(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | ||||
(Address of principal executive offices) | (Zip code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
ý | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | Emerging growth company |
Item 1. | Financial Statements |
(Unaudited) | ||||||||||||||
March 31, | December 31, | |||||||||||||
2023 | 2022 | |||||||||||||
Assets | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Accounts receivable, net of $ | ||||||||||||||
Accounts receivable, net of $ | ||||||||||||||
Current portion of contract assets, net | ||||||||||||||
Prepaid expenses and other current assets | ||||||||||||||
Total current assets | ||||||||||||||
Property, equipment and software, net | ||||||||||||||
Operating lease right-of-use assets | ||||||||||||||
Non-current portion of contract assets, net | ||||||||||||||
Non-current portion of deferred contract costs | ||||||||||||||
Intangible assets, net | ||||||||||||||
Goodwill | ||||||||||||||
Deferred tax assets | ||||||||||||||
Other assets | ||||||||||||||
Total assets | $ | $ | ||||||||||||
Liabilities | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | $ | ||||||||||||
Current portion of customer liabilities | ||||||||||||||
Current portion of customer liabilities - related party | ||||||||||||||
Accrued compensation and benefits | ||||||||||||||
Current portion of operating lease liabilities | ||||||||||||||
Current portion of long-term debt | ||||||||||||||
Accrued expenses and other current liabilities | ||||||||||||||
Total current liabilities | ||||||||||||||
Non-current portion of customer liabilities | ||||||||||||||
Non-current portion of customer liabilities - related party | ||||||||||||||
Non-current portion of operating lease liabilities | ||||||||||||||
Long-term debt | ||||||||||||||
Deferred tax liabilities | ||||||||||||||
Other non-current liabilities | ||||||||||||||
Total liabilities | ||||||||||||||
Stockholders’ equity: | ||||||||||||||
Common stock, $ | ||||||||||||||
Additional paid-in capital | ||||||||||||||
Accumulated deficit | ( | ( | ||||||||||||
Accumulated other comprehensive loss | ( | ( | ||||||||||||
Treasury stock, at cost, | ( | ( | ||||||||||||
Total stockholders’ equity | ||||||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Net services revenue ($ | $ | $ | ||||||||||||
Operating expenses: | ||||||||||||||
Cost of services | ||||||||||||||
Selling, general and administrative | ||||||||||||||
Other expenses | ||||||||||||||
Total operating expenses | ||||||||||||||
Income from operations | ||||||||||||||
Net interest expense | ||||||||||||||
Income before income tax provision | ||||||||||||||
Income tax provision | ||||||||||||||
Net income | $ | $ | ||||||||||||
Net income per common share: | ||||||||||||||
Basic | $ | $ | ||||||||||||
Diluted | $ | $ | ||||||||||||
Weighted average shares used in calculating net income per common share: | ||||||||||||||
Basic | ||||||||||||||
Diluted | ||||||||||||||
Consolidated statements of comprehensive income (loss) | ||||||||||||||
Net income | $ | $ | ||||||||||||
Other comprehensive income (loss): | ||||||||||||||
Net change on derivatives designated as cash flow hedges, net of tax | ( | |||||||||||||
Foreign currency translation adjustments | ( | |||||||||||||
Total other comprehensive income (loss), net of tax | $ | ( | $ | ( | ||||||||||
Comprehensive income (loss) | $ | ( | $ |
Common Stock | Treasury Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total | |||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2022 | $ | ( | $ | ( | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||
Share-based compensation expense | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
CoyCo 2 share-based compensation expense | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock related to share-based compensation plans | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Exercise of vested stock options | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Acquisition of treasury stock related to share-based compensation plans | — | — | ( | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||
Net change on derivatives designated as cash flow hedges, net of tax of $ | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2023 | $ | ( | $ | ( | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||
Common Stock | Treasury Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total | |||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2021 | $ | ( | $ | ( | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||
Share-based compensation expense | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock related to share-based compensation plans | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Exercise of vested stock options | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Acquisition of treasury stock related to share-based compensation plans | — | — | ( | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock | — | — | ( | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||
Net change on derivatives designated as cash flow hedges, net of tax of $ | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2022 | $ | ( | $ | ( | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Operating activities | ||||||||||||||
Net income | $ | $ | ||||||||||||
Adjustments to reconcile net income to net cash provided by operations: | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Amortization of debt issuance costs | ||||||||||||||
Share-based compensation | ||||||||||||||
CoyCo 2 share-based compensation | ||||||||||||||
Loss on disposal and right-of-use asset write-downs | ||||||||||||||
Provision for credit losses | ||||||||||||||
Deferred income taxes | ||||||||||||||
Non-cash lease expense | ||||||||||||||
Other | ||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||
Accounts receivable and related party accounts receivable | ||||||||||||||
Contract assets | ( | |||||||||||||
Prepaid expenses and other assets | ( | |||||||||||||
Accounts payable | ( | |||||||||||||
Accrued compensation and benefits | ( | ( | ||||||||||||
Lease liabilities | ( | ( | ||||||||||||
Other liabilities | ||||||||||||||
Customer liabilities and customer liabilities - related party | ( | ( | ||||||||||||
Net cash provided by operating activities | ||||||||||||||
Investing activities | ||||||||||||||
Purchases of property, equipment, and software | ( | ( | ||||||||||||
Other | ( | |||||||||||||
Net cash used in investing activities | ( | ( | ||||||||||||
Financing activities | ||||||||||||||
Repayment of senior secured debt | ( | ( | ||||||||||||
Repayments on revolver | ( | |||||||||||||
Exercise of vested stock options | ||||||||||||||
Purchase of treasury stock | ( | |||||||||||||
Shares withheld for taxes | ( | ( | ||||||||||||
Other | ( | ( | ||||||||||||
Net cash used in financing activities | ( | ( | ||||||||||||
Effect of exchange rate changes in cash, cash equivalents and restricted cash | ( | |||||||||||||
Net decrease in cash, cash equivalents and restricted cash | ( | ( | ||||||||||||
Cash, cash equivalents and restricted cash, at beginning of period | ||||||||||||||
Cash, cash equivalents and restricted cash, at end of period | $ | $ | ||||||||||||
Supplemental disclosures of cash flow information | ||||||||||||||
Property, equipment and software purchases not paid | $ | $ | ||||||||||||
Company Name | Description of the Business | Description of the Acquisition | ||||||
Revint Holdings, LLC (“Cloudmed”) | Provider of revenue intelligence solutions | Purchased all outstanding equity interests in exchange for shares of common stock of the Company and cash. The shares of common stock received by the Cloudmed sellers are subject to an |
Purchase Price Allocation | ||||||||
Total purchase consideration | $ | |||||||
Allocation of consideration to assets acquired and liabilities assumed: | ||||||||
Cash and cash equivalents | $ | |||||||
Accounts receivable | ||||||||
Current portion of contract assets | ||||||||
Property, equipment and software | ||||||||
Operating lease right-of-use assets | ||||||||
Non-current portion of contract assets | ||||||||
Intangible assets | ||||||||
Goodwill | ||||||||
Other assets | ||||||||
Accounts payable | ( | |||||||
Customer liabilities | ( | |||||||
Accrued compensation and benefits | ( | |||||||
Operating lease liabilities | ( | |||||||
Deferred income tax liabilities | ( | |||||||
Other liabilities | ( | |||||||
Net assets acquired | $ |
Three Months Ended March 31, 2022 | ||||||||
Net services revenue | $ | |||||||
Net income | $ |
Three Months Ended March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Net operating fees | $ | $ | ||||||||||||
Incentive fees | ||||||||||||||
Modular and other (1) | ||||||||||||||
Net services revenue | $ | $ |
March 31, 2023 | December 31, 2022 | |||||||||||||
Contract assets, net | ||||||||||||||
Current | $ | $ | ||||||||||||
Non-current | ||||||||||||||
Total contract assets, net | $ | $ | ||||||||||||
Contract liabilities | ||||||||||||||
Current (1) | $ | $ | ||||||||||||
Non-current (2) | ||||||||||||||
Total contract liabilities | $ | $ |
Contract Assets, net | ||||||||
Balance as of December 31, 2022 | $ | |||||||
Revenue recognized | ||||||||
Amounts billed | ( | |||||||
Other (1) | ( | |||||||
Balance as of March 31, 2023 | $ |
Contract Liabilities | ||||||||
Balance as of December 31, 2022 | $ | ( | ||||||
Advanced billings - January 1, 2023 (1) | ( | |||||||
Advanced billings recognized | ||||||||
Additions | ( | |||||||
Revenue recognized | ||||||||
Balance as of March 31, 2023 | $ | ( |
Net operating fees | Incentive fees | ||||||||||
Remainder of 2023 | $ | $ | |||||||||
2024 | |||||||||||
2025 | |||||||||||
2026 | |||||||||||
2027 | |||||||||||
2028 | |||||||||||
Thereafter | |||||||||||
Total | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Beginning balance (1) | $ | $ | ||||||||||||
Provision (recoveries) | ||||||||||||||
Write-offs | ( | ( | ||||||||||||
Ending balance (1) | $ | $ |
March 31, 2023 | December 31, 2022 | |||||||||||||
Senior Revolver (1) | $ | $ | ||||||||||||
Term A Loans | ||||||||||||||
Term B Loan | ||||||||||||||
Unamortized discount and issuance costs | ( | ( | ||||||||||||
Total debt | ||||||||||||||
Less: Current maturities | ( | ( | ||||||||||||
Total long-term debt | $ | $ |
Scheduled Maturities | ||||||||
Remainder of 2023 | $ | |||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
2028 | ||||||||
Thereafter | ||||||||
Total | $ |
March 31, 2023 | December 31, 2022 | |||||||||||||
Foreign currency forward contracts | ||||||||||||||
Prepaid expenses and other current assets | $ | $ | ||||||||||||
Other accrued expenses | ||||||||||||||
Total foreign current forward contracts | $ | $ | ||||||||||||
Interest rate swaps | ||||||||||||||
Prepaid expenses and other current assets | $ | $ | ||||||||||||
Other assets | ||||||||||||||
Other accrued expenses | ||||||||||||||
Total interest rate swaps | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Share-Based Compensation Expense Allocation Details: | ||||||||||||||
Cost of services | $ | $ | ||||||||||||
Selling, general and administrative | ||||||||||||||
Total share-based compensation expense (1) | $ | $ |
Options | Weighted- Average Exercise Price | |||||||||||||
Outstanding at December 31, 2022 | $ | |||||||||||||
Granted | ||||||||||||||
Exercised | ( | |||||||||||||
Canceled/forfeited | ( | |||||||||||||
Expired | ||||||||||||||
Outstanding at March 31, 2023 | $ | |||||||||||||
Outstanding, vested and exercisable at March 31, 2023 | $ | |||||||||||||
Outstanding, vested and exercisable at December 31, 2022 | $ |
Weighted- Average Grant Date Fair Value | ||||||||||||||||||||||||||
RSUs | PBRSUs | RSU | PBRSU | |||||||||||||||||||||||
Outstanding and unvested at December 31, 2022 | $ | $ | ||||||||||||||||||||||||
Granted | ||||||||||||||||||||||||||
Performance factor adjustment | ||||||||||||||||||||||||||
Vested | ( | ( | ||||||||||||||||||||||||
Forfeited | ( | ( | ||||||||||||||||||||||||
Outstanding and unvested at March 31, 2023 | $ | $ | ||||||||||||||||||||||||
Shares surrendered for taxes for the three months ended March 31, 2023 | ||||||||||||||||||||||||||
Cost of shares surrendered for taxes for the three months ended March 31, 2023 (in millions) | $ | $ | ||||||||||||||||||||||||
Shares surrendered for taxes for the three months ended March 31, 2022 | ||||||||||||||||||||||||||
Cost of shares surrendered for taxes for the three months ended March 31, 2022 (in millions) | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Business acquisition costs (1) | $ | $ | ||||||||||||
Integration costs (2) | ||||||||||||||
Strategic initiatives (3) | ||||||||||||||
Global business services center expansion project in the Philippines (4) | ||||||||||||||
Facility-exit charges (5) | ||||||||||||||
Other (6) | ||||||||||||||
Total other expenses | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Net income | $ | $ | ||||||||||||
Basic weighted-average common shares | ||||||||||||||
Add: Effect of dilutive equity awards | ||||||||||||||
Add: Effect of dilutive warrants | ||||||||||||||
Diluted weighted average common shares | ||||||||||||||
Net income per common share (basic) | $ | $ | ||||||||||||
Net income per common share (diluted) | $ | $ |
Three Months Ended March 31, | ||||||||||||||
Customer Name | 2023 | 2022 | ||||||||||||
Ascension and its affiliates | % | % | ||||||||||||
Intermountain Healthcare | % | % |
Three Months Ended March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Cost of services | $ | $ | ||||||||||||
Selling, general and administrative | ||||||||||||||
Total depreciation and amortization | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||
Operating cash flows for operating leases | $ | $ | ||||||||||||
Right-of-use assets obtained in exchange for operating lease obligations: | ||||||||||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Three Months Ended March 31, | 2023 vs. 2022 Change | |||||||||||||||||||||||||
2023 | 2022 | Amount | % | |||||||||||||||||||||||
(In millions, except percentages) | ||||||||||||||||||||||||||
Consolidated Statement of Operations Data: | ||||||||||||||||||||||||||
Net operating fees | $ | 361.0 | $ | 322.8 | $ | 38.2 | 12 | % | ||||||||||||||||||
Incentive fees | 23.6 | 30.2 | (6.6) | (22) | % | |||||||||||||||||||||
Modular and other | 161.0 | 32.7 | 128.3 | 392 | % | |||||||||||||||||||||
Total net services revenue | 545.6 | 385.7 | 159.9 | 41 | % | |||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||
Cost of services | 434.7 | 296.5 | 138.2 | 47 | % | |||||||||||||||||||||
Selling, general and administrative | 47.0 | 28.9 | 18.1 | 63 | % | |||||||||||||||||||||
Other expenses | 30.2 | 17.1 | 13.1 | 77 | % | |||||||||||||||||||||
Total operating expenses | 511.9 | 342.5 | 169.4 | 49 | % | |||||||||||||||||||||
Income from operations | 33.7 | 43.2 | (9.5) | (22) | % | |||||||||||||||||||||
Net interest expense | 30.7 | 4.7 | 26.0 | 553 | % | |||||||||||||||||||||
Net income before income tax provision | 3.0 | 38.5 | (35.5) | (92) | % | |||||||||||||||||||||
Income tax provision | 2.7 | 9.1 | (6.4) | (70) | % | |||||||||||||||||||||
Net income | $ | 0.3 | $ | 29.4 | $ | (29.1) | (99) | % | ||||||||||||||||||
Adjusted EBITDA (1) | $ | 142.2 | $ | 89.3 | $ | 52.9 | 59 | % |
Three Months Ended March 31, | 2023 vs. 2022 Change | |||||||||||||||||||||||||
2023 | 2022 | Amount | % | |||||||||||||||||||||||
(In millions, except percentages) | ||||||||||||||||||||||||||
Net income | $ | 0.3 | $ | 29.4 | $ | (29.1) | (99) | % | ||||||||||||||||||
Net interest expense | 30.7 | 4.7 | 26.0 | 553 | % | |||||||||||||||||||||
Income tax provision | 2.7 | 9.1 | (6.4) | (70) | % | |||||||||||||||||||||
Depreciation and amortization expense | 66.0 | 18.9 | 47.1 | 249 | % | |||||||||||||||||||||
Share-based compensation expense (1) | 10.5 | 10.1 | 0.4 | 4 | % | |||||||||||||||||||||
CoyCo 2 share-based compensation expense (2) | 1.8 | — | 1.8 | 100 | % | |||||||||||||||||||||
Other expenses (3) | 30.2 | 17.1 | 13.1 | 77 | % | |||||||||||||||||||||
Adjusted EBITDA (non-GAAP) | $ | 142.2 | $ | 89.3 | $ | 52.9 | 59 | % |
Three Months Ended March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
(In millions) | ||||||||||||||
Net cash provided by operating activities | $ | 54.7 | $ | 30.9 | ||||||||||
Net cash used in investing activities | $ | (25.6) | $ | (10.0) | ||||||||||
Net cash used in financing activities | $ | (35.4) | $ | (26.2) |
Item 3. | Qualitative and Quantitative Disclosures about Market Risk |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) | Maximum Dollar Value of Shares that May Yet be Purchased Under Publicly Announced Plans or Programs (in millions) (1) | ||||||||||||||||||||||
January 1, 2023 through January 31, 2023 | — | $ | — | — | $ | 453.2 | ||||||||||||||||||||
February 1, 2023 through February 28, 2023 | — | — | — | 453.2 | ||||||||||||||||||||||
March 1, 2023 through March 31, 2023 | — | — | — | 453.2 | ||||||||||||||||||||||
(1) | On October 22, 2021, the Board adopted a new repurchase program and authorized the repurchase of up to $200.0 million of our common stock from time to time in the open market or in privately negotiated transactions (the “2021 Repurchase Program”). On January 9, 2022, the Board increased the authorization under the 2021 Repurchase Program to an aggregate amount of up to $500.0 million. The average price paid per share of common stock repurchased under the 2021 Repurchase Program is the execution price, including commissions paid to brokers. The timing and amount of any shares repurchased under the 2021 Repurchase Program will be determined by our management based on its evaluation of market conditions and other factors. The 2021 Repurchase Program may be suspended or discontinued at any time. | ||||
Item 5. | Other Information |
Item 6. | Exhibits |
Exhibit Number | Exhibit Description | ||||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | ||||
101.SCH | XBRL Taxonomy Extension Schema Document | ||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | ||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | ||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | ||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | ||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* | Furnished herewith. | ||||
R1 RCM INC. | |||||
By: | /s/ Lee Rivas | ||||
Lee Rivas | |||||
Chief Executive Officer | |||||
By: | /s/ Jennifer Williams | ||||
Jennifer Williams | |||||
Chief Financial Officer and Treasurer |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
10 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Accounts receivable, allowance | $ 16.0 | $ 15.1 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 750,000,000 | 750,000,000 |
Common stock, shares issued (in shares) | 442,439,169 | 439,950,125 |
Common stock, shares outstanding (in shares) | 418,176,363 | 416,597,885 |
Treasury stock, shares (in shares) | 24,262,806 | 23,352,240 |
Related Party | ||
Accounts receivable, allowance | $ 0.1 | $ 0.1 |
Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Income Statement [Abstract] | ||
Net services revenue, from related parties | $ 216.8 | $ 216.7 |
Consolidated Statements of Stockholders' Equity (Unaudited) (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Accumulated Other Comprehensive Loss | ||
Net change on derivatives designated as cash flow hedges, tax | $ 0.5 | $ 0.0 |
Business Description and Basis of Presentation |
3 Months Ended |
---|---|
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business Description and Basis of Presentation | Business Description and Basis of Presentation Business Description R1 RCM Inc. (the “Company”) is a leading provider of technology-driven solutions that transform the patient experience and financial performance of healthcare providers. The Company helps healthcare providers generate sustainable improvements in their operating margins and cash flows while also enhancing patient, physician, and staff satisfaction for its customers. Basis of Presentation The accompanying unaudited consolidated financial statements reflect the Company’s financial position as of March 31, 2023, the results of operations of the Company for the three months ended March 31, 2023 and 2022, and the cash flows of the Company for the three months ended March 31, 2023 and 2022. These financial statements include the accounts of R1 RCM Inc. and its wholly-owned subsidiaries. All material intercompany amounts have been eliminated in consolidation. These financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial reporting and as required by the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures required for complete financial statements are not included herein. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the interim financial information, have been included. Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for any other interim period or for the fiscal year ending December 31, 2023. When preparing financial statements in conformity with GAAP, the Company makes a number of significant estimates, assumptions, and judgments in the preparation of the financial statements. Actual results could differ from those estimates. For a more complete discussion of the Company’s significant accounting policies and other information, the unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements included in the Company’s 2022 Form 10-K. Recently Issued Accounting Standards and Disclosures In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”). ASU 2022-03 clarifies that a contractual sale restriction on an equity security should not be considered in measuring the security’s fair value. The Company will adopt ASU 2022-03 prospectively effective January 1, 2024 and is currently evaluating the impact of the standard on its consolidated financial statements.
|
Acquisitions |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination and Asset Acquisition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | AcquisitionsAssets acquired and liabilities assumed in a business combination are recorded at their estimated fair value on the date of the acquisition. The difference between the purchase price amount and the net fair value of assets acquired and liabilities assumed is recognized as goodwill on the balance sheet if the purchase price exceeds the estimated net fair value or as a bargain purchase gain on the income statement if the purchase price is less than the estimated net fair value. The allocation of the purchase price may be modified up to one year after the acquisition date as more information is obtained about the fair value of assets acquired and liabilities assumed. Prior Acquisitions During 2022, the Company acquired the following business:
The purchase price has been provisionally allocated to assets acquired and liabilities assumed based on their fair value as of the acquisition date. The fair value estimate of assets acquired and liabilities assumed is pending the completion of various elements, including gathering further information to ensure the completeness of assets acquired and liabilities assumed and the finalization of an independent appraisal of their respective fair values, which is subject to final review by the Company’s management. Accordingly, management considers the balances shown in the following table to be preliminary, and there could be adjustments to the consolidated financial statements, including changes in our amortization expense related to the valuation of intangible assets acquired and their respective useful lives, among other adjustments. The preliminary fair value of assets acquired and liabilities assumed is:
Measurement period adjustments The Company had various measurement period adjustments due to additional information received since December 31, 2022. The significant adjustments included a reduction to deferred income tax liabilities and a corresponding decrease to goodwill of $9.8 million related to updated tax return information. RevWorks In 2020, the Company purchased certain assets relating to the RevWorks services business from Cerner Corporation. In accordance with the purchase agreement, the Company paid the first deferred payment of $12.5 million in the third quarter of 2021. The remaining deferred payment of $12.5 million was payable on the second anniversary of the closing date (August 2022) and is included in other accrued expenses on the Consolidated Balance Sheet as of March 31, 2023 as it had not been paid as of such date. The two deferred payments related to the RevWorks acquisition were contractual obligations of the Company; however, they are refundable to the Company if certain RevWorks customer revenue targets defined in the purchase agreement for the first two years following the acquisition are not achieved. The parties are currently engaged in arbitration to finalize the remaining deferred payment and contingently refundable consideration amounts. The contingently refundable consideration is stated at an amount approximating the amount expected to be realized and is included in other current assets on the Consolidated Balance Sheet as of March 31, 2023. Pro Forma Results The following table summarizes, on a pro forma basis, the combined results of the Company as though the Cloudmed acquisition had occurred as of January 1, 2021. These pro forma results are not necessarily indicative of the actual consolidated results had the acquisition occurred as of that date or of the future consolidated operating results for any period. Pro forma results are:
Adjustments were made to earnings to adjust depreciation and amortization to reflect the fair value of identified assets acquired, to adjust share-based compensation expense for awards granted in connection with the acquisition, to record the effects of extinguishing the debt of the acquired company and replacing it with the debt of the Company, to adjust timing of acquisition related costs incurred by the Company, and to record the income tax effect of these adjustments.
|
Revenue Recognition |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | Revenue Recognition Revenue is measured based on consideration specified in a contract with a customer, and presented net of any sales incentives and amounts collected on behalf of third parties. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a service to a customer, which is typically over the contact term. Estimates of variable consideration are included in revenue to the extent that it is probable that a significant reversal of cumulative revenue will not occur once the uncertainty is resolved. Disaggregation of Revenue In the following table, revenue is disaggregated by source of revenue:
(1) Modular and other revenue primarily consists of $125.8 million in service fees related to Cloudmed for the three months ended March 31, 2023, revenue integrity solutions, practice management (“PM”) services, physician advisory services (“PAS”), and software subscription revenue. Contract Balances The following table provides information about contract assets, net and contract liabilities from contracts with customers:
(1) Current contract liabilities include $8.8 million and $7.6 million classified in the current portion of customer liabilities and $2.2 million and $2.1 million classified in the current portion of customer liabilities - related party as of March 31, 2023 and December 31, 2022, respectively. (2) Non-current contract liabilities include $5.2 million and $5.0 million classified in the non-current portion of customer liabilities and $13.2 million and $13.7 million classified in the non-current portion of customer liabilities - related party as of March 31, 2023 and December 31, 2022, respectively. The contract assets, net balance will increase or decrease based on the timing of invoices and recognition of revenue. Prior to the Cloudmed acquisition, the Company did not have significant contract assets. Significant changes in the carrying amount of contract assets, net for the three months ended March 31, 2023 were as follows:
(1) Other primarily includes adjustments made during the period to the allowance for credit losses.
(1) The Company records advanced billings to contract liabilities and accounts receivable on the first day of the respective service period, which are earned during the quarter. Transaction Price Allocated to the Remaining Performance Obligation The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period. The estimated revenue does not include amounts of variable consideration that are constrained.
The amounts presented in the table above include variable fee estimates of the Company’s physician groups revenue cycle management (“RCM”) services contracts, fixed fees, and forecasted incentive fees. Fixed fees are typically recognized ratably as the performance obligation is satisfied and forecasted incentive fees are measured cumulatively over the contractually defined performance period. Estimates of revenue expected to be recognized in future periods exclude unexercised customer options to purchase services within the Company’s PAS contracts that do not represent material rights to the customer. The Company does not disclose information about remaining performance obligations with an original expected duration of one year or less and has elected an exemption to the disclosure requirements related to estimate variable consideration and an exemption where the Company has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date.
|
Accounts Receivable and Allowance for Credit Losses |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable and Allowance for Credit Losses | Accounts Receivable and Allowance for Credit LossesAccounts receivable is comprised of invoiced and unbilled balances due from modular services and end-to-end RCM customers, which are presented net after considering cost reimbursements owed to end-to-end RCM customers. The Company evaluates its accounts receivable for expected credit losses quarterly. The Company maintains an estimated allowance for credit losses to reduce its accounts receivable to the amount that it believes will be collected. This allowance is based on the Company’s historical experience, its assessment of each customer’s ability to pay, the length of time a balance has been outstanding, input from key Company resources assigned to each customer, the status of any ongoing operations with each applicable customer, and business and industry factors such as significant shifts in the healthcare environment which the Company believes may have impacted or will impact its customers’ financial health and ability to pay. The Company has presented the rollforward below on a consolidated basis as the currently expected credit losses for its large integrated healthcare system customers are not anticipated to be material. Movements in the allowance for credit losses related to accounts receivable are as follows:
(1) The 2023 balance includes an allowance for credit losses related to a physician customer of $10.1 million that was established in the third quarter of 2022. Management continues to monitor collections and the financial condition of this customer. No changes were made in the current period. The Company acquired contract assets through the Cloudmed acquisition. As of March 31, 2023, there was an allowance for credit losses of $2.6 million against total contract assets.
|
Debt |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt The carrying amounts of debt consist of the following:
(1) As of March 31, 2023, the Company had $90.0 million in borrowings, $0.9 million letters of credit outstanding, and $509.1 million of availability under the $600.0 million senior secured revolving credit facility (“Senior Revolver ”). Second Amended and Restated Senior Secured Credit Facilities On June 21, 2022, the Company, R1 RCM Holdco Inc. (f/k/a R1 RCM Inc.), and certain of its subsidiaries entered into a second amended and restated senior credit agreement (the “Second A&R Credit Agreement”) with Bank of America, N.A., as administrative agent, and the lenders named therein, governing the Company’s second amended and restated senior secured credit facilities (the “Senior Secured Credit Facilities”), consisting of the $691.3 million existing senior secured term loan A facility (the “Existing Term A Loan”), a $540.0 million senior secured incremental term loan A facility (the “Incremental Term A Loan,” and together with the Existing Term A Loan, the “Term A Loans”), a $500.0 million senior secured term loan B facility (the “Term B Loan,” and together with the Term A Loans, the “Senior Term Loans”), and the $600.0 million Senior Revolver. In conjunction with entering into the Second A&R Credit Agreement, the Company incurred $7.2 million and capitalized $6.4 million of debt issuance costs. The interest rate as of March 31, 2023 was 7.31% for the Term A Loans and Senior Revolver and 7.81% for the Term B Loan. The Second A&R Credit Agreement contains a number of financial and non-financial covenants. The Company was in compliance with all of the covenants in the Second A&R Credit Agreement as of March 31, 2023. The obligations under the Second A&R Credit Agreement are secured by a pledge of 100% of the capital stock of certain domestic subsidiaries owned by the Company and a security interest in substantially all of the Company’s tangible and intangible assets and the tangible and intangible assets of certain domestic subsidiaries. Debt Maturities Scheduled maturities of the Company’s long-term debt are summarized as follows:
For further details on the Second A&R Credit Agreement, refer to Note 10 of the Company’s 2022 Form 10-K.
|
Derivative Financial Instruments |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial InstrumentsThe Company utilizes cash flow hedges to manage its currency risk arising from its global business services centers. As of March 31, 2023, the Company has recorded $1.1 million of unrealized gains in accumulated other comprehensive loss related to foreign currency hedges. The Company estimates that $1.1 million of gains reported in accumulated other comprehensive loss are expected to be reclassified into earnings within the next 9 months. Amounts reclassified into cost of services were a net gain of $0.3 million and $0.2 million during the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, the Company’s foreign currency forward contracts have maturities extending no later than December 31, 2023, and had a total notional value of $90.2 million. The Company also utilizes cash flow hedges to reduce variability in interest cash flows from its outstanding debt. As of March 31, 2023, the Company has recorded $9.9 million of unrealized gains in accumulated other comprehensive loss related to interest rate swaps. The Company estimates that $8.3 million of gains reported in accumulated other comprehensive loss are expected to be reclassified into earnings within the next 12 months. Amounts reclassified into interest expense were a net gain of $1.9 million and a net loss of $0.3 million during the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, the Company’s interest rate swaps extend no later than June 30, 2025, and had a total notional value of $500.0 million. The location and fair value of derivative instruments designated as hedges in the Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022 are as follows:
As of March 31, 2023 and December 31, 2022, the accumulated gain, net of tax, recognized in accumulated other comprehensive loss was $8.2 million and $9.9 million, respectively. The Company classifies cash flows from its derivative programs as cash flows from operating activities in the Consolidated Statements of Cash Flows. Fair values for derivative financial instruments are based on prices computed using third-party valuation models and are classified as Level 2 in accordance with the three-level hierarchy of fair value measurements. On July 5, 2022, the Company and Sutter Health (“Sutter”) entered into an agreement regarding the potential purchase of a business that would expand the Company’s service capabilities (the “Sutter Put Right Agreement”). This agreement is effective through approximately the end of 2023 and allows Sutter to sell the business to the Company for $150.0 million, subject to the negotiation of a definitive agreement and the satisfaction of agreed upon closing conditions, including the requirement that the purchase price be deemed to be fair value at the time of the potential transaction. Assuming an agreement is reached, the Company and Sutter would also need to reach agreement as to whether the purchase price would be paid in cash or shares of the Company’s common stock.
|
Share-Based Compensation |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | Share-Based Compensation The share-based compensation expense relating to the Company’s stock options, RSUs, and performance-based restricted stock units (“PBRSUs”) for the three months ended March 31, 2023 and 2022 was $12.3 million and $10.1 million, respectively, with related tax benefits of approximately $2.6 million and $1.8 million, respectively. The Company accounts for forfeitures as they occur. Excess tax benefits and shortfalls for share-based payments are recognized in income tax expense and included in operating activities. The Company recognized $0.5 million and $2.5 million of income tax benefit from windfalls associated with vesting and exercises of equity awards for the three months ended March 31, 2023 and 2022, respectively. Total share-based compensation costs that have been included in the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) were as follows:
(1) Included in the share-based compensation expense above is $1.8 million of CoyCo 2, L.P. (“CoyCo 2”) share-based compensation expense for the three months ended March 31, 2023. See further discussion below. The Company uses the Black-Scholes option pricing model to estimate the fair value of its service-based options as of their grant dates. The volatility for the options was calculated based on an analysis of historical volatility. The Company assesses current performance on performance-based PBRSUs by reviewing historical performance to date, along with any adjustments which have been approved to the reported performance, and changes to the projections to determine the probable outcome of the awards. The current estimates are then compared to the scoring metrics and any necessary adjustments are reflected in the current period to update share-based compensation expense to the current performance expectations. A Monte Carlo simulation was used to estimate the fair value of the Unvested Units (as defined below), which are being amortized over a period of 4 years on a straight-line basis. The volatility for the Unvested Units was calculated based on an analysis of historical and implied volatility. Stock options A summary of the options activity during the three months ended March 31, 2023 is shown below:
Restricted stock units and performance-based restricted stock units A summary of the RSU and PBRSU activity during the three months ended March 31, 2023 is shown below:
Upon consummation of the Cloudmed acquisition, outstanding restricted units of Cloudmed were replaced by an aggregate 1,536,220 RSUs of the Company. The Company also issued an aggregate of 3,173,184 inducement RSUs and PBRSUs to certain employees of Cloudmed under Nasdaq Listing Rule 5635(c)(4) pursuant to its newly adopted 2022 Inducement Plan. The Company’s RSU and PBRSU agreements allow employees to surrender to the Company shares of common stock upon vesting of their RSUs and PBRSUs in lieu of their payment of the required personal employment-related taxes. Shares surrendered for payment of personal employment-related taxes are held in treasury. Outstanding PBRSUs vest upon satisfaction of both time-based and performance-based conditions. Depending on the award, performance condition targets may include cumulative adjusted EBITDA, end-to-end RCM agreement growth, modular sales revenue, or other specific performance factors. Depending on the percentage level at which the performance-based conditions are satisfied, the number of shares vesting could be between 0% and 200% of the number of PBRSUs originally granted. Based on the established targets, the maximum number of shares that could vest for all outstanding PBRSUs is 9,852,450. CoyCo 2, L.P. Limited Partnership Units As part of the transactions contemplated by the Cloudmed acquisition, equity awards held by certain employees of Cloudmed (“Former Class P Units”) were modified, through a series of transactions, into awards (“Management Units”) of CoyCo 2. The Management Units issued by CoyCo 2 are treated as share-based compensation under ASC 718, Compensation — Stock Compensation. The Former Class P Units were originally issued to employees of Cloudmed and its affiliates (“Participants”) in connection with and as a part of the compensation and incentive arrangements between Cloudmed and such Participants prior to the consummation of the Cloudmed acquisition. A portion of the Former Class P Units immediately vested upon the closing of the Cloudmed acquisition; however, certain Former Class P Units that were subject to performance-based vesting conditions did not become vested upon the closing of the Cloudmed acquisition (“Unvested Units”). In connection with the Cloudmed acquisition, Cloudmed caused the Former Class P Units, including the Unvested Units, to be converted into Management Units. At the time of the closing of the Cloudmed acquisition, 97,875 Unvested Units were converted into 514,986 Management Units. In general, Unvested Units vest upon the achievement of certain performance criteria, including achievement by CoyCo 2’s owner, New Mountain Capital, L.L.C. (“New Mountain”), of (i) specified multiples of Base Equity Value (“BEV”) (i.e., generally the aggregate equity value of New Mountain’s investment in Cloudmed as of the original grant date), or (ii) specified Multiples on Invested Capital (“MIC”) with respect to New Mountain Capital’s pre-Cloudmed acquisition investment in Cloudmed, and subject to continued service with the Company and its affiliates, including Cloudmed through the applicable vesting date. The Unvested Units are not awards of the Company and the participants will receive no additional shares of the Company upon satisfaction of the vesting criteria. However, GAAP requires the Company recognize the cost of share-based compensation granted by an investor (CoyCo 2) to the Company’s employees and service providers for services that benefit the Company’s operations (hereafter, “CoyCo 2 share-based compensation expense”), and a corresponding capital contribution because the costs are incurred on the Company’s behalf.
|
Other Expenses |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Expenses | Other Expenses Other expenses are incurred in connection with acquisition and integration costs, various exit activities, transformation initiatives, and organizational changes to improve our business alignment and cost structure. The following table summarizes the other expenses recognized for the three months ended March 31, 2023 and 2022.
(1) These are costs, including legal, consulting, and bank fees, that are directly related to the closing of business acquisitions and include changes to contingent consideration, if applicable. (2) These costs reflect efforts to integrate acquisitions from a systems, processes, and people perspective and to achieve synergies expected from business acquisitions. Costs include consulting fees, IT vendor spend, severance, retention, and certain payroll costs. (3) These costs relate to performing portfolio and capital structure analyses and transactions and other business transformation projects (including large scale system projects) as part of the Company’s growth strategy. Costs include vendor spend, employee time and expenses spent on activities, severance, and retention amounts. (4) These costs include legal and consulting fees related to the establishment of the Company’s inaugural global business services center in the Philippines as well as severance costs for personnel whose roles are being relocated. The entry into the Philippines was the first new organic global business services center country expansion by the Company in approximately 15 years. The Company completed the expansion project in 2022. (5) As part of evaluating its footprint, the Company has exited certain leased facilities. Costs include asset impairment charges, early termination fees, and other costs related to exited leased facilities. (6) For the three months ended March 31, 2023 and 2022, other includes $5.5 million and $1.1 million, respectively, of expenses related to the Company’s ongoing litigation matters. For further details, refer to Note 11, Commitments and Contingencies.
|
Income Taxes |
3 Months Ended |
---|---|
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax provisions for interim periods are based on estimated annual income tax rates, adjusted to reflect the effects of any significant and infrequent or unusual items which are required to be discretely recognized within the current interim period. The effective tax rates in the periods presented are largely based upon the projected annual pre-tax earnings by jurisdiction and the allocation of certain expenses in various taxing jurisdictions where the Company conducts its business. These taxing jurisdictions apply a broad range of statutory income tax rates. The global intangible low-taxed income (“GILTI”) provisions impose taxes on foreign income in excess of a deemed return on tangible assets of foreign corporations. The Company elected to account for GILTI tax in the period in which it is incurred. The Company recognized income tax expense for the three months ended March 31, 2023 on the year-to-date pre-tax income. The deviation from the federal statutory tax rate of 21% is primarily attributable to recognizing the provisions for foreign taxes, state taxes, non-deductible expenses, and discrete items. The Company recognized income tax expense for the three months ended March 31, 2022 on the year-to-date pre-tax income. The deviation from the federal statutory tax rate of 21% is primarily attributable to recognizing the provisions for state taxes, GILTI, non-deductible expenses, and discrete items. The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. U.S. federal income tax returns since 2019 are currently open for examination. State jurisdictions vary for open tax years. The statute of limitations for most states ranges from to six years. At December 31, 2022, the Company had gross deferred tax assets of $147.6 million, of which $50.0 million related to net operating loss (“NOL”) carryforwards. The Company expects to be profitable, allowing the Company to utilize its NOL carryforwards and other deferred tax assets.
|
Earnings Per Share |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per share is calculated by adjusting the denominator used in the basic net income per share computation by potentially dilutive securities outstanding during the period plus, when their effect is dilutive, incremental shares consisting of shares subject to stock options and shares issuable upon vesting of RSUs and PBRSUs. Basic and diluted net income per common share are calculated as follows:
|
Commitments and Contingencies |
3 Months Ended |
---|---|
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal Proceedings Other than as described below, the Company is not presently a party to any material litigation or regulatory proceeding and is not aware of any pending or threatened litigation or regulatory proceeding against the Company which, individually or in the aggregate, could have a material adverse effect on its business, operating results, financial condition or cash flows. On April 13, 2021 and April 19, 2021, respectively, certain purported stockholders of the Company filed two complaints in the Delaware Court of Chancery regarding the Company’s January 15, 2021 recapitalization transaction with TCP-ASC. Both complaints allege that TCP-ASC, Ascension Health (“Ascension”), and TowerBrook Capital Partners (“TowerBrook”) controlled the Company and breached their fiduciary duties by using that alleged control to force the Company to overpay in redeeming TCP-ASC’s preferred stock as part of the recapitalization transaction. The plaintiffs seek an unspecified amount of damages against TCP-ASC, Ascension, and TowerBrook. The plaintiffs also allege that the Company and TCP-ASC entered into amendments to the Investor Rights Agreement that the plaintiffs contend contain provisions that are void under the Company’s charter, bylaws, and the Delaware General Corporation Law. The cases have since been consolidated into a single action. All defendants have answered the complaint and discovery has commenced. On February 18, 2022, plaintiffs filed a supplement to their complaint, naming certain additional defendants and asserting additional claims related to the Company’s agreement to acquire Cloudmed, which was announced on January 10, 2022. The additional claims assert that: (i) TCP-ASC, Ascension, and TowerBrook, along with the Company’s directors (“Individual Defendants”), breached their fiduciary duties by causing the Company to enter into and approving the Cloudmed acquisition, respectively, which plaintiffs claim will perpetuate TCP-ASC’s, Ascension’s, and TowerBrook’s control over the Company and entrench the Individual Defendants by virtue of certain agreements entered into as part of the transaction, including a Second Amended Investor Rights Agreement with TCP-ASC (the “Seconded Amended Investor Rights Agreement”) and an Investor Rights Agreement with Cloudmed (the “Cloudmed Investor Rights Agreement”); and (ii) Cloudmed’s stockholders aided and abetted such breaches. Plaintiffs also allege that certain provisions in the Cloudmed Investor Rights Agreement and the Second Amended Investor Rights Agreement are void under the Company’s charter, bylaws, and the Delaware General Corporation law. The plaintiffs seek a declaratory judgment and an unspecified amount of damages, as well as attorneys’ fees and costs. Trial is scheduled for November 2023. The Company believes it has meritorious defenses to all claims against it and intends to vigorously defend itself against these claims. In May 2016, the Company was served with a False Claims Act case brought by a former emergency department service associate who worked at a hospital of one of the Company’s customers, MedStar Inc.’s Washington Hospital Center (“WHC”), along with WHC and three other hospitals that were PAS customers and a place holder, John Doe hospital, representing all PAS customers (U.S. ex rel. Graziosi vs. Accretive Health, Inc. et. al.), and seeking money damages, False Claims Act penalties, and plaintiff’s attorneys’ fees. The Third Amended Complaint alleges that the Company’s PAS business violates the federal False Claims Act. The case was originally filed under seal in 2013 in the federal district court in Chicago and was presented to the U.S. Attorney in Chicago, and the U.S. Attorney declined to intervene. Both the Company’s and plaintiff’s motions for summary judgment were denied in December 2020, and the parties have completed damage and expert discovery. Additional dispositive motions are expected to extend into 2023, with trial, if necessary, likely to be scheduled in 2024. The Company believes it has meritorious defenses to all claims in the case and intends to vigorously defend itself against these claims.
|
Related Party Transactions |
3 Months Ended |
---|---|
Mar. 31, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions This note encompasses transactions between Ascension and its affiliates, including AMITA Health, and the Company pursuant to the Master Professional Services Agreement, including all supplements, amendments, and other documents entered into in connection therewith. For further details on the Company’s agreements with Ascension, see Note 1 and Note 19 of the Company’s 2022 Form 10-K. In conjunction with the Cloudmed acquisition, New Mountain became a new related party. There were no material transactions with New Mountain subsequent to the Cloudmed acquisition. Net services revenue from services provided to Ascension, as well as corresponding accounts receivable and customer liabilities are presented in the Consolidated Statements of Operations and Comprehensive Income (Loss) and the Consolidated Balance Sheets. Since Ascension is the Company’s largest customer, a significant percentage of the Company’s cost of services is associated with providing services to Ascension. However, due to the nature of the Company’s global business services and information technology operations, it is impractical to assign the dollar amount associated with services provided to Ascension.
|
Segments and Customer Concentrations |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segments and Customer Concentrations | Segments and Customer Concentrations The Company has determined that it has a single operating segment in accordance with the way that management operates and views the business. All of the Company’s significant operations are organized around the single business of providing management services of revenue cycle operations for U.S.-based healthcare providers. Accordingly, for purposes of segment disclosures, the Company has only one operating and reportable segment. Customers comprising greater than 10% of net services revenue are as follows:
The loss of customers within the Ascension health system or Intermountain network could have a material adverse impact on the Company’s operations. As of March 31, 2023 and December 31, 2022, the Company had a concentration of credit risk with Ascension, representing 10% of accounts receivable.
|
Supplemental Financial Information |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Financial Information | Supplemental Financial Information The following table summarizes the allocation of depreciation and amortization expense related to property, equipment and software between cost of services and selling, general and administrative expenses:
Intangible asset amortization expense was $50.1 million and $7.1 million for the three months ended March 31, 2023 and 2022, respectively. Amortization expense for intangible assets is included in cost of services on the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss). Supplemental cash flow information related to leases are as follows:
|
Business Description and Basis of Presentation (Policies) |
3 Months Ended |
---|---|
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements reflect the Company’s financial position as of March 31, 2023, the results of operations of the Company for the three months ended March 31, 2023 and 2022, and the cash flows of the Company for the three months ended March 31, 2023 and 2022. These financial statements include the accounts of R1 RCM Inc. and its wholly-owned subsidiaries. All material intercompany amounts have been eliminated in consolidation. These financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial reporting and as required by the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures required for complete financial statements are not included herein. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the interim financial information, have been included. Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for any other interim period or for the fiscal year ending December 31, 2023. When preparing financial statements in conformity with GAAP, the Company makes a number of significant estimates, assumptions, and judgments in the preparation of the financial statements. Actual results could differ from those estimates.
|
Recently Issued Accounting Standards and Disclosures | Recently Issued Accounting Standards and Disclosures In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”). ASU 2022-03 clarifies that a contractual sale restriction on an equity security should not be considered in measuring the security’s fair value. The Company will adopt ASU 2022-03 prospectively effective January 1, 2024 and is currently evaluating the impact of the standard on its consolidated financial statements.
|
Revenue Recognition | Revenue RecognitionRevenue is measured based on consideration specified in a contract with a customer, and presented net of any sales incentives and amounts collected on behalf of third parties. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a service to a customer, which is typically over the contact term. Estimates of variable consideration are included in revenue to the extent that it is probable that a significant reversal of cumulative revenue will not occur once the uncertainty is resolved. |
Acquisitions (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value of Total Consideration Paid and Schedule of Acquisitions | During 2022, the Company acquired the following business:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value of Assets Acquired and Liabilities Assumed | The preliminary fair value of assets acquired and liabilities assumed is:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Pro Forma Results | The following table summarizes, on a pro forma basis, the combined results of the Company as though the Cloudmed acquisition had occurred as of January 1, 2021. These pro forma results are not necessarily indicative of the actual consolidated results had the acquisition occurred as of that date or of the future consolidated operating results for any period. Pro forma results are:
|
Revenue Recognition (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disaggregated Revenue By Source | In the following table, revenue is disaggregated by source of revenue:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Contract Assets and Contract Liabilities | The following table provides information about contract assets, net and contract liabilities from contracts with customers:
(1) Current contract liabilities include $8.8 million and $7.6 million classified in the current portion of customer liabilities and $2.2 million and $2.1 million classified in the current portion of customer liabilities - related party as of March 31, 2023 and December 31, 2022, respectively. (2) Non-current contract liabilities include $5.2 million and $5.0 million classified in the non-current portion of customer liabilities and $13.2 million and $13.7 million classified in the non-current portion of customer liabilities - related party as of March 31, 2023 and December 31, 2022, respectively. The contract assets, net balance will increase or decrease based on the timing of invoices and recognition of revenue. Prior to the Cloudmed acquisition, the Company did not have significant contract assets. Significant changes in the carrying amount of contract assets, net for the three months ended March 31, 2023 were as follows:
(1) Other primarily includes adjustments made during the period to the allowance for credit losses.
(1) The Company records advanced billings to contract liabilities and accounts receivable on the first day of the respective service period, which are earned during the quarter.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Transaction Price Allocated to the Remaining Performance Obligation | The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period. The estimated revenue does not include amounts of variable consideration that are constrained.
|
Accounts Receivable and Allowance for Credit Losses (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Allowance for Credit Losses | Movements in the allowance for credit losses related to accounts receivable are as follows:
|
Debt (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Carrying Values Long-Term Debt | The carrying amounts of debt consist of the following:
(1) As of March 31, 2023, the Company had $90.0 million in borrowings, $0.9 million letters of credit outstanding, and $509.1 million of availability under the $600.0 million senior secured revolving credit facility (“Senior Revolver ”).
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Scheduled Maturities of Long-term Debt | Scheduled maturities of the Company’s long-term debt are summarized as follows:
|
Derivative Instruments and Hedging Activities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position, Location | The location and fair value of derivative instruments designated as hedges in the Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022 are as follows:
|
Share-Based Compensation (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation Expense | Total share-based compensation costs that have been included in the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) were as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Options Activity | A summary of the options activity during the three months ended March 31, 2023 is shown below:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Non-Options Awards Activity | A summary of the RSU and PBRSU activity during the three months ended March 31, 2023 is shown below:
|
Other Expenses (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Expenses | The following table summarizes the other expenses recognized for the three months ended March 31, 2023 and 2022.
(1) These are costs, including legal, consulting, and bank fees, that are directly related to the closing of business acquisitions and include changes to contingent consideration, if applicable. (2) These costs reflect efforts to integrate acquisitions from a systems, processes, and people perspective and to achieve synergies expected from business acquisitions. Costs include consulting fees, IT vendor spend, severance, retention, and certain payroll costs. (3) These costs relate to performing portfolio and capital structure analyses and transactions and other business transformation projects (including large scale system projects) as part of the Company’s growth strategy. Costs include vendor spend, employee time and expenses spent on activities, severance, and retention amounts. (4) These costs include legal and consulting fees related to the establishment of the Company’s inaugural global business services center in the Philippines as well as severance costs for personnel whose roles are being relocated. The entry into the Philippines was the first new organic global business services center country expansion by the Company in approximately 15 years. The Company completed the expansion project in 2022. (5) As part of evaluating its footprint, the Company has exited certain leased facilities. Costs include asset impairment charges, early termination fees, and other costs related to exited leased facilities. (6) For the three months ended March 31, 2023 and 2022, other includes $5.5 million and $1.1 million, respectively, of expenses related to the Company’s ongoing litigation matters. For further details, refer to Note 11, Commitments and Contingencies.
|
Earnings Per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Basic and Diluted Net Income (Loss) Per Common Share | Basic and diluted net income per common share are calculated as follows:
|
Segments and Customer Concentrations (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Customer Concentration, Net Services Revenue | Customers comprising greater than 10% of net services revenue are as follows:
|
Supplemental Financial Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Depreciation and Amortization Expense | The following table summarizes the allocation of depreciation and amortization expense related to property, equipment and software between cost of services and selling, general and administrative expenses:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash Flow, Supplemental Cash Flow Information | Supplemental cash flow information related to leases are as follows:
|
Acquisitions - Narrative (Details) $ in Millions |
1 Months Ended | 3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Jun. 21, 2022
USD ($)
|
Aug. 31, 2022
USD ($)
|
Aug. 31, 2020
payment
|
Mar. 31, 2022
USD ($)
|
Sep. 30, 2021
USD ($)
|
Dec. 31, 2022 |
|
Cloudmed | ||||||
Business Acquisition [Line Items] | ||||||
Total purchase consideration | $ 3,281.6 | |||||
Decrease in deferred income tax liability | $ 9.8 | |||||
Decrease in goodwill | $ 9.8 | |||||
RevWorks | ||||||
Business Acquisition [Line Items] | ||||||
Payments to acquire business | $ 12.5 | $ 12.5 | ||||
Number of deferred payments | payment | 2 | |||||
Payments to acquire business, number of payments, refund period, if circumstances met | 2 years | |||||
Cloudmed | Cloudmed | ||||||
Business Acquisition [Line Items] | ||||||
Lock-up period | 18 months |
Acquisitions - Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions |
Jun. 21, 2022 |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|---|
Allocation of consideration to assets acquired and liabilities assumed: | |||
Goodwill | $ 2,648.5 | $ 2,658.2 | |
Cloudmed | |||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |||
Total purchase consideration | $ 3,281.6 | ||
Allocation of consideration to assets acquired and liabilities assumed: | |||
Cash and cash equivalents | 32.1 | ||
Accounts receivable | 61.8 | ||
Current portion of contract assets | 68.2 | ||
Property, equipment and software | 5.0 | ||
Operating lease right-of-use assets | 25.3 | ||
Non-current portion of contract assets | 23.8 | ||
Intangible assets | 1,366.6 | ||
Goodwill | 2,093.9 | ||
Other assets | 6.7 | ||
Accounts payable | (31.9) | ||
Customer liabilities | (3.3) | ||
Accrued compensation and benefits | (93.4) | ||
Operating lease liabilities | (25.4) | ||
Deferred income tax liabilities | (235.6) | ||
Other liabilities | (12.2) | ||
Net assets acquired | $ 3,281.6 |
Acquisitions - Pro Forma Results (Details) - Cloudmed and VisitPay Acquisitions $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2022
USD ($)
| |
Business Acquisition [Line Items] | |
Net services revenue | $ 486.4 |
Net income | $ 1.4 |
Revenue Recognition - Schedule of Disaggregated Revenue by Source (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Disaggregation of Revenue [Line Items] | ||
Net services revenue | $ 545.6 | $ 385.7 |
Net operating fees | ||
Disaggregation of Revenue [Line Items] | ||
Net services revenue | 361.0 | 322.8 |
Incentive fees | ||
Disaggregation of Revenue [Line Items] | ||
Net services revenue | 23.6 | 30.2 |
Modular and other | ||
Disaggregation of Revenue [Line Items] | ||
Net services revenue | 161.0 | $ 32.7 |
Cloudmed | ||
Disaggregation of Revenue [Line Items] | ||
Net services revenue | $ 125.8 |
Revenue Recognition - Schedule of Contract Balances (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Contract assets, net | ||
Current | $ 81.8 | $ 83.9 |
Non-current | 37.3 | 32.0 |
Total contract assets, net | 119.1 | 115.9 |
Contract liabilities | ||
Current | 11.0 | 9.7 |
Non-current | 18.4 | 18.7 |
Total contract liabilities | 29.4 | 28.4 |
Current portion of customer liabilities | 8.8 | 7.6 |
Non-current portion of customer liabilities | 5.2 | 5.0 |
Investor | ||
Contract liabilities | ||
Current portion of customer liabilities | 2.2 | 2.1 |
Non-current portion of customer liabilities | $ 13.2 | $ 13.7 |
Revenue Recognition - Changes to Contract Assets (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2023
USD ($)
| |
Contract with Customer, Asset [Roll Forward] | |
Balance as of December 31, 2022 | $ 115,900 |
Revenue recognized | 86,000 |
Amounts billed | (82,600) |
Other | (200) |
Balance as of March 31, 2023 | 119,100 |
Contract with Customer, Liabilities [Roll Forward] | |
Balance as of December 31, 2022 | (28,400) |
Advanced billings | (91,300) |
Advanced billings recognized | 91,300 |
Additions | (3,900) |
Revenue recognized | 2,900 |
Balance as of March 31, 2023 | $ (29,400) |
Accounts Receivable and Allowance for Credit Losses - Rollforward (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023 |
Sep. 30, 2022 |
Mar. 31, 2022 |
|
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |||
Beginning balance | $ 15.2 | $ 2.5 | |
Provision (recoveries) | 1.1 | 0.0 | |
Write-offs | (0.2) | (0.1) | |
Ending balance | 16.1 | 2.4 | |
Increase in allowance | $ 1.1 | $ 0.0 | |
Physician Customer | |||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |||
Provision (recoveries) | $ 10.1 | ||
Increase in allowance | $ 10.1 |
Accounts Receivable and Allowance for Credit Losses - Narratives (Details) $ in Millions |
Mar. 31, 2023
USD ($)
|
---|---|
Receivables [Abstract] | |
Contract assets, allowance | $ 2.6 |
Debt - Carrying Amounts of Debt (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Debt Instrument [Line Items] | ||
Long-term debt | $ 1,787.8 | |
Unamortized discount and issuance costs | (22.5) | $ (23.6) |
Total debt | 1,765.3 | 1,786.5 |
Less: Current maturities | (58.3) | (53.9) |
Total long-term debt | 1,707.0 | 1,732.6 |
Line of Credit | Senior Revolver | ||
Debt Instrument [Line Items] | ||
Long-term debt | 90.0 | 100.0 |
Borrowing availability | 509.1 | |
Line of Credit | Term A Loans | ||
Debt Instrument [Line Items] | ||
Long-term debt | 1,200.3 | 1,211.4 |
Line of Credit | Term B Loan | ||
Debt Instrument [Line Items] | ||
Long-term debt | 497.5 | $ 498.7 |
Line of Credit | Letters of Credit | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 0.9 |
Debt - Narrative (Details) - Line of Credit - Second A&R Credit Agreement - USD ($) |
Mar. 31, 2023 |
Jun. 21, 2022 |
---|---|---|
Debt Instrument [Line Items] | ||
Debt covenant, secured obligation pledged, capital stock of certain domestic subsidiaries, percent | 100.00% | |
Term A Loans | ||
Debt Instrument [Line Items] | ||
Interest rate | 7.31% | |
Existing Term A Loan | ||
Debt Instrument [Line Items] | ||
Credit agreement, maximum borrowing capacity | $ 691,300,000 | |
Incremental Term A Loan | ||
Debt Instrument [Line Items] | ||
Credit agreement, maximum borrowing capacity | 540,000,000 | |
Term B Loan | ||
Debt Instrument [Line Items] | ||
Credit agreement, maximum borrowing capacity | 500,000,000 | |
Interest rate | 7.81% | |
Senior Revolver | ||
Debt Instrument [Line Items] | ||
Credit agreement, maximum borrowing capacity | 600,000,000 | |
Debt issuance costs incurred | 7,200,000 | |
Debt issuance costs, capitalized | $ 6,400,000 |
Debt - Scheduled Maturities of Long-Term Debt (Details) $ in Millions |
Mar. 31, 2023
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
Remainder of 2023 | $ 41.5 |
2024 | 67.0 |
2025 | 67.0 |
2026 | 708.3 |
2027 | 430.2 |
2028 | 5.0 |
Thereafter | 468.8 |
Total | $ 1,787.8 |
Derivative Financial Instruments- Schedule Of Derivative Instruments as Hedged on Consolidated Balance Sheets (Details) - Cash Flow Hedging - Designated as Hedging Instrument - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Foreign currency forward contracts | ||
Derivative [Line Items] | ||
Derivative asset, current | $ 1.1 | $ 0.1 |
Derivative liability | 0.0 | 0.5 |
Derivative, fair value, net | 1.1 | 0.6 |
Interest rate swaps | ||
Derivative [Line Items] | ||
Derivative asset, current | 8.3 | 8.7 |
Derivative asset, noncurrent | 1.6 | 5.0 |
Derivative liability | 0.0 | 0.0 |
Derivative, fair value, net | $ 9.9 | $ 13.7 |
Share-Based Compensation - Compensation Expense Allocation (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total share-based compensation expense | $ 12.3 | $ 10.1 |
CoyCo 2 | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation expense capitalized to deferred contract costs | 1.8 | |
Cost of services | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total share-based compensation expense | 6.9 | 4.3 |
Selling, general and administrative | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total share-based compensation expense | $ 5.4 | $ 5.8 |
Share-Based Compensation - Stock Options Activity (Details) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
|
Options | ||
Outstanding at beginning of period (in shares) | 3,104,413 | |
Granted (in shares) | 0 | |
Exercised (in shares) | (180,453) | |
Canceled/forfeited (in shares) | (45,865) | |
Expired (in shares) | 0 | |
Outstanding at end of period (in shares) | 2,878,095 | |
Outstanding, vested and exercisable at end of period (in shares) | 2,855,175 | 3,080,069 |
Weighted- Average Exercise Price | ||
Outstanding at beginning of period (in dollars per share) | $ 3.38 | |
Granted (in dollars per share) | 0 | |
Exercised (in dollars per share) | 3.05 | |
Canceled/forfeited (in dollars per share) | 2.59 | |
Expired (in dollars per share) | 0 | |
Outstanding at end of period (in dollars per share) | 3.41 | |
Outstanding, vested and exercisable at end of period (in dollars per share) | $ 3.26 | $ 3.23 |
Other Expenses - Schedule of Other Expenses (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Other Income and Expenses [Abstract] | ||
Business acquisition costs | $ 0.1 | $ 6.3 |
Integration costs | 15.8 | 0.4 |
Strategic initiatives | 8.0 | 0.3 |
Global business services center expansion project in the Philippines | 0.0 | 3.1 |
Facility-exit charges | 1.2 | 4.8 |
Other | 5.1 | 2.2 |
Total other expenses | $ 30.2 | 17.1 |
Number of years since new country entry | 15 years | |
Litigation expenses | $ 5.5 | $ 1.1 |
Income Taxes - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
|
Income Tax Disclosure [Abstract] | ||
Federal statutory tax rate | 21.00% | |
Statute of limitations minimum | 3 years | |
Statute of limitations maximum | 6 years | |
Gross deferred tax assets | $ 147.6 | |
Deferred tax assets related to operating loss carryforwards | $ 50.0 |
Earnings Per Share - Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Earnings Per Share [Abstract] | ||
Net income (loss) available to common stockholders, basic | $ 0.3 | $ 29.4 |
Net income (loss) available to common stockholders, diluted | $ 0.3 | $ 29.4 |
Basic weighted-average common shares (in shares) | 417,346,840 | 278,747,261 |
Add: Effect of dilutive equity awards (in shares) | 4,621,205 | 6,472,685 |
Add: Effect of dilutive warrants (in shares) | 30,957,744 | 35,823,425 |
Diluted weighted average common shares (in shares) | 452,925,789 | 321,043,371 |
Net income per common share (basic) (in dollars per share) | $ 0 | $ 0.11 |
Net income per common share (diluted) (in dollars per share) | $ 0 | $ 0.09 |
Earnings Per Share - Narrative (Details) - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Earnings Per Share [Abstract] | ||
Antidilutive common share equivalents (in shares) | 768,030 | 43,206 |
Commitments and Contingencies - Narrative (Details) |
Apr. 19, 2021
claim
|
---|---|
TCP-ASC Recapitalization Litigation | Pending Litigation | |
Loss Contingencies [Line Items] | |
Number of complaints filed | 2 |
Segments and Customer Concentrations - Narrative (Details) - segment |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
|
Segment Reporting Information [Line Items] | ||
Number of operating segments | 1 | |
Number of reporting segments | 1 | |
Customer Concentration Risk | Accounts Receivable | Ascension and its affiliates | ||
Segment Reporting Information [Line Items] | ||
Concentration percentage | 10.00% | 10.00% |
Segments and Customer Concentrations - Concentration Risk by Customer (Details) - Revenue - Customer Concentration Risk |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Ascension and its affiliates | ||
Concentration Risk [Line Items] | ||
Concentration percentage | 40.00% | 56.00% |
Intermountain Healthcare | ||
Concentration Risk [Line Items] | ||
Concentration percentage | 11.00% | 14.00% |
Supplemental Financial Information - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Property, Plant and Equipment [Line Items] | ||
Total depreciation and amortization | $ 15.9 | $ 11.8 |
Cost of services | ||
Property, Plant and Equipment [Line Items] | ||
Total depreciation and amortization | 15.5 | 11.5 |
Selling, general and administrative | ||
Property, Plant and Equipment [Line Items] | ||
Total depreciation and amortization | $ 0.4 | $ 0.3 |
Supplemental Financial Information - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Intangible asset amortization expense | $ 50.1 | $ 7.1 |
Supplemental Financial Information - Schedule of Supplemental Cash Flow Information Related to Leases (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows for operating leases | $ 6.2 | $ 3.4 |
Right-of-use assets obtained in exchange for operating lease obligations | $ 3.1 | $ 6.0 |
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
DB8$DW; .:QLDV?9AV =:HFVNDNB2E%WO
MU^\Y4E(41W4#K%\LFSS>/??<"T^^V"G]V:R%L.QKEN;FLK.V=G/>[YMX+3)N
M K41.7:62F? .*:0]\[
M(G"/$3HU[L"#/?()._F$A\M'B^R>PMW&>FR*8ZF?=HEF+^9NT8PW1=Y8,@H0
M:SM\;0?RI:2(V7?:IJUNTX:[TE8J"IA8-:0NRO1)Q_J'K;F8'\/7I5::HFXP
M28I7F&$]1;F!8. [GALX@6?"Z0_\!'ZG_6[D9T7)3KOV^A%E5IJ\]+W$=8+0
M/Z(%;@B7O,GH,,F'=!+.L#1K^T'H)%%X!&P0ID8^I=R!^(K;:TDZ29PX;AI:
M8H&W/=V!!U3&D-$3ML1,5=X-$X:.%[ D7/+;C=(6R=\GO*@37G2P
M\/X2S7$GNQ67^7[U[04^4'VWDV_6]YL+VWL7#3YKCS!5"ZVLI=;*BZR3[66S
M2<+NH#.?.:[+("(]1$Z