Company Quick10K Filing
Price9.80 EPS-0
Shares166 P/E-1,082
MCap1,623 P/FCF37
Net Debt312 EBIT-3
TEV1,935 TEV/EBIT-717
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-05
10-K 2019-12-31 Filed 2020-02-20
10-Q 2019-09-30 Filed 2019-11-05
10-Q 2019-06-30 Filed 2019-08-06
10-Q 2019-03-31 Filed 2019-05-09
10-K 2018-12-31 Filed 2019-02-22
10-Q 2018-09-30 Filed 2018-11-07
10-Q 2018-06-30 Filed 2018-08-09
10-Q 2018-03-31 Filed 2018-05-10
10-K 2017-12-31 Filed 2018-03-09
10-Q 2017-09-30 Filed 2017-10-31
10-Q 2017-06-30 Filed 2017-08-02
10-Q 2017-03-31 Filed 2017-05-09
10-K 2016-12-31 Filed 2017-03-01
10-Q 2016-09-30 Filed 2016-11-02
10-Q 2016-06-30 Filed 2016-08-04
10-Q 2016-03-31 Filed 2016-05-10
10-K 2015-12-31 Filed 2016-03-10
10-Q 2015-09-30 Filed 2015-11-09
10-Q 2015-03-31 Filed 2015-07-07
10-Q 2014-12-31 Filed 2015-08-05
10-K 2014-12-31 Filed 2015-06-23
10-Q 2014-09-30 Filed 2015-06-23
10-Q 2014-06-30 Filed 2015-06-23
10-Q 2014-03-31 Filed 2015-06-23
10-K 2013-12-31 Filed 2014-12-30
10-Q 2012-06-30 Filed 2012-08-09
10-Q 2012-03-31 Filed 2012-05-09
10-K 2011-12-31 Filed 2012-02-29
10-Q 2011-09-30 Filed 2011-11-10
10-Q 2011-06-30 Filed 2011-08-12
10-Q 2011-03-31 Filed 2011-05-12
10-K 2010-12-31 Filed 2011-03-18
10-Q 2010-09-30 Filed 2010-11-12
10-Q 2010-06-30 Filed 2010-08-13
8-K 2020-07-20 Regulation FD, Exhibits
8-K 2020-07-14 Officers, Exhibits
8-K 2020-06-03
8-K 2020-05-27
8-K 2020-05-05
8-K 2020-04-29
8-K 2020-04-01
8-K 2020-03-20
8-K 2020-02-20
8-K 2020-01-09
8-K 2019-12-27
8-K 2019-11-05
8-K 2019-09-20
8-K 2019-08-07
8-K 2019-08-06
8-K 2019-06-26
8-K 2019-06-13
8-K 2019-05-09
8-K 2019-04-16
8-K 2019-04-10
8-K 2019-03-07
8-K 2019-02-22
8-K 2019-01-07
8-K 2018-11-07
8-K 2018-10-01
8-K 2018-09-20
8-K 2018-08-09
8-K 2018-07-24
8-K 2018-06-24
8-K 2018-05-31
8-K 2018-05-30
8-K 2018-05-16
8-K 2018-05-09
8-K 2018-05-08
8-K 2018-04-26
8-K 2018-04-24
8-K 2018-04-17
8-K 2018-04-02
8-K 2018-03-26
8-K 2018-03-20
8-K 2018-03-09
8-K 2018-02-23
8-K 2018-01-24
8-K 2018-01-08

RCM 10Q Quarterly Report

Part I - Financial Information
Item 1.Consolidated Financial Statements
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3.Qualitative and Quantitative Disclosures About Market Risk
Item 4.Controls and Procedures
Part II
Item 1.Legal Proceedings
Item 1A.Risk Factors
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Item 6.Exhibits
EX-10.2 addendumno6lowerboundr.htm
EX-31.1 exhibit311-q12020.htm
EX-31.2 exhibit312-q12020.htm
EX-32.1 exhibit321-q12020.htm
EX-32.2 exhibit322-q12020.htm

R1 RCM Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
Assets, Equity
Rev, G Profit, Net Income
Ops, Inv, Fin

false2020Q10001472595December 31P9MP1YP1YP1YP1YP1YP3Y100014725952020-01-012020-03-31xbrli:shares00014725952020-04-28iso4217:USD00014725952020-03-3100014725952019-12-310001472595srt:AffiliatedEntityMember2020-03-310001472595srt:AffiliatedEntityMember2019-12-31xbrli:pure0001472595us-gaap:RedeemableConvertiblePreferredStockMember2019-01-012019-12-310001472595us-gaap:RedeemableConvertiblePreferredStockMember2020-01-012020-03-31iso4217:USDxbrli:shares0001472595us-gaap:RedeemableConvertiblePreferredStockMember2019-12-310001472595us-gaap:RedeemableConvertiblePreferredStockMember2020-03-3100014725952019-01-012019-03-310001472595ah:PreviouslyReportedMemberus-gaap:CommonStockMember2019-12-310001472595ah:PreviouslyReportedMemberus-gaap:TreasuryStockMember2019-12-310001472595us-gaap:AdditionalPaidInCapitalMemberah:PreviouslyReportedMember2019-12-310001472595ah:PreviouslyReportedMemberus-gaap:RetainedEarningsMember2019-12-310001472595ah:PreviouslyReportedMemberus-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001472595ah:PreviouslyReportedMember2019-12-310001472595ah:RevisionOfPriorPeriodAccountingStandardsUpdateAdjustmentMember2019-12-312019-12-310001472595ah:RevisionOfPriorPeriodAccountingStandardsUpdateAdjustmentMemberus-gaap:RetainedEarningsMember2020-01-010001472595ah:RevisionOfPriorPeriodAccountingStandardsUpdateAdjustmentMember2020-01-010001472595us-gaap:CommonStockMember2020-01-010001472595us-gaap:TreasuryStockMember2020-01-010001472595us-gaap:AdditionalPaidInCapitalMember2020-01-010001472595us-gaap:RetainedEarningsMember2020-01-010001472595us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-0100014725952020-01-010001472595us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310001472595us-gaap:CommonStockMember2020-01-012020-03-310001472595us-gaap:TreasuryStockMember2020-01-012020-03-310001472595us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-310001472595us-gaap:RetainedEarningsMember2020-01-012020-03-310001472595us-gaap:CommonStockMember2020-03-310001472595us-gaap:TreasuryStockMember2020-03-310001472595us-gaap:AdditionalPaidInCapitalMember2020-03-310001472595us-gaap:RetainedEarningsMember2020-03-310001472595us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-310001472595us-gaap:CommonStockMember2018-12-310001472595us-gaap:TreasuryStockMember2018-12-310001472595us-gaap:AdditionalPaidInCapitalMember2018-12-310001472595us-gaap:RetainedEarningsMember2018-12-310001472595us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-3100014725952018-12-310001472595us-gaap:AdditionalPaidInCapitalMember2019-01-012019-03-310001472595us-gaap:CommonStockMember2019-01-012019-03-310001472595us-gaap:TreasuryStockMember2019-01-012019-03-310001472595us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-03-310001472595us-gaap:RetainedEarningsMember2019-01-012019-03-310001472595us-gaap:CommonStockMember2019-03-310001472595us-gaap:TreasuryStockMember2019-03-310001472595us-gaap:AdditionalPaidInCapitalMember2019-03-310001472595us-gaap:RetainedEarningsMember2019-03-310001472595us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-03-3100014725952019-03-310001472595us-gaap:RevolvingCreditFacilityMember2020-01-012020-03-310001472595us-gaap:RevolvingCreditFacilityMember2019-01-012019-03-310001472595ah:CumulativeEffectPeriodOfAdoptionAdjustmentMember2020-01-010001472595us-gaap:LandAndBuildingMember2020-03-310001472595us-gaap:LandAndBuildingMember2019-12-310001472595ah:ComputerHardwareAndOtherEquipmentMember2020-03-310001472595ah:ComputerHardwareAndOtherEquipmentMember2019-12-310001472595us-gaap:LeaseholdImprovementsMember2020-03-310001472595us-gaap:LeaseholdImprovementsMember2019-12-310001472595us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2020-03-310001472595us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2019-12-310001472595us-gaap:OfficeEquipmentMember2020-03-310001472595us-gaap:OfficeEquipmentMember2019-12-310001472595us-gaap:CostOfSalesMember2020-01-012020-03-310001472595us-gaap:CostOfSalesMember2019-01-012019-03-310001472595us-gaap:SellingGeneralAndAdministrativeExpensesMember2020-01-012020-03-310001472595us-gaap:SellingGeneralAndAdministrativeExpensesMember2019-01-012019-03-310001472595us-gaap:CustomerRelationshipsMember2020-01-012020-03-310001472595us-gaap:CustomerRelationshipsMember2020-03-310001472595us-gaap:CustomerRelationshipsMember2019-12-310001472595us-gaap:TechnologyBasedIntangibleAssetsMember2020-01-012020-03-310001472595us-gaap:TechnologyBasedIntangibleAssetsMember2020-03-310001472595us-gaap:TechnologyBasedIntangibleAssetsMember2019-12-310001472595ah:NetOperatingFeesMember2020-01-012020-03-310001472595ah:NetOperatingFeesMember2019-01-012019-03-310001472595ah:IncentiveFeesMember2020-01-012020-03-310001472595ah:IncentiveFeesMember2019-01-012019-03-310001472595ah:OtherMember2020-01-012020-03-310001472595ah:OtherMember2019-01-012019-03-310001472595us-gaap:InvestorMember2020-03-310001472595us-gaap:InvestorMember2019-12-310001472595ah:NetOperatingFeesMember2020-04-012020-03-310001472595ah:IncentiveFeesMember2020-04-012020-03-310001472595ah:NetOperatingFeesMember2021-01-012020-03-310001472595ah:IncentiveFeesMember2021-01-012020-03-3100014725952022-01-01ah:NetOperatingFeesMember2020-03-3100014725952022-01-01ah:IncentiveFeesMember2020-03-310001472595ah:NetOperatingFeesMember2023-01-012020-03-3100014725952023-01-01ah:IncentiveFeesMember2020-03-310001472595ah:NetOperatingFeesMember2024-01-012020-03-310001472595ah:IncentiveFeesMember2024-01-012020-03-3100014725952025-01-01ah:NetOperatingFeesMember2020-03-3100014725952025-01-01ah:IncentiveFeesMember2020-03-310001472595ah:NetOperatingFeesMember2026-01-012020-03-310001472595ah:IncentiveFeesMember2026-01-012020-03-310001472595ah:NetOperatingFeesMember2020-03-310001472595ah:IncentiveFeesMember2020-03-3100014725952020-04-012020-03-3100014725952021-01-012020-03-3100014725952022-01-012020-03-3100014725952023-01-012020-03-3100014725952024-01-012020-03-3100014725952025-01-012020-03-3100014725952026-01-012020-03-310001472595us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2020-03-310001472595us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2019-12-310001472595us-gaap:LineOfCreditMemberah:SeniorTermLoanMember2020-03-310001472595us-gaap:LineOfCreditMemberah:SeniorTermLoanMember2019-12-310001472595us-gaap:LineOfCreditMemberah:SeniorTermLoanMember2019-06-260001472595us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2019-06-260001472595us-gaap:LineOfCreditMemberus-gaap:LineOfCreditMember2020-03-310001472595us-gaap:LineOfCreditMemberus-gaap:LetterOfCreditMember2020-03-310001472595us-gaap:LineOfCreditMemberus-gaap:FederalFundsEffectiveSwapRateMember2019-06-262019-06-260001472595us-gaap:LineOfCreditMemberus-gaap:EurodollarMemberah:InterestRateOptionBasisSpreadOneMember2019-06-262019-06-260001472595srt:MinimumMemberus-gaap:LineOfCreditMemberus-gaap:EurodollarMemberah:InterestRateOptionBasisSpreadOneMember2019-06-262019-06-260001472595srt:MaximumMemberus-gaap:LineOfCreditMemberus-gaap:EurodollarMemberah:InterestRateOptionBasisSpreadOneMember2019-06-262019-06-260001472595us-gaap:LineOfCreditMemberus-gaap:EurodollarMember2019-06-262019-06-260001472595us-gaap:LineOfCreditMemberus-gaap:EurodollarMemberah:InterestRateOptionTwoMember2019-06-262019-06-260001472595srt:MinimumMemberus-gaap:LineOfCreditMemberus-gaap:EurodollarMemberah:InterestRateOptionTwoMember2019-06-262019-06-260001472595srt:MaximumMemberus-gaap:LineOfCreditMemberus-gaap:EurodollarMemberah:InterestRateOptionTwoMember2019-06-262019-06-260001472595us-gaap:LineOfCreditMember2020-03-310001472595srt:MinimumMemberus-gaap:LineOfCreditMember2019-06-262019-06-260001472595srt:MaximumMemberus-gaap:LineOfCreditMember2019-06-262019-06-260001472595us-gaap:LineOfCreditMemberah:IncrementalTermLoanMember2020-03-200001472595ah:OtherMember2020-01-012020-03-310001472595ah:OtherMember2019-01-012019-03-310001472595srt:MinimumMember2019-01-012019-03-310001472595srt:MaximumMember2019-01-012019-03-310001472595us-gaap:RestrictedStockMember2019-12-310001472595us-gaap:RestrictedStockUnitsRSUMember2019-12-310001472595us-gaap:PerformanceSharesMember2019-12-310001472595us-gaap:RestrictedStockMember2020-01-012020-03-310001472595us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-03-310001472595us-gaap:PerformanceSharesMember2020-01-012020-03-310001472595us-gaap:RestrictedStockMember2020-03-310001472595us-gaap:RestrictedStockUnitsRSUMember2020-03-310001472595us-gaap:PerformanceSharesMember2020-03-310001472595us-gaap:RestrictedStockMember2019-01-012019-03-310001472595us-gaap:RestrictedStockUnitsRSUMember2019-01-012019-03-310001472595us-gaap:PerformanceSharesMember2019-01-012019-03-310001472595us-gaap:PerformanceSharesMembersrt:MinimumMember2019-01-012019-04-300001472595srt:MaximumMemberus-gaap:PerformanceSharesMember2019-01-012019-04-300001472595us-gaap:PerformanceSharesMembersrt:MinimumMember2019-05-012019-12-310001472595srt:MaximumMemberus-gaap:PerformanceSharesMember2019-05-012019-12-310001472595us-gaap:WarrantMember2020-01-012020-03-310001472595us-gaap:WarrantMember2019-01-012019-03-310001472595srt:AffiliatedEntityMember2019-06-262019-06-260001472595us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2020-03-310001472595us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2019-12-310001472595us-gaap:OtherAssetsMember2020-03-310001472595us-gaap:OtherAssetsMember2019-12-31ah:segment0001472595us-gaap:CustomerConcentrationRiskMemberah:AscensionMemberus-gaap:SalesRevenueNetMember2020-01-012020-03-310001472595us-gaap:CustomerConcentrationRiskMemberah:AscensionMemberus-gaap:SalesRevenueNetMember2019-01-012019-03-310001472595us-gaap:CustomerConcentrationRiskMemberus-gaap:SalesRevenueNetMemberah:CustomerNotAffiliatedwithAscensionHealthMember2020-01-012020-03-310001472595us-gaap:CustomerConcentrationRiskMemberus-gaap:SalesRevenueNetMemberah:CustomerNotAffiliatedwithAscensionHealthMember2019-01-012019-03-310001472595us-gaap:CustomerConcentrationRiskMemberah:AscensionMemberus-gaap:AccountsReceivableMember2020-01-012020-03-310001472595us-gaap:CustomerConcentrationRiskMemberah:AscensionMemberus-gaap:AccountsReceivableMember2019-01-012019-12-310001472595us-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-01-012020-03-310001472595us-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-01-012020-03-310001472595us-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMember2019-01-012019-03-310001472595us-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2019-01-012019-03-310001472595us-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-03-310001472595us-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-03-310001472595us-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMember2019-12-310001472595us-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2019-12-310001472595ah:SCIAcquisitionMemberus-gaap:SubsequentEventMember2020-04-012020-04-01

Washington, D.C. 20549
Form 10-Q

(Mark One)

        For the quarterly period ended March 31, 2020
        For the transition period from to
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
401 North Michigan Avenue
Suite 2700
(Address of principal executive offices)(Zip code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.01 per shareRCMNASDAQ
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ     No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes þ    No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerý
Accelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes      No 
As of April 28, 2020, the registrant had 114,894,490 shares of common stock, par value $0.01 per share, outstanding.

Table of Contents



R1 RCM Inc.
Consolidated Balance Sheets
(In millions, except share and per share data)

 March 31,December 31,
Current assets:
Cash and cash equivalents106.0  $92.0  
Accounts receivable, net of $4.6 million and $2.8 million allowance
57.6  52.3  
Accounts receivable, net of $0.1 million and $0.0 million allowance - related party
36.3  30.8  
Prepaid expenses and other current assets43.9  41.6  
Total current assets243.8  216.7  
Property, equipment and software, net116.7  116.9  
Operating lease right-of-use assets73.8  77.9  
Intangible assets, net161.3  164.7  
Goodwill253.2  253.2  
Non-current deferred tax assets55.6  64.2  
Non-current portion of restricted cash equivalents1.0  0.5  
Other assets37.5  35.0  
Total assets$942.9  $929.1  
Current liabilities:
Accounts payable$24.8  $20.2  
Current portion of customer liabilities13.3  14.0  
Current portion of customer liabilities - related party31.0  34.1  
Accrued compensation and benefits48.1  95.1  
Current portion of operating lease liabilities13.3  12.8  
Current portion of long-term debt16.3  16.3  
Other accrued expenses60.6  40.0  
Total current liabilities207.4  232.5  
Non-current portion of customer liabilities - related party19.3  18.6  
Non-current portion of operating lease liabilities78.4  82.7  
Long-term debt363.3  337.7  
Other non-current liabilities8.5  10.4  
Total liabilities676.9  681.9  
8.00% Series A convertible preferred stock, par value $0.01, 370,000 shares authorized, 271,859 shares issued and outstanding as of March 31, 2020 (aggregate liquidation value of $277.3); 370,000 shares authorized, 266,529 shares issued and outstanding as of December 31, 2019 (aggregate liquidation value of $271.9)
234.5  229.1  
Stockholders’ equity:
Common stock, $0.01 par value, 500,000,000 shares authorized, 128,362,786 shares issued and 114,575,975 shares outstanding at March 31, 2020; 127,807,546 shares issued and 114,021,280 shares outstanding at December 31, 2019
1.3  1.3  
Additional paid-in capital375.2  372.7  
Accumulated deficit(260.4) (277.8) 
Accumulated other comprehensive loss(11.0) (4.5) 
Treasury stock, at cost, 13,786,811 shares as of March 31, 2020; 13,786,266 shares as of December 31, 2019
(73.6) (73.6) 
Total stockholders’ equity31.5  18.1  
Total liabilities and stockholders’ equity$942.9  $929.1  
See accompanying notes to consolidated financial statements.

R1 RCM Inc.
Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)
(In millions, except share and per share data)

 Three Months Ended March 31,
Net services revenue ($208.4 million and $181.8 million for the three months ended March 31, 2020 and 2019, from related party, respectively)
$320.5  $275.9  
Operating expenses:
Cost of services253.9  237.2  
Selling, general and administrative25.5  22.5  
Other expenses8.7  8.8  
Total operating expenses288.1  268.5  
Income (loss) from operations32.4  7.4  
Net interest expense (income) 3.8  10.2  
Income (loss) before income tax provision (benefit)28.6  (2.8) 
Income tax provision (benefit)10.4  (3.0) 
Net income (loss)$18.2  $0.2  
Net income (loss) per common share:
Basic$0.06  $(0.04) 
Diluted$0.05  $(0.04) 
Weighted average shares used in calculating net income (loss) per common share:
Basic114,441,043  109,802,632  
Diluted169,620,178  109,802,632  
Consolidated statements of comprehensive income (loss)
Net income (loss)18.2  0.2  
Other comprehensive income (loss):
Net change on derivatives designated as cash flow hedges, net of tax(4.4) 0.2  
Foreign currency translation adjustments(2.1) 0.5  
Comprehensive income (loss)$11.7  $0.9  

Net income (loss)$18.2  $0.2  
Less dividends on preferred shares(5.4) (5.0) 
Less income allocated to preferred shareholders(6.2)   
Net income (loss) available/allocated to common shareholders - basic$6.6  $(4.8) 
Net income (loss)$18.2  $0.2  
Less dividends on preferred shares(5.4) (5.0) 
Less income allocated to preferred shareholders(5.0)   
Net income (loss) available/allocated to common shareholders - diluted$7.8  $(4.8) 
See accompanying notes to consolidated financial statements.

R1 RCM Inc.
Consolidated Statements of Stockholders’ Equity (Deficit) (Unaudited)
(In millions, except share and per share data)

 Common StockTreasury StockAdditional
Balance at December 31, 2019127,807,546  $1.3  (13,786,266) $(73.6) $372.7  $(277.8) $(4.5) $18.1  
Impact of credit-loss standard adoption, net of tax of $0.3 million
—  —  —  —  —  (0.8) —  (0.8) 
Adjusted balance at January 1, 2020127,807,546  $1.3  (13,786,266) $(73.6) $372.7  $(278.6) $(4.5) $17.3  
Share-based compensation expense—  —  —  —  4.8  —  —  4.8  
Issuance of common stock related to share-based compensation plans1,720  —  —  —  —  —  —  —  
Exercise of vested stock options553,520  —  —  —  3.1  —  —  3.1  
Dividends paid/accrued—  —  —  —  (5.4) —  —  (5.4) 
Acquisition of treasury stock related to share-based compensation plans—  —  (545)   —  —  —    
Net change on derivatives designated as cash flow hedges, net of tax of $1.5 million
—  —  —  —  —  —  (4.4) (4.4) 
Foreign currency translation adjustments—  —  —  —  —  —  (2.1) (2.1) 
Net income (loss)—  —  —  —  —  18.2  —  18.2  
Balance at March 31, 2020128,362,786  $1.3  (13,786,811) $(73.6) $375.2  $(260.4) $(11.0) $31.5  
See accompanying notes to consolidated financial statements.

 Common StockTreasury StockAdditional
Balance at December 31, 2018123,353,656  $1.2  (12,811,755) $(62.6) $361.0  $(289.8) $(3.5) $6.3  
Share-based compensation expense—  —  —  —  4.5  —  —  4.5  
Issuance of common stock related to share-based compensation plans2,613  —  —  —  —  —  —  —  
Exercise of vested stock options145,235  —  —  —  0.4  —  —  0.4  
Dividends paid/accrued—  —  —  —  (5.0) —  —  (5.0) 
Acquisition of treasury stock related to share-based compensation plans—  —  (342,998) (3.3) —  —  —  (3.3) 
Forfeitures—  —  (1,208) —  —  —  —  —  
Net change on derivatives designated as cash flow hedges, net of tax of $0.1 million
—  —  —  —  —  —  0.2  0.2  
Foreign currency translation adjustments—  —  —  —  —  —  0.5  0.5  
Net income (loss)—  —  —  —  —  0.2  —  0.2  
Balance at March 31, 2019123,501,504  $1.2  (13,155,961) $(65.9) $360.9  $(289.6) $(2.8) $3.8  
See accompanying notes to consolidated financial statements.

R1 RCM Inc.
Consolidated Statements of Cash Flows (Unaudited)
(In millions)

 Three Months Ended March 31,
Operating activities
Net income (loss)$18.2  $0.2  
Adjustments to reconcile net income (loss) to net cash provided by (used in) operations:
Depreciation and amortization15.7  12.9  
Amortization of debt issuance costs0.2  0.6  
Share-based compensation4.8  4.4  
Provision for credit losses0.8  1.0  
Deferred income taxes8.9  (4.1) 
Non-cash lease expense2.9  2.7  
Changes in operating assets and liabilities:
Accounts receivable and related party accounts receivable(12.5) 33.0  
Prepaid expenses and other assets(5.2) (3.3) 
Accounts payable2.8  3.0  
Accrued compensation and benefits(46.6) 9.1  
Lease liabilities(2.6) (2.7) 
Other liabilities16.0  12.4  
Customer liabilities and customer liabilities - related party(2.8) 1.9  
Net cash provided by operating activities0.6  71.1  
Investing activities
Purchases of property, equipment, and software(13.3) (14.8) 
Net cash used in investing activities(13.3) (14.8) 
Financing activities
Borrowings on revolver50.0    
Repayment of senior secured debt(4.1) (0.7) 
Repayments on revolver(20.0)   
Exercise of vested stock options3.1  0.4  
Shares withheld for taxes  (3.3) 
Finance lease payments(0.6) (0.2) 
Net cash provided by (used in) financing activities28.4  (3.8) 
Effect of exchange rate changes in cash, cash equivalents and restricted cash(1.2) 0.2  
Net increase in cash, cash equivalents and restricted cash14.5  52.7  
Cash, cash equivalents and restricted cash, at beginning of period92.5  65.1  
Cash, cash equivalents and restricted cash, at end of period$107.0  $117.8  
Supplemental disclosures of cash flow information
Accrued dividends payable to preferred stockholders$5.4  $5.0  
Accrued and other liabilities related to purchases of property, equipment and software$18.4  $20.6  
Accounts payable related to purchases of property, equipment and software$3.1  $1.4  
Interest paid$3.2  $5.1  
Income taxes paid$0.9  $0.5  
Income taxes refunded$  $0.1  
See accompanying notes to consolidated financial statements.

R1 RCM Inc.
Notes to Unaudited Consolidated Financial Statements

1. Business Description and Basis of Presentation
Business Description
R1 RCM Inc. (the “Company”) is a leading provider of technology-enabled revenue cycle management (“RCM”) services to healthcare providers, including health systems and hospitals, physician groups, and municipal and private emergency medical service (“EMS”) providers. The Company helps healthcare providers generate sustainable improvements in their operating margins and cash flows while also enhancing patient, physician, and staff satisfaction for its customers. For further information regarding the Company's business, including relationships with Ascension Health (“Ascension”), TowerBrook Capital Partners (“TowerBrook”), IHC Health Services, Inc. (“Intermountain”), and Intermedix, refer to Note 1 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the “2019 Form 10-K”).

SCI Solutions, Inc. Acquisition

On January 9, 2020, the Company entered into a Stock Purchase Agreement with Clearsight Intermediate Holdings, Inc. (“Seller Blocker”) and Clearsight Group Holdings, LLC (the “Seller”) providing for the purchase (the “SCI Acquisition”) by the Company from the Seller of all of the issued and outstanding equity interests of Seller Blocker, which owns all of the issued and outstanding equity interests of, Inc. d/b/a SCI Solutions, Inc. (“SCI”). SCI is a leading provider of software-as-a-service (“SaaS”)-based scheduling and patient access solutions. SCI’s platform streamlines the patient and provider experience, creating efficient care networks where health systems’ capacity is digitally and conveniently accessible to all market constituents. The combination of R1 and SCI is expected to deliver enhanced value for healthcare providers by enabling them to expand digital front door strategies for their patients, improve operating efficiency, and increase capacity utilization, among other benefits. On April 1, 2020, the Company completed the acquisition of SCI. For details on the closing, refer to Note 10, Debt and Note 21, Subsequent Events.
Basis of Presentation
The accompanying unaudited consolidated financial statements reflect the Company's financial position as of March 31, 2020, the results of operations of the Company for the three months ended March 31, 2020 and 2019, and the cash flows of the Company for the three months ended March 31, 2020 and 2019. These financial statements include the accounts of R1 RCM Inc. and its wholly-owned subsidiaries. All material intercompany amounts have been eliminated in consolidation. These financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial reporting and as required by the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures required for complete financial statements are not included herein. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the interim financial information, have been included. Operating results for the three months ended March 31, 2020 are not necessarily indicative of the results that may be expected for any other interim period or for the fiscal year ending December 31, 2020.
When preparing financial statements in conformity with GAAP, the Company must make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures at the date of the financial statements. Actual results could differ from those estimates. For a more complete discussion of the Company’s significant accounting policies and other information, the unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements included in the Company's 2019 Form 10-K.
2. Recent Accounting Pronouncements

Recently Issued Accounting Standards and Disclosures


R1 RCM Inc.
Notes to Unaudited Consolidated Financial Statements
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates. The change will result in earlier recognition of credit losses. The Company adopted ASU 2016-13 effective January 1, 2020 utilizing a modified retrospective transition method. Adoption of the new standard resulted in the recording of additional allowance for credit losses of $1.1 million and a corresponding impact to retained earnings and deferred tax assets. The adoption also required changes to the Company's process of estimating expected credit losses on trade receivables and customer contract assets.
3. Fair Value of Financial Instruments
The Company's accounting policy for fair values, including details of the fair value hierarchy levels, are outlined in Note 4 of the Company's 2019 Form 10-K.
The carrying amounts of the Company’s financial instruments, which include financial assets such as cash and cash equivalents, restricted cash equivalents, accounts receivable, net, and certain other current assets, as well as financial liabilities such as accounts payable, accrued service costs, accrued compensation and benefits and certain other accrued expenses, approximate their fair values, due to the short-term nature of these instruments. See Note 20, Derivative Financial Instruments, for a discussion of the fair value of the Company's forward currency derivative contracts and interest rate swaps.

The Company believes the carrying value of the senior term loan (see Note 10, Debt) approximates fair value as it is variable rate bank debt.

4. Accounts Receivable and Allowance for Credit Losses

Accounts receivable is comprised of unpaid balances pertaining to modular services and end-to-end RCM customers, net receivable balances for end-to-end RCM customers after considering cost reimbursements owed to such customers, including related accrued balances, and amounts due from physician RCM and PM customers.

On January 1, 2020 (the "adoption date"), the Company replaced its previous incurred loss impairment model for estimating credit losses on accounts receivables with an expected loss model prepared in accordance with ASC 326. While the incurred loss impairment model had the Company recognize credit losses when it was probable that a loss had been incurred, ASC 326 requires the Company to estimate future expected credit losses on such instruments before an impairment may occur. On the adoption date the Company recorded an initial increase of $1.1 million to the Company's allowance for credit losses, with an offset recorded as an opening adjustment to accumulated deficit and deferred tax assets.

The Company evaluates its accounts receivable for expected credit losses quarterly. The Company maintains an estimated allowance for credit losses to reduce its accounts receivable to the amount that it believes will be collected. This allowance is based on the Company’s historical experience, its assessment of each customer’s ability to pay, the length of time a balance has been outstanding, input from key Company resources assigned to each customer, the status of any ongoing operations with each applicable customer, and environmental factors such as significant shifts in the healthcare environment which the Company believes may have impacted or will impact its customers’ financial health and ability to pay.

The full effects of COVID-19 on the Company’s clients are highly uncertain and cannot be predicted. As a result, the Company’s future collection experience may differ significantly from historical collection trends.

The Company has presented the rollforward below on a consolidated basis as the currently expected credit losses for its large Integrated Delivery Network customers are not anticipated to be material.

Movements in the allowance for credit losses are as follows (in millions):


R1 RCM Inc.
Notes to Unaudited Consolidated Financial Statements
 Three Months Ended March 31,
Beginning balance$2.8  $1.1  
Cumulative effect of ASC 326 adoption1.1  —  
Provision (recoveries)0.8  1.0  
Ending balance$4.7  $2.1  

5. Property, Equipment and Software
Property, equipment and software consist of the following (in millions):
 March 31, 2020December 31, 2019
Buildings and land$4.6  $4.6  
Computer and other equipment56.4  50.7  
Leasehold improvements30.7  31.1  
Software129.5  123.0  
Office furniture8.6  9.4  
Property, equipment and software, gross229.8  218.8  
Less accumulated depreciation and amortization(113.1) (101.9) 
Property, equipment and software, net$116.7  $116.9  
The following table summarizes the allocation of depreciation and amortization expense between cost of services and selling, general and administrative expenses (in millions):
 Three Months Ended March 31,
Cost of services$10.9  $8.9  
Selling, general and administrative1.3  0.5  
Total depreciation and amortization$12.2  $9.4  

6. Leases

The Company's accounting policy for leases, including the elections made as part of the adoption of ASC 842 effective January 1, 2019, are outlined in Note 8 of the Company's 2019 Form 10-K. The components of lease costs are as follows (in millions):

Three Months Ended March 31,
Operating lease cost$4.9  $4.6  
Finance lease cost:
Amortization of right-of-use assets0.2  0.2  
Interest on lease liabilities0.1  0.1  
Sublease income(0.6) (0.6) 
Total lease cost$4.6  $4.3  

R1 RCM Inc.
Notes to Unaudited Consolidated Financial Statements

Supplemental cash flow information related to leases are as follows (in millions):
Three Months Ended March 31,
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases$4.9  $4.5  
Operating cash flows for finance leases0.1  0.1  
Financing cash flows for finance leases0.6  0.2  
ROU assets obtained in exchange for lease obligations:
Operating leases1.7  0.2  
Finance leases  0.5  

The Company presents all non-cash transactions related to adjustments to the lease liability or right-of-use asset as non-cash transactions. This includes all non-cash charges related to any modification or reassessment events triggering remeasurement.

Supplemental balance sheet information related to leases are as follows (in millions):

March 31, 2020December 31, 2019
Weighted average remaining lease term:
Operating leases7 years8 years
Finance leases2 years2 years
Weighted average incremental borrowing rate:
Operating leases8.81 %8.84 %
Finance leases6.51 %6.45 %

Maturities of lease liabilities as of March 31, 2020 are as follows (in millions):

Operating LeasesFinance Leases
Remainder of 2020