Actions we have taken to support our Customers ▪ Faster conversion of billings to cash ▪ Enablement of mobile registration and contactless check-in ▪ Assistance with COVID-related compliance and regulatory updates ▪ Telehealth billing support ▪ Scheduling of elective procedures as services restart Patient Volumes Started to Recover in Q2 ▪ Experienced successive monthly improvement through July relative to late March/early April lows ▪ Pace of recovery has been faster than we expected three months ago, with variation between different geographies and care settings 4

Deployment Update Penn State Health ▪ Initiated onboarding activities in May, proceeding on schedule under a virtual model ▪ Expect onboarding to conclude in the first quarter of 2021 Rush University System for Health (RUSH) ▪ Progressing on schedule, also under a virtual model ▪ Evolving COVID-19 restrictions in Illinois may impact some deployment activities; optimistic that we can complete onboarding by the end of 2020 $700 million NPR Physician Customer (signed in 3Q 2019) ▪ Currently 75% through deployment plan ▪ On track to complete onboarding in the fourth quarter Quorum Health ▪ Deployment activities complete ▪ Dedicated team will focus on optimizing performance 5

Commercial Update End-to-End and Modular Pipeline Up Sequentially ▪ Increase in RFP activity, as well interest from >$5 billion NPR health systems ▪ High degree of visibility to meet or exceed goal of $3 billion of new end-to-end NPR in 2020 RevWorks/Cerner Partnership ▪ RevWorks acquisition completed on August 3rd ▪ Via strategic partnership, we will offer our revenue cycle capabilities and expertise to Cerner’s current customers and new prospects ▪ This week, we will begin communicating to providers the enhanced value proposition that R1 and Cerner now offer Physician Solution Gaining Traction ▪ Physician market remains highly attractive for us - vendor landscape is highly fragmented and competitors generally have limited scale leverage ▪ Notable recent wins: Pinnacle Dermatology and Integrated Care Physicians 6

Digital Transformation Patient Experience Platform (PX) ▪ With the acquisition of SCI, we now have comprehensive digital patient interface capabilities across the front office, inclusive of scheduling, contactless patient intake and financial clearance ▪ Recent signings for PX include Boston Children’s, St. Jude Children’s, Nuvance Health, Houston Methodist and a $5B NPR health system ▪ We intend to further invest in advancing our capabilities and increasing market awareness of this offering Robotic Process Automation (RPA) ▪ Original portfolio of 13 routines fully in production; on track to exceed expected results ▪ 10 additional routines in various stages of development Machine Learning ▪ Presents significant opportunity to reduce inefficiency and improve productivity ▪ Leverages vast repository of structured data to improve operational performance ▪ Four proof-of-concepts launched with very encouraging results 7

2Q’20 Non-GAAP Results – Q/Q and Y/Y Comparison ($ in millions) 2Q’20 1Q’20 2Q’19 Key change driver(s) • Q/Q: Volume and incentive fee reduction due to COVID-19 Revenue $314.7 $320.5 $295.0 • Y/Y: New customer wins and organic growth at existing customers • Q/Q: Cost containment initiatives and lower employee expenses Non-GAAP Cost of Services1 $229.8 $237.6 $232.5 • Y/Y: Lower compensation costs, healthcare claims experience and CARES Act relief • Q/Q: Lower travel and marketing expenses due to COVID-19 Non-GAAP SG&A expense1 $19.6 $21.3 $21.9 • Y/Y: Lower travel and marketing expenses due to COVID-19 • Q/Q: Cost containment initiatives and lower employee expenses • Y/Y: Continued progression of Adjusted EBITDA1 $65.3 $61.6 $40.6 operating partner customers along the profitability curve, offset partly by onboarding costs Note1: Non-GAAP cost of services, non-GAAP SG&A expense and adjusted EBITDA are non-GAAP measures. 8 A reconciliation of non-GAAP to GAAP measures is provided in the Appendix of this presentation.

Additional Commentary Net debt1 of $443.4 million as of 6/30/20, including restricted cash ▪ Up sequentially due to incremental borrowing to fund SCI acquisition Sufficient liquidity to withstand a wide range of scenarios ▪ Cash, revolver availability and expected proceeds from EMS divestiture equate to over $285 million in cash that could be used for debt paydown, to invest in the business, or for acquisitions 2020 Financial Outlook ▪ Revenue of $1,220 million to $1,250 million ▪ Adjusted EBITDA of $230 million to $240 million Q3 2020 Financial Outlook ▪ Revenue of $290 million to $300 million ▪ Adjusted EBITDA in the low-to-mid $40 million range Note1: Net debt is a non-GAAP measure. A reconciliation of non-GAAP to GAAP measures is provided in the Appendix of this presentation. 9

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, severance and related employee benefits, 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 and total debt to net debt 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 Three Months Ended June 30, March 31, 2020 2019 2020 Net income (loss) $ 15.1 $ (5.2) $ 18.2 Net interest expense 4.8 9.9 3.8 Income tax provision (benefit) 5.2 (11.1) 10.4 Depreciation and amortization expense 17.9 12.9 15.7 Share-based compensation expense 4.3 4.6 4.8 Loss on debt extinguishment — 18.8 — Other expenses (1) 18.0 10.7 8.7 Adjusted EBITDA (non-GAAP) $ 65.3 $ 40.6 $ 61.6 Reconciliation of GAAP Cost of Services to Non-GAAP Cost of Services Three Months Ended Three Months Ended June 30, March 31, 2020 2019 2020 Cost of services $ 248.3 $ 246.1 $ 253.9 Less: Share-based compensation expense 1.5 1.5 1.9 Depreciation and amortization expense 17.0 12.1 14.4 Non-GAAP cost of services $ 229.8 $ 232.5 $ 237.6 Reconciliation of GAAP SG&A to Non-GAAP SG&A Three Months Ended Three Months Ended June 30, March 31, 2020 2019 2020 Selling, general and administrative $ 23.3 $ 25.8 $ 25.5 Less: Share-based compensation expense 2.8 3.1 2.9 Depreciation and amortization expense 0.9 0.8 1.3 Non-GAAP selling, general and administrative $ 19.6 $ 21.9 $ 21.3 Note (1): Other expenses are comprised of severance and related employee benefits, strategic initiatives costs, transitioned employees restructuring expense, a portion 12 of DTO costs and appreciation bonuses for the Company’s front-line employees and pandemic response mobilization efforts related to the COVID-19 pandemic.

Reconciliation of GAAP to Non-GAAP Financials $ in millions Reconciliation of GAAP Operating Income Guidance to Non-GAAP Adjusted EBITDA Guidance 2020 GAAP Operating Income Guidance $90-110 Plus: Depreciation and amortization expense $65-75 Share-based compensation expense $20-25 Strategic initiatives, severance and other costs $45-50 Adjusted EBITDA Guidance $230-240 Reconciliation of Total Debt to Net Debt June 30, December 31, 2020 2019 Senior Revolver $ 70.0 $ 40.0 Senior Term Loan 497.5 316.9 567.5 356.9 Less: Cash and cash equivalents 123.1 92.0 Non-current portion of restricted cash equivalents 1.0 0.5 Net Debt $ 443.4 $ 264.4 13

XML

Document and Entity Information Document	Aug. 04, 2020
Cover [Abstract]
Document Type	8-K
Document Period End Date	Aug. 04, 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