R1 RCM Inc.

Thank you for standing by. My name is Eric and I will be your conference operator today. At this time, I would like to welcome everyone to the second quarter 2024 R1 RCM Incorporated earnings conference call. All lines have been placed on mute to prevent any background noise. I would now like to turn the call over to Evan Smith. Please go ahead.

Thank you, operator. 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 plan and performance, statements about the impacts of recent cyber attacks, including the change healthcare and ascension cyber attacks on our business and financial results, our strategic and cost-saving initiatives, our liquidity position, our integration, At growth opportunities, our future financial performance are forward-looking statements. These statements are often identified by the use of words such as anticipate, believe, estimate, 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 the completion of the take private transaction announced on August 1st, 2024 on anticipated terms and timing or at all breaches or failures of our vendor's information security measures or unauthorized access to a customer's data, disruptions in or damages to our global business service centers, third-party operated data centers or other services provided by other third parties, economic downturns and market conditions beyond our control, including high inflation, the quality of global financial markets, our ability to timely and successfully achieve the anticipated benefits and potential synergies of the acquisitions of CloudMed and Aclara, 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, delayed or unsuccessful implementation of our technologies, including AI, competition with the market, and factors discussed under the heading risk factors in our most recent annual report on Form 10-K. Certain results will be referenced on this call may be rounded to the nearest poll number. We will also be referencing non-GAAP metrics on this call. For reconciliation of non-GAAP metrics, the most closely comparable GAAP metrics, please refer to our press release. As a reminder, last week we announced the execution of a definitive agreement with Tower Brook and CDNR, where the two firms will acquire all the outstanding commerce stocks of the company that Tower Brook does not currently own. In light of the pending transaction, we are not providing guidance for 2024. We're taking questions following our prepared remarks. Now, let me turn the call over to Lee. Lee, go ahead.

Thank you, Evan, and good morning, everyone. As indicated in our press release, we delivered strong operational results and continued to advance our technology transformation while addressing the impacts resulting from the cyber attack on one of our largest customers. as well as the change healthcare outage. Underlying business trends are positive, resulting in approximately $628 million in revenue and $156 million in adjusted EBITDA for the second quarter. Before I provide more detail on our progress in the quarter, I want to reinforce our commitment and belief in our position in a growing industry and our strategy to be the platform of choice for providers. We operate with the most scale of any technology and service provider in our space. We currently serve over 90 of the top 100 health systems and over 500 customers. The breadth of data we access, the power of our technology platform, and our unmatched global scale enables our teams to deliver best-in-class unit economics, increase revenue yield, and improve patient satisfaction. which are the main value drivers for our customers. As evidenced by response to recent events, the company demonstrated its significant operational agility and scale, the ability to drive rapid deployment of high-impact technologies, and our close, collaborative relationships with our customer organizations. We believe our customer-centric approach and continued innovation around GenAI will keep R1 at the forefront of the industry and support our continued growth. Now, let me shift to execution on our priorities through the first half of the year. First, operational execution. First, let me cover the onboarding of our largest new end-to-end customer. The customer's leadership team has been very supportive to execute a seamless transition to R1. I am pleased to report that we successfully completed the onboarding of over 1,900 associates over the last several weeks and are on track to begin ramping revenue in the second half of the year. These team members are continuing to perform outstanding work implementing our technology. We are using an onboarding playbook that has been successful with our other large acute customers, which gives us confidence in our ability to achieve the operational and financial objectives we stated for this contract. The integration of Aclara continues to progress. We are impressed with the team as we continue to advance opportunities to integrate the business into our existing offerings. We believe we are at or ahead of our integration timeline, and we remain confident in our ability to achieve our stated synergy objectives. While focused on the integration, We also have a disciplined approach to our commercial strategy and are actively meeting with the Aclara customer base, which we believe will provide additional cross-selling opportunities to support our growth going forward. Last, I want to provide some color surrounding R1's operations related to the Ascension cyber attack announced in early May. Given we are deeply embedded across Ascension's revenue cycle operation, our operating and technology teams mobilize quickly. Our priority from the outset has been patient safety and care continuity combined with the security of R1 systems. After disconnecting from the systems, we implemented downtime procedures across all functions during the outage. These manual processes have resulted in hundreds of thousands of paper registrations and corresponding clinical records, which need to be loaded into the electronic systems. We are happy to report that we have reconnected all systems and we expect to gradually resume normal operations over the coming weeks. We have brought in additional resources to assist in backlog resolution, including scanning paper documentation, coding outstanding claims, and cash posting. These additional costs began in the second quarter and are expected to continue throughout the remainder of the year. We believe our dedicated approach to operational continuity and recover in support of our customers bolsters our position as the leading revenue cycle partner in the industry. Now, let me move to our second priority, growth. We continue to execute on our growth plan, including new modular bookings and expanding new opportunities in our end-to-end pipeline. The end-to-end pipeline consists of a diverse selection of mid- to large-sized health systems who have engaged deeply with our commercial teams to support partnership opportunities. In addition to adding to our 500-plus customer base, we continue to have success cross-selling within our core customer base. A notable example this quarter included an expansion with a longstanding transfer DRG validation customer. During the quarter, we added charge capture and underpayment solutions, which are anticipated to add several million dollars in additional annual revenue. We are also gaining traction with our functional model through successful onboarding, new bookings, and continued interest in the solution. Last quarter, we mentioned an expansion with a 400 million NPR regional hospital for inpatient clinical denials, and that we were in discussion for additional opportunities, including a managed service or functional partnership deal for our CDI total performance solution offering. During the quarter, we expanded this relationship by signing the CDI functional partnership and adding coding and denial of management modular solutions. We believe this example demonstrates the long runway for growth within our core base, and we are in discussions to further expand this relationship to include three additional modular solutions. Finally, we are executing on our technology roadmap. In June, Steve Albert and Brian Gams our chief product and chief technology officers, shared top priorities with investors, which includes further development of our platform, AI and automation, as well as new solution innovation. With access to a large-scale data ecosystem, technology remains a cornerstone of our strategy, which we believe will enable R1 to drive down costs, improve revenue yield, and enable patient satisfaction. First, our platform is the foundation for how we are able to drive operational efficiencies and increase user satisfaction for our employee base while also improving customer results. You heard the team discuss our modernization efforts, which started with our cloud migration. We believe these infrastructure improvements allow us to scale with a high degree of reliability, which is increasingly important given our data ecosystem. Second, Our use of advanced technologies, including generative AI and intelligent automation, continues to transform many aspects of work performed by our associates. We are focused on AI assistance, AI-infused task automation, and enhanced self-service. Last quarter, you heard us discuss our automated clinical appeals application, which assists our clinical experts by reading medical records for clinically denied claims and then drafting an appeal. This reduces time spent by our team members by 75% from one hour down to 15 minutes. In addition, we continually add task automation to some of the most complex problems in revenue cycles, such as prior auth. We believe this multi-step process has the potential to save providers up to $20 billion annually in the long term by preventing care delays and reducing the time spent per request. We continue to leverage our data, scale, and expertise to develop new products and ways to serve our customers. Recent examples include insurance discovery, modular coding, and patient receivable solutions, each of which enables lower cost and expands revenue for our providers. Our commercial team has started discussing these solutions with providers, and we anticipate our results to further assist in future bookings and revenue growth for R1. In summary, we believe our vision to be the automation platform of choice for the provider industry is clear and achievable. Our strategy to meet providers where they are in their needs today matches a large and growing market, and we expect will help us continue to grow and further diversify our business. Lastly, our value proposition to the provider industry is strong, combining technology, global scale, and the best people in the industry. Thank you, and with that, I'll turn the call over to Jennifer to discuss our quarterly financials.