R1 RCM Inc.

Good morning. My name is Julie, and I will be your conference operator today. At this time, I would like to welcome everyone to the R1-RCM Q3 2021 Earnings Conference Call. Thank you. At this, Investor Relations, you may begin your conference.

Good morning, everyone, and welcome to the call. Good morning, everyone, and welcome to the call. Certain statements made during this call may be considered public provisions of the Private Securities Litigation Reform Act of 1995. In particular, any statements about our future growth, plans, and performance, including statements about our strategic and cost-saving initiatives, our liquidity position, our growth opportunities, and our future financial performance are forward-looking statements. These statements are often identified by the use of words such as anticipate, believe, estimate, expect, intend, design, may, plan, project, would, and similar expressions or variations. Investors are cautioned not to place undue reliance on such forward-looking statements. All forward-looking statements made on today's call involve risks and uncertainties. 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. Our actual results and outcomes could differ materially from those included in these forward-looking statements as a result of various factors, including but not limited to the potential impacts of the COVID-19 pandemic and the factors discussed under the heading risk factors, in our annual report on our latest Form 10-K and in our latest report on Form 10-Q. We will also be referencing non-GAAP metrics on this call. For a reconciliation of the non-GAAP amounts mentioned to their equivalent GAAP amounts, please refer to our press release. Now, I'd like to turn the call over to Joe.

Thanks, Atif. Good morning, everyone, and thank you for joining us. I'm pleased to report another solid quarter with revenue of $379.7 million and adjusted EBITDA of $89.3 million, driven by strong operational execution, contribution from our technology investments, and a recovery in patient volumes. Our team continues to perform exceptionally well and deliver excellent results for our customers. With our strong performance in the third quarter, we are updating our adjusted EBITDA guidance for the year to $337 to $343 million. While COVID-19 continues to present some uncertainty, volumes have generally recovered to pre-COVID levels across our customer base. Providers are much better prepared and have managed well through recent flare-ups in COVID cases in some parts of the country. Our value proposition is resonating well as it addresses many long-standing revenue cycle challenges. Recent conversations with prospective customers have been increasingly focused on our ability to address tighter labor market conditions and wage inflation. We believe our significant scale, technology investments, and global shared services footprint give us a structural advantage versus our competitors and in-house revenue cycle operations. I'll discuss this in more detail in a few minutes, but I'd like to first provide an update on our commercial activity. Our end-to-end pipeline remains very active and grew almost 50% over Q2. We are in the contracting stage with prospective customers and expect to exceed our 4 billion NPR target for 2021 if these contracts are signed by year-end. In addition to activity in our end-to-end pipeline, we are seeing strong traction across our full spectrum of offerings. One of the areas we've strategically invested in over the past several quarters is infrastructure to enable providers to manage value-based contracts. Fundamentally, there are direct parallels from the core operations that we perform daily for customers under our fee-for-service contracts with those needed to serve value-based arrangements. For example, Patient engagement, referral management, and intake activities translate to preventative care metric compliance and site of service management for value-based arrangements. Our clinical documentation and acuity capture capabilities are relevant to clinical quality data capture and risk adjustment accuracy. And finally, member eligibility reconciliation and claims administration under value-based arrangements are analogous to activities we perform related to revenue integrity and payment administration. We've leveraged these capabilities and added new functionality to serve the needs of value-based providers. With this backdrop, I'm very pleased to announce that VillageMD, a leading provider of value-based primary care services, has selected us to drive revenue cycle performance across their rapidly growing footprint. Under this end-to-end operating partner agreement, We will interface with VillageMD's Athena Health EMR system to drive improvements in revenue cycle performance while supporting VillageMD's efforts to scale from their current 145 locations to an expected 700 locations over the next five years. By partnering with us to re-engineer and scale their revenue cycle workflows across fee-for-service and fee-for-value payment models, VillageMD can focus on delivering high-quality clinical care to patients while ensuring accurate revenue for the care they provide. The capabilities we have developed position us very well to serve the needs of emerging high-growth value-based providers and further build on the $1.7 billion of value-based payments we currently manage today. One additional example is a new revenue cycle partnership with Archwell Health, an innovative healthcare provider specializing in value-based senior care. Next, with the launch of our Entry platform over the summer, we've seen increased interest from health systems seeking comprehensive digitized patient-facing capabilities ranging from scheduling to payment. While our deployment efforts with Entry are primarily focused on our end-to-end operating partner customers over the next 18 to 24 months, we are pleased with two recent notable wins. Memorial Sloan Kettering Cancer Care Center, the world's largest private cancer care center, selected us to implement a personalized digital financial experience for patients. And via our partnership with Cerner, the Veterans Administration selected us to provide our digital patient intake solution across at least 14 and up to all 18 of the VA integrated service networks. Over the next couple of years, we expect this contract to ramp to approximately $10 million in annual revenue, with high flow-through to EBITDA after the implementation phase, given the SAS nature of the contract. On the physician front, last week we announced a 10-year extension of our agreement with American Physician Partners, or APP, a leader in hospital-based emergency medicine, with annual NPR approaching $1 billion. Since the inception of the relationship in 2019, we've generated significant improvement in APP's collections per visit via our built-for-purpose emergency department billing system, which now leverages robotic process automation to automate more than 20% of all back office tasks. We've also simplified the patient experience via mobile functionality and predictive outreach solutions. Given our track record of strong performance and APP's growth, The extension and simplification of the contract is a win-win for us as well for APP. Overall, our expertise and scale in the emergency care setting, along with our technology investments, position us well to serve the needs of providers in this segment of the market. Now let me provide an update on our ongoing onboarding activity. Onboarding activities at LifePoint and MedNax are progressing on schedule. Phase 1 of LifePoint is expected to conclude by the end of November, and Phase 2 is scheduled to be completed in early 2022. Phase 3, which commenced in July, is more than 50% complete and on track to be fully onboarded by mid-2022. Overall, our relationship is very collaborative, and we are pleased with the pace of progress at LifePoint. At MedNax, onboarding activities commenced immediately after contract announcement in May. and are progressing on schedule we welcome the first wave of mednax leaders to r1 in mid-october and are in the process of welcoming an additional 250 associates in november we are on track to complete mednax onboarding activities in the second quarter of 2022. next i'd like to provide an update on our automation and patient experience technology as i mentioned earlier current labor market conditions are presenting new challenges to providers These challenges are evidenced by higher vacancy rates, longer time to fill open roles, and wage inflation. Our significant scale, global shared services footprint, and technology, particularly our recent investments in automation and patient experience capabilities, present us with unique levers to sustainably address labor-related challenges. With 80% of providers' in-house revenue cycle costs typically spent on labor, we believe there is a substantial opportunity for technology-driven productivity improvement in the industry. Our intelligent automation capability, which is an extension of our core technology platform, positions us to digitize the wide range of complex processes found in the revenue cycle and thereby reduce the reliance on manual labor. Our Automation Center of Excellence is dedicated to uncovering opportunities for automation and developing innovative solutions that improve revenue cycle performance for our customers. Since 2018, we have systematically automated more than 60 million manual tasks in our operations, including approximately 10 million additional tasks in the third quarter. One of the guiding principles of our Automation Center of Excellence is to develop solutions in a modular manner. which allows complicated workflows to be automated, reusing and combining various modules. Our library of modules now stretches across customers in all 50 states, as well as all major host systems, providing us with a strong foundation of building blocks to drive further automation from. The vast coverage of processes is also important when we conduct new customer assessments. as it allows us to confidently underwrite the financial performance we can deliver for customers at our desired profitability goals. We are extremely bullish on the value we can create for providers via our intelligent automation solution and continue to invest heavily in this area. From an internal talent standpoint, the ability to redeploy existing team members from lower complexity work, which can be readily automated, to other tasks provides us with immediate capacity. Additionally, this shift to more complex, rewarding work nicely positions us to differentiate R1 as an employer of choice for top revenue cycle talent. It also allows us to rapidly deploy automation, which is particularly important in the current environment. In addition to intelligent automation, our Entry platform, which empowers consumers to access and plan for care quickly and simply via digital self-service, also reduces many of the manual and redundant activities performed by revenue cycle employees. We believe Entry's market-leading capabilities across scheduling, registration, financial clearance, and payment are a game changer for the industry. We've seen some transformative results as we've rolled out Entry to our customers. More than 60% of patient registration encounters are performed on a self-service basis, NPS scores are above 75, and that we have cut patient time spent on administrative tasks in half. These results are fueling further innovation. Two recent advancements to our entry platform include the integration of financial clearance and authorization into the scheduling processes and the ability for providers to schedule their patients across care settings. With the uptake we've seen at our recent health system deployments, we believe Entry is effectively one of the leading digital front door platforms on the market. Since our formal launch of Entry in August, we've received significant interest from health systems. Our near-term priority is to deploy Entry across our base event and IDN customers to unlock the significant operational, financial, and experiential efficiencies presented by Entry. In Q3, we went live with entry at three large health systems and anticipate four go-lives in Q4, with further acceleration as we look out to 2022. As we deploy entry across our base, we've seen our unit economics improve with each new installation, giving us incremental confidence in our 30% long-term adjusted EBITDA margin target. Additionally, the acquisition of visit pay prevents us with new opportunities to further differentiate our offering. Since the completion of the acquisition on July 1st, we've been focused on three near-term priorities. First, support the Visipay team and fuel strong momentum they are seeing in the market. Second, integrate and deploy the Visipay platform across our IDN customer base to achieve targeted synergies. And third, drive further innovation in the healthcare payments arena. We see a large unmet opportunity in the market to deliver innovative financial products that improve healthcare affordability for consumers, alleviate friction in the financing of medical costs, and simplify financial interactions between large providers and their patients. Overall, the integration of Visipay is progressing well, and the team has maintained strong momentum in the market. We look forward to updating you on activity on the innovation front in the future. In closing, we remain very optimistic about our growth prospects. With the investments we've made in technology in recent years, we believe R1 is distinctly positioned to deliver superior financial outcomes for healthcare providers and an exceptional experience for their patients. Prospective customers are recognizing our differentiated, technology-driven value proposition, and selection decisions are increasingly driven by appreciation for our technological capabilities. These attributes, along with current labor dynamics in the macro environment, position us well for future growth. Now I'd like to turn the call over to Rachel.