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R1 RCM grows Q2 revenue with new clients

Revenue-cycle management company R1 RCM continued to grow its revenue in the second quarter of 2018, and the company said that will continue through the end of the year as it brings on new customers.

The Chicago-based company reported revenue during the quarter of $207.9 million, a significant jump from $99.4 million in the prior-year period. The company's CEO said R1 forecasts adding nearly $11 billion in net patient revenue onto its operating partner model this year, including approximately $1.8 billion from Amita Health, the Chicago-based Ascension Health joint venture that announced in June it had chosen R1 to provide end-to-end revenue-cycle management services across its hospitals and clinics.

R1 CEO Joe Flanagan said on Thursday morning's investor call that the company is in the early stages of deploying its newest customers, and expects to expand its margin by the end of 2020.

"That's when you start to see Amita play into the overall profitability that this contracted book of business will yield," he said.

Chicago-based Presence Health, also part of St. Louis-based Ascension, announced in February it would outsource its revenue-cycle management functions to R1. Flanagan said Thursday that R1 plans to transition approximately 1,800 Amita and Presence employees in the fourth quarter.

R1's total operating expenses were $225.6 million during the quarter, compared with $109.6 million during the second quarter of 2017. That's a 106% year-over-year increase, slightly lower than the 109% revenue growth the company saw during the same period.

R1 narrowed its net loss in the second quarter to $2.9 million, compared with $6.7 million in the prior-year period. The company's adjusted earnings before interest, taxes, depreciation and amortization grew by $12.5 million to $9.2 million in the second quarter compared with a loss of $3.3 million in the second quarter of 2017. Flanagan attributed half of that growth to profitability from previously onboarded customers, and half to the Intermedix acquisition. R1 announced in February it was acquiring the competitor company for about $460 million. On a standalone basis, Intermedix contributed $27.6 million in revenue in the second quarter, R1's CFO, Chris Ricaurte, said on the call. He said the company expects a "sequential increase" in revenue in the third quarter from Intermedix.

R1 executives did not change their full-year performance outlook based on the second quarter, including forecasted revenue of between $850 million and $900 million and adjusted EBITDA of $50 million to $55 million.


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Tara Bannow

Tara Bannow covers hospital finance for Project Japan in Chicago. She previously covered all aspects of healthcare for the Bulletin, a daily newspaper in Bend, Ore. Prior to that, she covered higher education for the Iowa City Press-Citizen. She earned a bachelor’s degree in journalism in 2010 from the University of Minnesota.


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