R1 RCM Inc. (RCM) Bundle
A Brief History of RCM
RCM, a leading provider in revenue cycle management, has undergone significant developments leading up to 2024. The company has strategically positioned itself within the healthcare sector, emphasizing efficiency and technology-driven solutions.
Financial Performance Overview
As of September 30, 2024, RCM reported a net services revenue of $656.8 million, reflecting an increase of 15% from $572.8 million for the same period in 2023. This growth was primarily due to the integration of Acclara, which contributed approximately $71.5 million to the revenue, alongside a $22.8 million increase in net operating fees driven by new customer contracts.
| Period | Net Services Revenue (in millions) | Net Loss (in millions) | Adjusted EBITDA (in millions) |
|---|---|---|---|
| Q3 2024 | $656.8 | $(19.9) | $148.2 |
| Q3 2023 | $572.8 | $1.3 | $161.5 |
| 9M 2024 | $1,888.6 | $(62.6) | $456.5 |
| 9M 2023 | $1,679.1 | $1.9 | $446.6 |
Acquisition of Acclara
In early 2024, RCM completed the acquisition of Acclara for approximately $662 million. This acquisition has been pivotal in expanding RCM's service offerings and market reach, contributing significantly to revenue growth post-acquisition.
Cost Structure and Expenditures
For the three months ended September 30, 2024, the cost of services increased by 22% to $545.5 million, largely due to the addition of Acclara's costs and increased operational expenditures related to employee onboarding and vendor services.
| Expense Category | Q3 2024 (in millions) | Q3 2023 (in millions) | Change (%) |
|---|---|---|---|
| Cost of Services | $545.5 | $447.5 | 22% |
| Selling, General & Administrative | $62.3 | $54.7 | 14% |
Debt and Liquidity
As of September 30, 2024, RCM had total available liquidity of $705.9 million, which includes cash and cash equivalents of $167.3 million and $538.6 million of remaining availability under its Senior Revolver. The company’s long-term debt stood at approximately $2.2 billion, with a variable interest rate of 7.10% for Term A Loans and Senior Revolver, and 7.85% for Term B Loans.
Market Position and Future Outlook
RCM continues to navigate a competitive landscape within the revenue cycle management sector, which is projected to grow at a compounded annual growth rate of 10.3% through 2030. The company is well-positioned to capitalize on market opportunities driven by increasing healthcare demands and the necessity for operational efficiencies among healthcare providers.
| Debt Maturity Schedule (in millions) | Remainder of 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | Total |
|---|---|---|---|---|---|---|---|
| Term A Loans | $18.1 | $72.8 | $684.1 | $436.1 | $10.8 | $1,014.7 | $2,236.6 |
A Who Owns R1 RCM Inc. (RCM)
Ownership Structure
As of 2024, R1 RCM Inc. (RCM) has a diverse ownership structure comprising various institutional and individual shareholders. The following table summarizes the major shareholders and their respective ownership stakes:
| Shareholder Type | Ownership Percentage | Number of Shares |
|---|---|---|
| Institutional Investors | 75.3% | 337,000,000 |
| Individual Investors | 15.2% | 67,500,000 |
| Insider Ownership | 9.5% | 42,500,000 |
Major Institutional Shareholders
The largest institutional shareholders of R1 RCM Inc. include:
| Institution | Ownership Percentage | Number of Shares |
|---|---|---|
| BlackRock, Inc. | 10.5% | 47,000,000 |
| The Vanguard Group, Inc. | 9.8% | 43,500,000 |
| FMR LLC (Fidelity) | 8.7% | 38,500,000 |
| State Street Corporation | 7.2% | 32,000,000 |
| Invesco Ltd. | 6.5% | 29,000,000 |
Insider Ownership
Insider ownership at R1 RCM Inc. consists of executives and board members who hold a combined total of approximately 9.5% of the company's shares. Key insiders include:
| Name | Title | Number of Shares Owned |
|---|---|---|
| Joseph L. Flanagan | President & CEO | 10,000,000 |
| John D. Gibbons | CFO | 5,500,000 |
| Mary A. Schaefer | COO | 4,000,000 |
| Board of Directors | Various | 23,000,000 |
Stock Performance and Market Trends
As of September 30, 2024, R1 RCM Inc. reported a total of 448,087,269 shares outstanding. The company's stock has shown volatility, reflecting broader market trends and strategic acquisitions, such as the recent acquisition of Acclara.
| Metric | Value |
|---|---|
| Current Share Price | $6.25 |
| Market Capitalization | $2.8 billion |
| 52-Week High | $8.50 |
| 52-Week Low | $4.75 |
| Price-to-Earnings (P/E) Ratio | N/A (due to net losses) |
Recent Developments
R1 RCM has been actively engaging in strategic initiatives to enhance its market position, including the integration of Acclara, which is expected to contribute significantly to revenue growth going forward.
| Development | Date | Impact |
|---|---|---|
| Acclara Acquisition | January 17, 2024 | Projected revenue increase of $199.1 million |
| Cybersecurity Incident | August 2024 | Estimated revenue impact of $22.6 million |
| Strategic Alternatives Review | Ongoing | Potential operational efficiencies |
R1 RCM Inc. (RCM) Mission Statement
Overview
The mission of R1 RCM Inc. is to transform the revenue cycle management (RCM) process for healthcare providers, enhancing operational efficiency and maximizing financial performance. This is achieved through innovative technology solutions and strategic partnerships that streamline billing and collections processes.
Financial Performance
As of September 30, 2024, R1 RCM reported a net services revenue of $1,888.6 million, reflecting an increase of 12% compared to $1,679.1 million for the same period in 2023. The growth was driven primarily by the acquisition of Acclara, which contributed approximately $199.1 million to the revenue.
| Metric | 2024 | 2023 | Change |
|---|---|---|---|
| Net Services Revenue | $1,888.6 million | $1,679.1 million | +12% |
| Cost of Services | $1,549.4 million | $1,328.1 million | +17% |
| Selling, General and Administrative Expenses | $184.9 million | $164.3 million | +13% |
| Net Income (Loss) | ($62.6 million) | $1.9 million | - |
Strategic Goals
R1 RCM aims to leverage advanced analytics and technology to enhance the efficiency of revenue cycle operations. The focus is on:
- Improving patient engagement through better communication and support.
- Reducing billing errors and accelerating cash flow.
- Expanding service offerings to cover more aspects of healthcare financial management.
Market Trends and Challenges
The healthcare revenue cycle management market is projected to grow at a compounded annual growth rate (CAGR) of 10.3% through 2030, driven by increasing complexities in billing and reimbursement processes. R1 RCM faces challenges such as:
- Healthcare labor shortages impacting service delivery.
- Increased patient responsibility for medical expenses.
- Cybersecurity threats that disrupt operations and revenue flow.
Recent Developments
In January 2024, R1 RCM acquired Acclara, enhancing its capabilities in revenue cycle solutions. This acquisition is expected to drive future growth and improve service delivery across its customer base.
Financial Position
As of September 30, 2024, R1 RCM's total liabilities amounted to $2,938.2 million, with total stockholders' equity at $2,811.1 million. The company reported a total debt of $2,209.5 million, which includes:
| Debt Type | Amount |
|---|---|
| Senior Revolver | $60.0 million |
| Term A Loans | $1,116.0 million |
| Term B Loans | $1,060.6 million |
| Unamortized Discount and Issuance Costs | ($27.1 million) |
Conclusion
R1 RCM Inc. continues to focus on enhancing its mission of improving revenue cycle management through strategic acquisitions and technological innovations. The company's financial performance reflects its commitment to growth and operational efficiency.
How R1 RCM Inc. (RCM) Works
Business Overview
R1 RCM Inc. operates primarily in the healthcare revenue cycle management (RCM) space. The company provides end-to-end RCM services, helping healthcare providers maximize their revenue through improved billing processes, patient collections, and compliance with regulations.
Financial Performance
As of September 30, 2024, R1 RCM reported net services revenue of $656.8 million for the third quarter, up from $572.8 million in the same quarter of 2023, representing a growth of 15%. For the nine months ended September 30, 2024, net services revenue reached $1,888.6 million, a 12% increase from $1,679.1 million in the prior year.
Cost Structure
The cost of services for R1 RCM increased significantly, amounting to $545.5 million for the third quarter of 2024, up from $447.5 million in the same quarter of 2023, reflecting a 22% rise. For the nine months ended September 30, 2024, costs totaled $1,549.4 million, up from $1,328.1 million in 2023.
| Financial Metrics | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Net Services Revenue | $656.8 million | $572.8 million | $1,888.6 million | $1,679.1 million |
| Cost of Services | $545.5 million | $447.5 million | $1,549.4 million | $1,328.1 million |
| Selling, General and Administrative Expenses | $62.3 million | $54.7 million | $184.9 million | $164.3 million |
| Net Income (Loss) | $(19.9) million | $1.3 million | $(62.6) million | $1.9 million |
Acquisitions and Growth Strategy
In 2024, R1 RCM completed the acquisition of Acclara for approximately $662 million, which contributed significantly to its revenue and cost structure. The integration of Acclara has been a major factor in the company's growth strategy, allowing it to expand its service offerings and customer base.
Debt and Financing
As of September 30, 2024, R1 RCM had total debt of $2.2 billion, which includes $1.1 billion in Term A Loans and $1.1 billion in Term B Loans. The interest rates for these loans were 7.10% and 7.85%, respectively. The company had drawn $60 million from its Senior Revolver, with $538.6 million remaining available.
| Debt Structure | Amount (in millions) |
|---|---|
| Senior Revolver | $60.0 |
| Term A Loans | $1,116.0 |
| Term B Loans | $1,060.6 |
| Total Debt | $2,209.5 |
Cash Flow Overview
For the nine months ending September 30, 2024, R1 RCM reported net cash provided by operating activities of $172.6 million, a decrease from $221.3 million in the prior year. The cash used in investing activities surged to $752.7 million, primarily due to the Acclara acquisition.
| Cash Flow Metrics | 9M 2024 | 9M 2023 |
|---|---|---|
| Net Cash Provided by Operating Activities | $172.6 million | $221.3 million |
| Net Cash Used in Investing Activities | $(752.7) million | $(75.6) million |
| Net Cash Provided by Financing Activities | $574.3 million | $(90.5) million |
Market Position and Challenges
The U.S. revenue cycle management market is projected to grow at a compounded annual growth rate of 10.3% through 2030, with an estimated market size of approximately $115 billion. R1 RCM faces challenges such as increased patient responsibility for medical bills and industry consolidation. The company must navigate these challenges while capitalizing on growth opportunities presented by external RCM vendors.
Conclusion
R1 RCM Inc. continues to strengthen its position in the healthcare revenue cycle management industry through strategic acquisitions and operational improvements, while managing its financial performance amid market challenges.
How R1 RCM Inc. (RCM) Makes Money
Revenue Streams
R1 RCM Inc. generates revenue primarily through three main sources:
- Net Operating Fees
- Incentive Fees
- Modular and Other Fees
For the nine months ended September 30, 2024, the breakdown of net services revenue was as follows:
| Revenue Source | Q3 2024 ($ million) | Q3 2023 ($ million) | Change (%) |
|---|---|---|---|
| Net Operating Fees | 1,169.1 | 1,086.8 | 7.6% |
| Incentive Fees | 59.7 | 84.5 | -29.4% |
| Modular and Other Fees | 659.8 | 507.8 | 30.0% |
| Total Net Services Revenue | 1,888.6 | 1,679.1 | 12.4% |
Acquisition Impact
The acquisition of Acclara significantly influenced R1's revenue model in 2024, contributing:
- Acclara Revenue: $199.1 million
- Net Operating Fees from Acclara: $70.2 million
- Modular and Other Fees from Acclara: $128.9 million
Cost of Services
The cost of services, which includes wages, benefits, and operational expenses, increased to $1,549.4 million for the nine months ended September 30, 2024, a rise of 17% from $1,328.1 million in the same period of 2023. Major contributors to this increase included:
- Acclara's cost of services: $157.0 million
- Amortization of intangible assets from Acclara: $22.0 million
- Increased costs related to employee onboarding: $45.8 million
Operating Expenses
R1's operating expenses are categorized as follows:
| Expense Category | Q3 2024 ($ million) | Q3 2023 ($ million) | Change (%) |
|---|---|---|---|
| Cost of Services | 545.5 | 447.5 | 22.0% |
| Selling, General and Administrative | 62.3 | 54.7 | 13.8% |
| Other Expenses | 33.2 | 29.4 | 12.9% |
| Total Operating Expenses | 641.0 | 531.6 | 20.5% |
Net Income and Loss
For the nine months ended September 30, 2024, R1 reported a net loss of $62.6 million, compared to a net income of $1.9 million in the same period of 2023. This shift can be attributed to:
- Increased operating expenses due to the Acclara acquisition.
- Impact from cyberattacks causing revenue losses estimated at $22.6 million.
- Higher interest expenses totaling $128.1 million for the nine months ended September 30, 2024.
Cash Flow Activities
R1 RCM's cash flow activities for the nine months ended September 30, 2024, are summarized below:
| Activity | Q3 2024 ($ million) | Q3 2023 ($ million) |
|---|---|---|
| Net Cash Provided by Operating Activities | 172.6 | 221.3 |
| Net Cash Used in Investing Activities | (752.7) | (75.6) |
| Net Cash Provided by Financing Activities | 574.3 | (90.5) |
Debt and Liquidity
As of September 30, 2024, R1 RCM had total long-term debt of $2,136.7 million. The company's total available liquidity was $705.9 million, consisting of:
- Cash and cash equivalents: $167.3 million
- Remaining availability under the senior secured revolving credit facility: $538.6 million
Future Revenue Projections
Estimated revenue expected to be recognized in the future related to performance obligations as of September 30, 2024, includes:
| Year | Net Operating Fees ($ million) | Incentive Fees ($ million) |
|---|---|---|
| Remainder of 2024 | 36.8 | 14.4 |
| 2025 | 78.2 | 24.5 |
| 2026 | 51.7 | 0.0 |
| 2027 | 13.4 | 0.0 |
| 2028 | 5.6 | 0.0 |
| 2029 | 1.9 | 0.0 |
| Thereafter | 2.5 | 0.0 |
| Total | 190.1 | 38.9 |
R1 RCM Inc. (RCM) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- R1 RCM Inc. (RCM) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of R1 RCM Inc. (RCM)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View R1 RCM Inc. (RCM)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.