First Quarter 2024 Results:
- Revenue of
$603.9 million , up$58.3 million or 10.7% compared to the same period last year. - GAAP net loss of
$35.1 million , compared to net income of$1.6 million in the same period last year. - Adjusted EBITDA of
$152.2 million , compared to adjusted EBITDA of$142.2 million in the same period last year.
The quarter reflects impacts of the
“First quarter results reflect the strength and flexibility of our technology platform, our people, and our global scale. While addressing the impact of the
2024 Updated Outlook
For 2024, R1 now expects to generate:
- Revenue of
$2.60 billion to$2.64 billion - GAAP operating income of
$85 million to$105 million - Adjusted EBITDA of
$625 million to$650 million
The updated guidance reflects the impacts of the
Conference Call and Webcast Details
R1’s management team will host a conference call today at
Non-GAAP Financial Measures
In order to provide a more comprehensive understanding of the information used by R1’s management team in financial and operational decision making, the Company supplements its GAAP consolidated financial statements with certain non-GAAP financial measures, including adjusted EBITDA, non-GAAP cost of services, non-GAAP selling, general and administrative expenses, and net debt. Adjusted EBITDA is defined as GAAP net income (loss) before net interest income/expense, income tax provision/benefit, depreciation and amortization expense, including the amortization of cloud computing arrangement implementation fees, share-based compensation expense, CoyCo 2, L.P. (“CoyCo 2”) share-based compensation expense, and certain other items, including acquisition and integration costs, various exit activities costs, strategic and transformation initiatives costs, costs related to organization changes to improve business alignment and cost structure, and costs related to review of strategic alternatives and stockholder litigation. Non-GAAP cost of services is defined as GAAP cost of services less share-based compensation expense, CoyCo 2 share-based compensation expense, and depreciation and amortization expense attributed to cost of services. Non-GAAP selling, general and administrative expenses is defined as GAAP selling, general and administrative expenses less share-based compensation expense, CoyCo 2 share-based compensation expense, and depreciation and amortization expense attributed to selling, general and administrative expenses. Net debt is defined as debt less cash and cash equivalents, inclusive of restricted cash. Adjusted EBITDA guidance is reconciled to operating income guidance, the most closely comparable available GAAP measure.
Our board of directors and management team use adjusted EBITDA as (i) one of the primary methods for planning and forecasting overall expectations and for evaluating actual results against such expectations and (ii) a performance evaluation metric in determining achievement of certain executive incentive compensation programs, as well as for incentive compensation programs for employees. Non-GAAP cost of services and non-GAAP selling, general and administrative expenses are used to calculate adjusted EBITDA. Net debt is used as a supplemental measure of our liquidity.
Tables 4 through 8 present a reconciliation of GAAP financial measures to non-GAAP financial measures. Non-GAAP measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with GAAP.
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this press release are forward-looking statements. The words “anticipate,” “believe,” “contemplate,” “designed,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “outlook,” “plan,” “predict,” “project,” “see,” “seek,” “target,” “would” and similar expressions or variations or negatives of these words are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Such forward-looking statements include, among other things, statements about the Company’s review of strategic alternatives, strategy, future operations, future financial position, prospects, plans, challenges faced by health systems and their revenue cycle operations and the role of business therein, objectives of management, ability to successfully deliver on commitments to customers, impacts of the
About
R1 is a leading provider of technology-driven solutions that transform the financial performance and patient experience for health systems, hospitals, and physician groups. R1’s proven and scalable operating models seamlessly complement a healthcare organization’s infrastructure, quickly driving sustainable improvements to net patient revenue and cash flows while driving revenue yield, reducing operating costs, and enhancing the patient experience. To learn more, visit: r1rcm.com.
Contact:
Investor Relations:
516-743-5184
investorrelations@r1rcm.com
Media Relations:
678-895-9401
media@r1rcm.com
Table 1 | |||||||
Consolidated Balance Sheets | |||||||
(In millions) | |||||||
(Unaudited) | |||||||
2024 | 2023 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 178.0 | $ | 173.6 | |||
Accounts receivable, net of | 291.4 | 243.3 | |||||
Accounts receivable - related party, net of | 26.5 | 26.1 | |||||
Current portion of contract assets, net | 96.3 | 94.4 | |||||
Prepaid expenses and other current assets | 107.9 | 95.9 | |||||
Total current assets | 700.1 | 633.3 | |||||
Property, equipment and software, net | 186.6 | 173.7 | |||||
Operating lease right-of-use assets | 72.6 | 62.5 | |||||
Non-current portion of contract assets, net | 41.4 | 37.7 | |||||
Non-current portion of deferred contract costs | 33.3 | 30.4 | |||||
Intangible assets, net | 1,626.5 | 1,310.7 | |||||
3,049.4 | 2,629.4 | ||||||
Deferred tax assets | 10.9 | 10.9 | |||||
Other assets | 74.4 | 71.6 | |||||
Total assets | $ | 5,795.2 | $ | 4,960.2 | |||
Liabilities | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 27.1 | $ | 22.7 | |||
Current portion of customer liabilities | 37.6 | 39.8 | |||||
Current portion of customer liabilities - related party | 5.7 | 5.2 | |||||
Accrued compensation and benefits | 98.7 | 126.3 | |||||
Current portion of operating lease liabilities | 21.7 | 19.3 | |||||
Current portion of long-term debt | 91.0 | 67.0 | |||||
Accrued expenses and other current liabilities | 110.2 | 65.9 | |||||
Total current liabilities | 392.0 | 346.2 | |||||
Non-current portion of customer liabilities | 3.5 | 2.7 | |||||
Non-current portion of customer liabilities - related party | 11.3 | 11.8 | |||||
Non-current portion of operating lease liabilities | 87.4 | 77.8 | |||||
Long-term debt | 2,189.6 | 1,570.5 | |||||
Deferred tax liabilities | 263.1 | 176.6 | |||||
Other non-current liabilities | 24.7 | 23.2 | |||||
Total liabilities | 2,971.6 | 2,208.8 | |||||
Stockholders’ equity: | |||||||
Common stock | 4.5 | 4.5 | |||||
Additional paid-in capital | 3,306.6 | 3,197.4 | |||||
Accumulated deficit | (171.8 | ) | (136.7 | ) | |||
Accumulated other comprehensive loss | (5.2 | ) | (5.9 | ) | |||
(310.5 | ) | (307.9 | ) | ||||
Total stockholders’ equity | 2,823.6 | 2,751.4 | |||||
Total liabilities and stockholders’ equity | $ | 5,795.2 | $ | 4,960.2 | |||
Table 2 | ||||||
Consolidated Statements of Operations (Unaudited) | ||||||
(In millions, except share and per share data) | ||||||
Three Months Ended | ||||||
2024 | 2023 | |||||
Net operating fees | $ | 381.5 | $ | 361.0 | ||
Incentive fees | 15.6 | 23.6 | ||||
Modular and other | 206.8 | 161.0 | ||||
Net services revenue | 603.9 | 545.6 | ||||
Operating expenses: | ||||||
Cost of services | 497.6 | 434.7 | ||||
Selling, general and administrative | 64.4 | 47.0 | ||||
Other expenses | 33.9 | 30.2 | ||||
Total operating expenses | 595.9 | 511.9 | ||||
Income from operations | 8.0 | 33.7 | ||||
Net interest expense | 41.3 | 30.7 | ||||
Income (loss) before income tax provision | (33.3 | ) | 3.0 | |||
Income tax provision | 1.8 | 1.4 | ||||
Net income (loss) | $ | (35.1 | ) | $ | 1.6 | |
Net income (loss) per common share: | ||||||
Basic | $ | (0.08 | ) | $ | — | |
Diluted | $ | (0.08 | ) | $ | — | |
Weighted average shares used in calculating net income (loss) per common share: | ||||||
Basic | 420,427,136 | 417,346,840 | ||||
Diluted | 420,427,136 | 452,925,789 | ||||
Table 3 | |||||||
Consolidated Statements of Cash Flows (Unaudited) | |||||||
(In millions) | |||||||
Three Months Ended | |||||||
2024 | 2023 | ||||||
Operating activities | |||||||
Net income (loss) | $ | (35.1 | ) | $ | 1.6 | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | 78.3 | 66.0 | |||||
Amortization of debt issuance costs | 1.8 | 1.4 | |||||
Share-based compensation | 30.2 | 10.5 | |||||
CoyCo 2 share-based compensation | 1.8 | 1.8 | |||||
Provision (recoveries) for credit losses | (0.5 | ) | 1.5 | ||||
Deferred income taxes | 1.6 | 0.5 | |||||
Non-cash lease expense | 3.4 | 2.9 | |||||
Other | 1.8 | — | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable and related party accounts receivable | 0.1 | 4.7 | |||||
Contract assets | (5.6 | ) | (4.0 | ) | |||
Prepaid expenses and other assets | 1.3 | 8.2 | |||||
Accounts payable | (0.3 | ) | (10.9 | ) | |||
Accrued compensation and benefits | (49.5 | ) | (24.5 | ) | |||
Lease liabilities | (5.4 | ) | (4.4 | ) | |||
Other liabilities | 25.4 | 9.7 | |||||
Customer liabilities and customer liabilities - related party | (2.6 | ) | (10.3 | ) | |||
Net cash provided by operating activities | 46.7 | 54.7 | |||||
Investing activities | |||||||
Purchases of property, equipment, and software | (24.4 | ) | (23.4 | ) | |||
Acquisition of Acclara, net of cash acquired | (661.9 | ) | — | ||||
Other | (12.1 | ) | (2.2 | ) | |||
Net cash used in investing activities | (698.4 | ) | (25.6 | ) | |||
Financing activities | |||||||
Issuance of senior secured debt, net of discount and issuance costs | 561.5 | — | |||||
Borrowings on revolver | 80.0 | — | |||||
Repayment of senior secured debt | — | (12.4 | ) | ||||
Repayments on revolver | — | (10.0 | ) | ||||
Refund of inducement dividend | 16.4 | — | |||||
Exercise of vested stock options | 0.6 | 0.5 | |||||
Shares withheld for taxes | (2.3 | ) | (13.4 | ) | |||
Other | (0.1 | ) | (0.1 | ) | |||
Net cash provided by (used in) financing activities | 656.1 | (35.4 | ) | ||||
Effect of exchange rate changes in cash, cash equivalents and restricted cash | — | 0.4 | |||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 4.4 | (5.9 | ) | ||||
Cash, cash equivalents and restricted cash, at beginning of period | 173.6 | 110.1 | |||||
Cash, cash equivalents and restricted cash, at end of period | $ | 178.0 | $ | 104.2 | |||
Table 4 | |||||||||||||
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted EBITDA (Unaudited) | |||||||||||||
(In millions) | |||||||||||||
Three Months Ended | 2024 vs. 2023 Change | ||||||||||||
2024 | 2023 | Amount | % | ||||||||||
Net income (loss) | $ | (35.1 | ) | $ | 1.6 | $ | (36.7 | ) | n.m. | ||||
Net interest expense | 41.3 | 30.7 | 10.6 | 35 | % | ||||||||
Income tax provision | 1.8 | 1.4 | 0.4 | 29 | % | ||||||||
Depreciation and amortization expense | 78.3 | 66.0 | 12.3 | 19 | % | ||||||||
Share-based compensation expense | 30.2 | 10.5 | 19.7 | 188 | % | ||||||||
CoyCo 2 share-based compensation expense | 1.8 | 1.8 | — | — | % | ||||||||
Other expenses (1) | 33.9 | 30.2 | 3.7 | 12 | % | ||||||||
Adjusted EBITDA (non-GAAP) | $ | 152.2 | $ | 142.2 | $ | 10.0 | 7 | % | |||||
(1) For details, see Note 9 to the Condensed Consolidated Financial Statements included in the Company’s Quarterly Report on Form 10-Q.
Table 5 | |||||
Reconciliation of GAAP Cost of Services to Non-GAAP Cost of Services (Unaudited) | |||||
(In millions) | |||||
Three Months Ended | |||||
2024 | 2023 | ||||
Cost of services | $ | 497.6 | $ | 434.7 | |
Less: | |||||
Share-based compensation expense | 18.3 | 6.4 | |||
CoyCo 2 share-based compensation expense | 0.5 | 0.5 | |||
Depreciation and amortization expense | 77.7 | 65.6 | |||
Non-GAAP cost of services | $ | 401.1 | $ | 362.2 | |
Table 6 | |||||
Reconciliation of GAAP Selling, General and Administrative to Non-GAAP Selling, General and Administrative (Unaudited) | |||||
(In millions) | |||||
Three Months Ended | |||||
2024 | 2023 | ||||
Selling, general and administrative | $ | 64.4 | $ | 47.0 | |
Less: | |||||
Share-based compensation expense | 11.9 | 4.1 | |||
CoyCo 2 share-based compensation expense | 1.3 | 1.3 | |||
Depreciation and amortization expense | 0.6 | 0.4 | |||
Non-GAAP selling, general and administrative | $ | 50.6 | $ | 41.2 | |
Table 7 | |
Reconciliation of GAAP Operating Income Guidance to Non-GAAP Adjusted EBITDA Guidance (Unaudited) | |
(In millions) | |
2024E | |
GAAP Operating Income Guidance | |
Plus: | |
Depreciation and amortization expense | |
Share-based compensation expense | |
Strategic initiatives, severance and other costs | |
Adjusted EBITDA Guidance | |
Table 8 | |||||
Reconciliation of Total Debt to Net Debt (Unaudited) | |||||
(In millions) | |||||
2024 | 2023 | ||||
Senior Revolver | $ | 80.0 | $ | — | |
Term A Loans | 1,162.5 | 1,162.5 | |||
Term B Loans | 1,068.8 | 493.8 | |||
Total debt | 2,311.3 | 1,656.3 | |||
Less: | |||||
Cash and cash equivalents | 178.0 | 173.6 | |||
Net Debt | $ | 2,133.3 | $ | 1,482.7 | |
Source:
2024 GlobeNewswire, Inc., source