R1 RCM (RCM) Q2 2024 earnings summary

Executive summary

• Revenue for Q2 2024 rose 12% year-over-year to $627.9 million, driven by Acclara acquisition and growth despite cyberattack disruptions and customer outages.

• Adjusted EBITDA increased to $156.1 million, up 9% year-over-year, reflecting strong operational performance.

• GAAP net loss widened to $7.6 million from $1.0 million in Q2 2023, due to higher interest and integration costs.

• Successfully onboarded over 1,900 associates for a major new customer and advanced Acclara integration.

• Entered into a definitive agreement to be acquired by TowerBrook and CD&R for $14.30 per share in cash, with closing expected by year-end.

Financial highlights

• Q2 2024 revenue: $627.9 million (+12% YoY); adjusted EBITDA: $156.1 million (+9% YoY); GAAP net loss: $7.6 million.

• Net operating fees grew 5% YoY to $374.6 million; modular and other revenue increased 35% to $231.6 million.

• Cost of services increased 14% YoY in Q2, mainly due to Acclara; non-GAAP cost of services was $421 million.

• Cash and cash equivalents at June 30, 2024: $163 million; available liquidity: $682 million.

• Net cash provided by operating activities for H1 2024: $83.5 million, down from $112.1 million YoY.

Outlook and guidance

• No formal 2024 guidance provided due to pending acquisition by TowerBrook and CD&R.

• Full-year revenue impact from the Ascension outage expected to be $75–$95 million, mostly a timing shift into 2025.

• Incremental costs from the Ascension outage projected at $10–$15 million in the second half of 2024.

• Recovery of delayed revenue and normalization of cash collections anticipated in 2025.

• Revenue impacts from recent cyberattacks expected to persist through 2024, with timing shifts in net operating fees.