R1 RCM INC. Unless the context indicates otherwise, references in this Quarterly Report on
Form 10-Q to "R1," "the Company," "we," "our," and "us" mean
This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the federal securities laws, that involve substantial risks and uncertainties. These statements are often identified by the use of words such as "anticipate," "believe," "estimate," "expect," "intend," "designed," "may," "plan," "predict," "project," "would," and similar expressions or variations. These forward-looking statements include, among other things, statements about the potential impacts of the COVID-19 pandemic, our strategic initiatives, our capital plans, our costs, our ability to successfully deliver on our commitments to our customers, our ability to deploy new business as planned, our ability to successfully implement new technologies, our future financial performance, and our liquidity. Such forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the severity, magnitude, and duration of the COVID-19 pandemic; responses to the pandemic by the government and healthcare providers and the direct and indirect impacts of the pandemic on our customers and personnel; the disruption of national, state, and local economies as a result of the pandemic; the impact of the pandemic on our financial results, including possible lost revenue and increased expenses; as well as those discussed in the section titled "Risk Factors," in Part II, Item 1A of this Quarterly Report on Form 10-Q, and elsewhere in this Report, and those set forth in Part I, Item 1A of the 2019 Form 10-K and our other filings with theSEC . The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on Form 10-Q. Subsequent events and developments may cause our views to change. While we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q. Overview Our Business R1 is a leading provider of technology-enabled revenue cycle management ("RCM") services to healthcare providers, including health systems, hospitals, and physicians groups. 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. 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 site experience, innovative technology, and process excellence. We assist our 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. 30 --------------------------------------------------------------------------------
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 more
third-party vendor contracts remain with the customer and those costs are netted
against our co-managed revenue. For the nine months ended
We also offer modular services, allowing customers to engage us for only specific components of our end-to-end RCM service offering, such as physician advisory services ("PAS"), practice management ("PM"), revenue integrity solutions ("RIS"), patient experience, coding management, and business office services. 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 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. 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 patient experience offering helps patients manage their data in one easy-to-use environment, enabling eligibility validation and insurance plan attribution, demographic accuracy, meeting authorization and referral requirements, medical necessity validation, and patient out-of-pocket cost estimation. 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 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.
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.
On
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On
The Incremental Term Loan was drawn substantially concurrently with the acquisition of SCI. The proceeds of the Incremental Term Loan were used to fund the purchase price for SCI and related expenses. The Incremental Term Loan has terms consistent with those of the Senior Term Loan, including with respect to interest, maturity, amortization and prepayments and has the same affirmative and negative covenants and events of default as those applicable to the Senior Term Loan under the Credit Agreement.
RevWorks Acquisition
On
EMS Disposition
On
Coronavirus Pandemic
In
Given the ongoing challenges associated with efforts to contain the spread of COVID-19 and related business impact for our customers, we initiated a number of actions in 2020 to ensure (1) the health and safety of our workforce and (2) uninterrupted and, in many respects, expanded support for our customers and the patients and communities they serve. Our efforts to date include: restricting all non-essential domestic and international travel; repositioning more than 15,000 global employees to a work-from-home operating environment; offering free COVID-19 testing and telemedicine visits; expanding paid time off for employees impacted by low work volumes; providing appreciation bonuses to our front-line, patient-facing services employees; launching a new remote patient registration tool to minimize contact between patients and registration staff and conserve personal protective equipment; leveraging capabilities acquired via our SCI acquisition to assist customers with processes to restart elective procedure scheduling; developing reporting to allow for detailed COVID-19 order tracking, scheduling, and follow-up; offering in-depth regulatory analysis and guidance for our customers given numerous changes to healthcare regulatory federal and state rules; and providing customers with operational best practices for implementation and revenue cycle management of telehealth services.
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We have been able to partially offset the revenue pressure faced during the nine
months ended
Given the ongoing impact of the pandemic, there continues to be decreased
patient volumes for our customers. We have continued to employ our full
customer-facing workforce, even during lower patient volumes, because it is
important to have that capacity available to serve our customers as volumes
return. We anticipate continued volume constraints and corresponding revenue
pressure associated with the pandemic. Despite the impacts of the pandemic, we
have executed on inorganic growth opportunities, including beginning our
integrations of both SCI and RevWorks. As of
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. However, we continue to assess its impact on our business and are actively managing our response. For further details on the potential impact of COVID-19 on our business, refer to "Risk Factors," in Part II, Item 1A of this Quarterly Report on Form 10-Q.
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