Baird’s 2020 Healthcare Conference September 9, 2020
Forward-Looking Statements and Non-GAAP Financial Measures This presentation includes information that may constitute “forward - looking statements,” made pursuant to the safe harbor provis ions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to future, not past, events and often address our expected future growth, plans and performance or forecasts. These forward- looking statements are often identified by the use of words such as “anticipate,” “believe,” “designed,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “will,” or “would,” and similar expressions or variations, although not all forward -looking statements contain these identifying words. These forward-looking statements include, among other things, statements about the potential impacts of the COVID-19 pandemic, our strategic initiatives, our capital plans, our costs, our ability to successfully deliver on our commitments to our customers, our ability to deploy new business as planned, our ability to successfully implement new technologies, our future financial performance and our liquidity, the expected timing of the proposed divestiture of the EMS business, and the anticipated benefits of the acquisitions of SCI Solutions and RevWorks, and the proposed divestiture of the EMS business. Such forward- looking statements are based on management’s current expectations about future events as of the date hereof and involve many risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Subsequent events and developments, including actual results or changes in our assumptions, may cause our views to change. We do not undertake to update our forward-looking statements except to the extent required by applicable law. Readers are cautioned not to place undue reliance on such forward-looking statements. All forward-looking statements included herein are expressly qualified in their entirety by these cautionary statements. Our actual results and outcomes could differ materially from those included in these forward-looking statements as a result of various factors, including, but not limited to, the severity, magnitude and duration of the COVID-19 pandemic; responses to the pandemic by the government and healthcare providers and the direct and indirect impacts of the pandemic on our customers and personnel; the disruption of national, state and local economies as a result of the pandemic; the impact of the pandemic on our financial results, including possible lost revenue and increased expenses; risks related to the satisfaction of the conditions to closing the divestiture of the EMS business in the anticipated timeframe or at all; risks that the expected benefits from the acquisition of SCI Solutions and RevWorks, the proposed divestiture of the EMS business, will not be realized or will not be realized within the expected time period; the risk that acquired businesses will not be integrated successfully; significant transaction costs; unknown or understated liabilities; and the factors discussed under the heading “Risk Factors” in our annual report on Form 10 -K for the year ended December 31, 2019, our quarterly reports on Form 10-Q and any other periodic reports that the Company files with the Securities and Exchange Commission. This presentation includes the following non-GAAP financial measure: Adjusted EBITDA. Please refer to the Appendix located at the end of this presentation for a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure. 2
R1 Investment Highlights Strong Profit Unique Large Multiple Growth Trajectory Value Market Drivers with High Underpinned by Proposition Opportunity Recurring Revenue Tech Investment 10% $110B $230-240M Operating Model Robust & Proven Acute & Physician RCM Average Quarterly 2020 Adjusted Scale Leverage Market Revenue Growth EBITDA Outlook Proprietary Technology Since 2016 From $168M in 2019 Leading, end-to-end revenue cycle platform with a compelling financial model 3
Significant Improvements for Integrated Health Systems NEED VALUE ADD RESULTS Growing • Lower costs pressure to run • Faster collections We plug into revenue cycle • Higher revenue health providers’ more efficiently • Higher patient satisfaction existing IT systems OPERATING MODEL Proprietary Experienced Analytics Global Shared Proven and Alerts Services Technology Talent Results 4
Comprehensive Revenue Cycle Capabilities for Providers Care Settings Emergency Physician Acute Post-Acute Revenue Cycle Phases Order to Intake Care to Claim Claim to Payment Solutions address the full Payment Models spectrum of needs and operations Fee-for-service Patient Self-pay Value-based Transforming revenue cycle performance across all care settings and payment models 5
Divestiture of Emergency Medical Services (EMS) Business ▪ EMS was acquired in 2018 as part of the Intermedix acquisition Background ▪ Provides RCM services to medical transport providers (mainly municipalities) ▪ EMS market is non- core and not strategic to R1’s provider customers; limited synergies with core offerings ▪ Increases R1’s capacity to drive innovation and growth in target markets Divestiture Rationale ▪ Sale proceeds further strengthen balance sheet and capacity for future M&A ▪ Demonstrates commitment to maintaining a focused value proposition via portfolio optimization ▪ Transaction valued at approximately $140 million 1 Transaction Terms ▪ Expected to close in Q3 2020 ▪ In 2019, EMS contributed: ▪ $66 million in revenue Financials ▪ Approximately $13 million in Adjusted EBITDA Increases R1’s Capacity to Drive Innovation and Growth in Target Markets Note 1 : $135 million at transaction close and $5 million after twelve months if certain transition services are completed. 6
Acquisition of RevWorks ▪ Further establishes R1 footprint across acute and ambulatory markets ▪ Valuable commercial partner in Cerner, speaking to R1’s best -in-class capabilities Strategic Rationale ▪ Access to high quality experienced team to support scaled growth ▪ Supports our commitment to R1 technology interoperability with all host systems ▪ Transaction valued at $30 million inclusive of working capital, financed with cash on balance sheet Transaction ▪ Payments to Cerner in three installments between closing and second anniversary of closing Terms ▪ Closed on August 3, 2020 ▪ Approximately $80 million in annual revenue across 150+ customers Financial ▪ Steady-state adjusted EBITDA margin of 25-30% Contribution ▪ Accretive to earnings within first year ▪ Minimal effect on R1 leverage levels and net debt/EBITDA ratio Attractive valuation underpinned by high degree of confidence in execution 7
Partnership with Cerner A B C Deal and Marketing Technology Product Collaboration Integration Collaboration ▪ Cerner will offer R1’s ▪ Enhanced technology ▪ Collaboration and integration of capabilities to clients across its integration will streamline R1 digital patient experience broad nationwide installed base installs for clients solutions ▪ R1 to help shared clients ▪ Close collaboration on ▪ Exploring collaboration on achieve superior revenue cycle technology will accelerate analytics, transaction results deployment timeframe processing, and others Strategic commercial, technology & product partnership Continued R1 commitment to technology-driven, EHR-agnostic, value prop 8
SCI Transaction Rationale ▪ Delivers most comprehensive solution to drive patient engagement for health systems Enhances Growth ▪ Expands R1 addressable market and supports commercialization of PX modular offering Trajectory ▪ Further differentiates R1’s value proposition in end -to-end opportunities ▪ Advances R1’s capability set and provides greater control of technology architecture Accelerates ▪ Comprehensive automation of patient intake including pre-auth process increases DTO use case Technology Roadmap ▪ Adds innovative culture and high-performing team ▪ Estimated $30M in synergies, with ~$20M from margin expansion on contracted base (expect $10M in synergies to phase-in in 2021, with remainder in 2022 and 2023) Unlocks Significant ▪ Adds high margin SaaS Offering to revenue mix that fuels R1 margin upside Synergies ▪ Potential for meaningful growth upside above synergy assumption via PX commercialization ▪ Accretive to earnings within first year Accretive to Earnings ▪ Closed on April 1, 2020 Strategic technology that meaningfully increases R1’s value proposition and unlocks significant synergies 9
Industry’s Only Integrated Pre -Service SaaS Workflow Automated Choreography Across Any Provider Care Setting SCI Core Product Offerings 1 2 3 4 Provider Network Schedule Digital Patient Intake Experience (PNX ) Maximizer Experience (DPX) Analytics Capture Confirm Schedule Obtain Maintain Outpatient Financial Viability Order Optimally Pre-Service Case Arrival, Update and Demand of Case Utilize Capacity Preparations Follow Up 40M 95K 1,100 86% 2,200 ~20% $225B Potential Order-Appt. Health Plan Productivity Consumers Providers Hospitals Annual NPR Conversion Automations Improvement Conveyed 10
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