Unless the context indicates otherwise, references in this Quarterly Report on
Form 10-Q to "R1," "the Company," "we," "our," and "us" mean
The following discussion and analysis is an integral part of understanding our financial results and is provided as an addition to, and should be read in connection with, our consolidated financial statements and the accompanying notes.
This Quarterly Report on Form 10-Q contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995, as amended.
You should not place undue reliance on these statements. All statements, other
than statements of historical facts, included in this Quarterly Report on Form
10-Q are forward-looking statements. The words "anticipate," "believe,"
"designed," "estimate," "expect," "forecast," "intend," "may," "plan,"
"predict," "project," "target," "will" or "would" and similar expressions or
variations 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 our potential
acquisition of Cloudmed, our strategic initiatives, our capital plans, our
costs, our ability to successfully implement new technologies, our future
financial performance, and our liquidity. Such forward-looking statements are
based on management's current expectations about future events as of the date
hereof and involve many risks and uncertainties that could cause our actual
results to differ materially from those expressed or implied in our
forward-looking statements. Subsequent events and developments, including actual
results or changes in our assumptions, may cause our views to change. We do not
undertake to update our forward-looking statements except to the extent required
by applicable law. Readers are cautioned not to place undue reliance on such
forward-looking statements. All forward-looking statements included herein are
expressly qualified in their entirety by these cautionary statements. Our actual
results and outcomes could differ materially from those included in these
forward-looking statements as a result of various factors, including, but are
not limited to, our ability to retain existing customers or acquire new
customers; the development of markets for our revenue cycle management offering;
variability in the lead time of prospective customers; failure to consummate the
potential Cloudmed acquisition within the expected timeframe or at all; our
ability to integrate Cloudmed's business into our operations in a timely and
efficient manner; failure to realize the anticipated benefits of the potential
Cloudmed acquisition; volatility in our price in connection with the
announcement of the potential Cloudmed acquisition; competition within the
market; breaches or failures of our information security measures or
unauthorized access to customer's data; delayed or unsuccessful implementation
of our technologies or services, or unexpected implementation costs; disruptions
in or damages to our global business services centers and third-party operated
data centers; the impact of the COVID-19 pandemic on our business, operating
results, and financial condition; the effects of macroeconomic events, including
the war in
Overview
Our Business
We are a leading provider of technology-driven solutions that transform the patient experience and financial performance of healthcare providers. Our services help healthcare providers generate sustainable improvements in their operating margins and cash flows while also enhancing patient, physician, and staff satisfaction for our customers.
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We achieve these results for our customers by managing healthcare providers' revenue cycle operations, which encompass processes including patient registration, insurance and benefit verification, medical treatment documentation and coding, bill preparation, and collections from patients and payers. We do so by deploying a unique operating model that leverages our extensive healthcare domain experience, innovative technology and intelligent automation, and process excellence. We assist our revenue cycle management ("RCM") customers in managing their revenue cycle operating costs while simultaneously increasing the portion of the maximum potential services revenue they receive. Together, these benefits can generate significant and sustainable improvements in operating margins and cash flows for our customers.
Our primary service offering consists of end-to-end RCM services for health
systems, hospitals, and physician groups, which we deploy through an operating
partner relationship or a co-managed relationship. Under an operating partner
relationship, we provide comprehensive revenue cycle infrastructure to
providers, including all revenue cycle personnel, technology solutions, and
process workflow. Under a co-managed relationship, we leverage our customers'
existing RCM staff and processes, and supplement them with our infused
management, subject matter specialists, proprietary technology solutions, and
other resources. Under the operating partner model, we record higher revenue and
expenses due to the fact that almost all of the revenue cycle personnel are our
employees and more third-party vendor contracts are controlled by us. Under the
co-managed model, the majority of the revenue cycle personnel and third-party
vendor contracts remain with the customer and those costs are netted against our
co-managed revenue. For the three months ended
We also offer modular services, allowing customers to engage us for specific components of our end-to-end RCM service offering, such as patient experience, physician advisory services ("PAS"), clinical documentation integrity ("CDI"), coding management, revenue integrity solutions ("RIS"), business office services, and practice management ("PM"). Our patient experience offering, R1 EntriTM, unifies scheduling, clearance, intake and payments into one welcoming experience. Our PAS offering assists healthcare organizations in complying with payer requirements regarding whether to classify a hospital visit as an in-patient or an out-patient observation case for billing purposes. Our CDI solution helps customers improve Hospital Compare Star Ratings, which in turn can increase volume and reimbursement. Our coding management offering drives performance, quality, and consistent results via business intelligence and analysis, human capital management, an accountability framework, and a quality management program. Our RIS offering includes charge capture, charge description master ("CDM") maintenance, and pricing services that help providers ensure they are capturing the maximum net compliant revenue for services delivered. Our business office services can help providers with the entire billing function or to specifically recoup revenue that may otherwise be lost by focusing skilled resources in lower priority areas with significant revenue potential. Our PM services offer administrative and operational support to allow healthcare providers to focus on delivering high quality patient care and outsource non-core functions to us.
Once implemented, our technology solutions, processes, and services are deeply embedded in our customers' day-to-day revenue cycle operations. We believe our service offerings are adaptable to meet an evolving healthcare regulatory environment, technology standards, and market trends.
We operate our business as a single segment configured with our significant operations and offerings organized around the business of providing revenue cycle operations for healthcare providers.
Coronavirus Pandemic
Patient volumes have continued to recover and are largely in line with pre-2019
Novel Coronavirus ("COVID-19") levels. The impact of the COVID-19 pandemic is
fluid and continues to evolve. We cannot predict the extent to which our
business, results of operations, financial condition or liquidity will
ultimately be impacted, including as a result of macro-economic impacts to the
global supply chain, labor shortages, and inflationary pressures. However, we
continue to assess its impact on our business and continue to actively manage
our response. For further details on the potential impact of COVID-19 on our
business, refer to "Risk Factors," in Part I, Item 1A of our Annual Report on
Form 10-K for the fiscal year ended
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Cloudmed Acquisition
On
We believe this transaction will enable us to further our ability to deliver transformative value to healthcare providers through a more fulsome platform of differentiated capabilities by creating a scaled leader across both end-to-end RCM and technology-driven revenue intelligence.
The transaction, which has been unanimously approved by the Boards of Directors of both companies, is expected to close in the second quarter of 2022, subject to approval of the stock issuance by our shareholders, the continued effectiveness of a registration statement on Form S-4, receipt of regulatory approvals, and the satisfaction of other customary closing conditions.
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