R1 RCM (US:RCM)2023-02-16 16:57Financial Data and Key Metrics Changes - Revenue for Q4 2022 was $532.8 million, up almost 34% year-over-year, and adjusted EBITDA was $125 million, up 31% [29][18] - For the full year, revenue grew 22.5% to $1.8 billion, and adjusted EBITDA grew nearly 24% to $425.5 million [29][18] - Cash and cash equivalents at the end of December were $110.1 million, down from $131.1 million at the end of September [32] Business Line Data and Key Metrics Changes - Cloudmed contributed $126.5 million in revenue for Q4 and $260 million for the full year after the acquisition closed in June 2022 [29] - Organic revenue growth, excluding Cloudmed, was approximately 2% year-over-year in Q4 and 5% for the full year [29] - Incentive fees in Q4 totaled $25.9 million, declining $9.9 million year-over-year due to payer timeline dynamics [30] Market Data and Key Metrics Changes - The company operates in a $115 billion end market, which continues to grow roughly 10% annually [19] - The modular pipeline reflects high demand for AR denials and revenue enhancement solutions, with expectations for Cloudmed offerings to grow revenue by 20% in 2023 [25] Company Strategy and Development Direction - The company is focused on operational execution and advancing a technology agenda to drive cost efficiencies and value for customers [7][11] - The integration of Cloudmed is progressing well, with corporate systems mostly consolidated and a focus on transforming the delivery model [33] - The company aims to automate tasks in the revenue cycle and leverage data and analytics to improve customer experience and performance [26][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver on commitments for 2023, highlighting operational delivery and execution as key themes [7] - The company anticipates continued modest improvement in incentive fee revenues quarter-over-quarter throughout 2023 [22] - Management noted that the current inflationary environment and labor challenges in the U.S. create significant commercial opportunities [19][40] Other Important Information - The company expects to generate revenue of $2.28 billion to $2.33 billion in 2023, with adjusted EBITDA of $595 million to $630 million [54] - The company anticipates realizing $15 million to $30 million of cost synergies in 2023, now expecting to be towards the higher end of that range [79][149] Q&A Session Summary Question: What is the pipeline opportunity for 2023? - Management indicated that the pipeline is very strong, with significant financial pressure on providers driving demand for end-to-end solutions [61] Question: How should we think about the 1Q guidance and incentive fees? - Incentive fees are expected to be flat quarter-over-quarter in Q1, with modest improvements anticipated throughout the year [59][66] Question: Can you provide an update on onboarding capacity and new business? - The company is currently onboarding $8 billion of the $13 billion in new business signed in 2022, with the remaining $5 billion expected to impact in late 2023 to 2024 [64] Question: What are the expectations for Cloudmed growth? - Cloudmed is expected to grow revenue by 20% in 2023, with no significant seasonality in the business [25][72] Question: How is the integration of Cloudmed progressing? - Integration is going well, with corporate functions largely integrated and a focus on cross-selling opportunities [124]