R1 RCM Inc.

Good morning. My name is Rob and I will be your conference operator today. At this time, I would like to welcome everyone to the R1RCM second quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you. Atif Rahim, Head of Investor Relations, you may begin your conference.

Good morning, everyone, and welcome to the call. Certain statements made during this call may be considered forward-looking statements pursuant to the safe harbor 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 may differ materially from those included in these forward-looking statements as a result of various factors, including but not limited to economic downtrends and market conditions beyond our control, including periods of inflation, the quality of global financial markets, our ability to timely and successfully achieve the anticipated benefits and potential synergies of the CloudMed acquisition, and factors discussed under the heading risk factors in our most recent annual report on Form 10-K and in our quarterly reports on Form 10-Q. We will also be referencing non-GAAP metrics on this call. For reconciliation of non-GAAP amounts to their equivalent GAAP amounts, please refer to a press release. Now, I'd like to turn the call over to Lee.

Thank you, Atif. Good morning, everyone, and thank you for joining us. I am pleased to report strong second quarter results driven by our technology-focused operating model and our team of experts delivering on behalf of our customers. Revenue totaled $560.7 million and adjusted EBITDA was $142.9 million, inclusive of an $11.6 million increase to reserves covering credit losses related to a physician customer. Adjusted EBITDA would have been well ahead of expectations absent this reserve increase. We are pleased with our first half performance and are refining our guidance to reflect our updated outlook for the remainder of the year. Jennifer will cover the financials shortly, but first, I'd like to discuss progress against our top three priorities. First, operating trends across both the business and industry remain largely in line with our expectations, and we continue to help our end-to-end customers navigate complex macro dynamics across the provider industry. Second, the power of our technology platform, including automation, AI, and large-scale data analytics, continues to strengthen our provider partnerships. And third, commercial activity expansion reflects a strong sales model, including cross-sell opportunities and differentiated capabilities in a market where providers need us now more than ever. Let me cover operational delivery for our customers. Our combination of people and technology allows us to proactively address evolving industry dynamics for our customers. Our global infrastructure reduces costs while continuing to achieve high-quality results. Purpose-built technology deployments drive deep insights and accelerated cash conversion, including predictive analytics, performance benchmarking, and trend management. Years of revenue cycle experience and access to data across more than 500 customers and $900 billion of NPR drives more predictability for our customers, allowing them to focus on what they do best, care for patients. Industry metrics such as payer timelines and volumes were in line with our expectations for the second quarter. Our internal efforts and customer engagement resulted in reductions to both total AR and aged AR. As a reminder, customer-specific fluctuations are expected within these calculations and are dependent upon customer geography, care setting types, and payer mix. While payer dynamics and our own operating performance have improved throughout the first half of the year, providers continue to face pressures due to sustained financial backlogs and increased costs as well as in an evolving regulatory landscape. Our customers understand that our technology, expertise, and unit economics continue to make us a preferred market partner. Next, I would like to talk about our technology strategy, the progress we've made this year on our platform and data approach, and applications of AI. First, let me start by reminding you of the problem we are solving for our customers and the technology journey we have been on for 10 plus years. Revenue cycle is a highly complex process typically solved with manual effort at a high cost. The complexity is due to a large volume of claims compounded by limited digitization, lack of data standardization, and siloed data across provider and payer systems. Our technology investments have been and continue to be aimed at digitizing, standardizing, and automating this process which improves both the productivity of our team and the quality of our services. Our customers typically do not have the financial capacity to invest in technology at scale and often struggle with the manual process or use fragmented point solutions. Our technology journey has been focused largely in three areas, intelligent automation, patient experience, and scaled analytics. Our intelligent automation work, which began in 2018, has focused on automating repeatable processes and reducing the need for labor in areas such as claims adjustments, insurance verifications, and payment posting. Our patient experience solution, which we call ENTRI, unifies and digitizes the scheduling, patient registration, and patient payment experience, which provides a combination of patient self-service and behind-the-scenes automation that makes patients' lives easier and improves the efficiency of our team. Our scaled analytics power solutions across our customer base by maximizing revenue opportunity identification using our breadth of data, algorithms, and expert rules across our over 500 customers. Across all of these areas, we leverage machine learning, for example, to extract data from documents, to personalize patient payment plans, and define data anomalies that are new revenue opportunities. Now for a few specific examples of technology deployed in our second quarter. The automation team released several net new use cases. One high value example is our enhanced prior authorization determination. This solution determines whether a prior auth is required by comparing the scheduled service against frequently changing payer policies to determine whether an authorization is required without human intervention. In another example, we continue to leverage our data by expanding our work prioritization models across our modular offerings. By analyzing the over 500 million patient encounters we touch annually, our models can more accurately predict the likelihood of collectability and time to collection, translating to more revenue for our customers faster. We expanded these models to our underpayments business, which have now automated and simplified the complex trade-offs our teams use to prioritize their work. In summary, we made significant progress across our technology portfolio, including extending our business intelligence solutions to new clients, automating cash posting activities, reducing appeal generation time, consolidating legacy applications, and improving stability and scale. Our efforts today create a strong foundation for us to leverage AI across our technology platform. We believe large-language models have the potential to significantly reduce and, in some areas, fully automate workloads by summarizing account histories and medical records, classifying documents, enabling patients to solve more complex problems via self-service, and more. Our data science and technology team has made great progress testing the applicability of these models on data from real-world use cases, and we expect to have several in production by year end. We think of AI and large language models as a significant new toolkit that, when combined with our data access and revenue cycle expertise, will enable us to achieve another level of automation, patient satisfaction, and service quality, which will further extend our competitive advantage. Finally, I'd like to discuss the continued strength of our commercial engine. End-market dynamics remain favorable due to continued financial and capital pressures faced by providers. Larged and aged AR backlogs, changing reimbursement and policy developments, as well as overall costs, continue to drive a need for our solutions. Despite these challenges, over 70% of providers continue to manage revenue cycle processes in-house. We believe these factors present us with sizable runway for long-term growth across the business. In Q2, the pipeline expanded across both end-to-end and modular opportunities for both hospital and physician customers. We saw an increase in cross-sell activity as our team leveraged our new commercial model. We increased the number of meetings with CFOs and heads of revenue cycle thanks to internal opportunities from CloudMed, cross-sell of legacy R1 modular solutions into the CloudMed base, and introduction of end-to-end solutions to the CloudMed base. On the modular side, bookings in the first half were ahead of expectations. With a faster sales and deployment cycle relative to our end-to-end solutions, we've been able to capture market demand faster, with momentum expected to continue into the second half of the year. On the N10 side, several partnership opportunities continue to progress in our pipeline. Furthermore, there was an uptick in inbound activity throughout the first half of the year, thanks to the cross-sell efforts made by our commercial teams. As a result, we are making good progress towards our goal of signing $4 billion of NPR by year-end. In closing, our teams remain dedicated to our 2023 priorities. We solve an important problem for our customers in a time when they need us the most. The market for our solutions is large and growing, and we have highly differentiated offerings with technology and data to maximize results for our customers. Now I'd like to turn the call over to Jennifer to review the financials.