R1 RCM Inc.

Second-quarter revenue was $627.9 million, up 12% year over year, and adjusted EBITDA was $156.1 million. Net operating fees were $374.6 million, up about 5% year over year, while Modular and Other revenue was $231.6 million, up 35% year over year. Incentive fees were $21.7 million, slightly below expectations due to a $4 million impact from outages. Non-GAAP cost of services was about $421 million, up roughly $57 million year over year, and non-GAAP SG&A was $50.8 million, down about $3 million. Cash and cash equivalents were $163 million at June 30, cash from operations was $36.8 million, and net debt was $2.1 billion. Looking ahead, the company is not providing 2024 guidance due to the announced transaction, but expects the Ascension outage to reduce full-year revenue by $75 million to $95 million, mostly as a timing shift into 2025, and expects $10 million to $15 million of incremental costs in the second half.

Lee Rivas emphasized that R1 sees strong demand for its platform and believes it is the leading automation and revenue cycle partner because of its scale, data, and technology. He pointed to the successful onboarding of more than 1,900 associates for a major new customer, continued progress on Acclara integration, and new cross-sell wins as evidence that the company is executing well. His tone was confident and constructive, even while acknowledging the operational disruption from the Ascension cyberattack.

Jennifer Williams said the quarter was ahead of expectations despite disruption from Change Healthcare and Ascension, and highlighted cost discipline as a key offset to the revenue impact. She cited $627.9 million of revenue, $156.1 million of adjusted EBITDA, $421 million of non-GAAP cost of services, $50.8 million of non-GAAP SG&A, and $34.3 million of other expenses, including $14 million of integration-related costs, $6.3 million for a one-time vendor termination fee, and about $8 million of advisory fees. On cash and liquidity, she noted $163 million of cash, $36.8 million in operating cash flow, $2.1 billion of net debt, and about $682 million of liquidity.

There was no Q&A, because management said it would not take questions after the prepared remarks due to the pending transaction. The main incremental disclosure in the remarks was the quantified Ascension impact: $75 million to $95 million of full-year revenue delay, mostly shifting into 2025, plus $10 million to $15 million of second-half incremental costs.