SEC Info - R1 RCM Holdco Inc. - ‘10-K’ for 12/31/21


Item 9B.			Other Information

None


Item 9C.			Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

None

PART III


Item 10.			Directors, Executive Officers, and Corporate Governance

The information required by this item with respect to our directors and executive officers will be contained in our 2022 Proxy Statement under the caption “Information About Our Directors, Officers and 5% Stockholders” and is incorporated in this report by reference.

The information required by this item with respect to corporate governance matters will be contained in our 2022 Proxy Statement under the caption “Corporate Governance” and is incorporated in this report by reference.

Code of Integrity

We have adopted a global code of integrity that applies to all employees, including our directors and officers (our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions). Copies of our Code of Integrity: Living Our Values are available without charge upon written request directed to Corporate Secretary, R1 RCM Inc., 434 W. Ascension Way, Murray, Utah 84123. Additionally, copies are available without charge online at https://www.r1rcm.com/hubfs/Code%20of%20Integrity%202021%20Final%20External.pdf.


Item 11.			Executive Compensation

Information required to be furnished by Item 402 of Regulation S-K and paragraphs (e)(4) and (e)(5) of Item 407 of Regulation S-K regarding executive compensation will be included in our 2022 Proxy Statement under the caption “Executive Compensation” and is herein incorporated by reference.


Item 12.			Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

We maintain an Amended and Restated Stock Option Plan (“2006 Plan”), and a Third Amended and Restated 2010 Stock Incentive Plan (the “2010 Amended Plan”), and together with the 2006 Plan (the “Plans”). Under the 2010 Amended Plan, we may issue up to a maximum of 55,974,756 shares of common stock, including any shares that remained available for issuance under the 2006 Plan as of the date of the IPO and any shares subject to awards that were outstanding under the 2006 Plan as of the date of the IPO that expire, terminate or are otherwise surrendered, canceled, forfeited, or repurchased by us without the issuance of shares thereunder. We will not make any further grants under the 2006 Plan. The 2010 Amended Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, and and other share-based awards. As of December 31, 2021, 11,300,381 shares were available for future grants of awards under the 2010 Amended Plan. However, to the extent that previously granted awards under the 2006 Plan or 2010 Amended Plan expire, terminate or are otherwise surrendered, canceled or forfeited, the number of shares available for future awards under the 2010 Amended Plan will increase.

The following table summarizes information about the securities authorized for issuance under our equity compensation plans as of December 31, 2021:


	(a)	(b)		(c)
Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options and Restricted Stock Units	Weighted- Average Exercise Price of Outstanding Options		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities reflected in Column (a))
Equity compensation plans approved by stockholders (1)	12,775,730	$	3.23	11,300,381
Equity compensation plans not approved by stockholders (2)	100,000	$	9.56	—
Total	12,875,730			11,300,381

(1) Includes 4,286,205 outstanding stock options, 2,218,651 restricted stock units, and 6,270,874 PBRSUs awarded under the Plans. The number of shares included for PBRSUs represents the maximum shares that could vest. Since the restricted stock units and PBRSUs have no exercise price, they are not included in the weighted-average exercise price calculation in column b.

(2) Represents stock option inducement grants made pursuant to the NYSE inducement grant rules prior to the Company’s trading of its common stock on NASDAQ.

The information required by this item with regard to security ownership of certain beneficial owners and management will be contained in our 2022 Proxy Statement under the caption “Information About Our Directors, Officers and 5% Stockholders - Security Ownership of Certain Beneficial Owners and Management” and is incorporated in this report by reference.


Item 13.			Certain Relationships and Related Transactions, and Director Independence

The information required by this item will be contained in our 2022 Proxy Statement under the captions “Related Person Transactions” and “Corporate Governance” and is incorporated in this report by reference.


Item 14.			Principal Accountant Fees and Services

The information required by this item will be contained in our 2022 Proxy Statement under the caption “Ratification of the Selection of Independent Registered Public Accounting Firm” and is incorporated in this report by reference.

PART IV


Item 15.			Exhibits and Financial Statement Schedules

a) The following documents are filed as a part of this report:

(1) Financial Statements: The financial statements and notes thereto annexed to this report beginning on page F-1.

(2) Financial Statement Schedules: Schedule II- Valuation and Qualifying Accounts Disclosure schedules have been omitted because they are not required or because the required information is in the Consolidated Financial Statements and notes thereto.

(3) Exhibits:


Exhibit Number			Description

2.1			Agreement and Plan of Merger by and among Intermedix Holdings, Inc., the Registrant, Project Links Parent, Inc., Project Links Merger Sub, Inc. and solely in its capacity as Securityholder Representative, Thomas H. Lee Equity Fund VI, L.P. dated as of February 23, 2018 (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K (file No. 001-34746) filed on February 26, 2018) (Exhibits and schedules were omitted pursuant to Item 601(b)(2) of Regulation S-K and will be furnished to the Securities and Exchange Commission upon request)
2.2			Stock Purchase Agreement, dated as of January 9, 2020, by and among the Registrant, Clearsight Intermediate Holdings, Inc. and Clearsight Group Holdings, LLC (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K (file No. 001-34746) filed on January 13, 2020) (Exhibits and schedules were omitted pursuant to Item 601(b)(2) of Regulation S-K and will be furnished to the Securities and Exchange Commission upon request)
3.1			Restated Certificate of Incorporation of the Registrant, as amended (incorporated by reference to Exhibit 3.2 to Amendment No. 4 to the Registration Statement on Form S-1 (File No. 333-162186) filed on April 26, 2010)
3.2			Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.4 to Amendment No. 4 to the Registration Statement on Form S-1 (File No. 333-162186) filed on April 26, 2010)
3.3			Certificate of Amendment to Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-34746) filed on August 20, 2015)
3.4			Amendment No.1 to the Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K (File No. 001-34746) filed on August 20, 2015)
3.5			Certificate of Designations of the Registrant's 8.00% Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.5 to Annual Report on Form 10-K for the year ended December 31, 2015 (File No. 001-34746) filed on March 10, 2016)
3.6			Certificate of Amendment to Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-34746) filed on January 5, 2017)
3.7			Certificate of Amendment to Certificate of Designation of 8.00% Series A Convertible Preferred Stock, Par Value $0.01 per Share, of the Registrant (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K (File No. 001-34746) filed on January 5, 2017)
3.8			Amendment No. 2 to the Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.3 to the Current Report on Form 8-K (File No. 001-34746) filed on January 5, 2017)
3.9			Certificate of Elimination of 8.00% Series A Convertible Preferred Stock of the Registrant (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-34746) filed on January 20, 2021)


3.10			Amendment No. 3 to the Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-34746) filed on February 26, 2021)
4.1			Specimen Certificate evidencing shares of Common Stock (incorporated by reference to Exhibit 4.1 to Amendment No. 4 to the Registration Statement on Form S-1 (File No. 333-162186) filed on April 26, 2010)
4.2			Description of Common Stock (incorporated by reference to Exhibit 4.2 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (File No. 001-34746) filed on February 18, 2021)
10.1*			Amended and Restated Stock Option Plan, as amended (incorporated by reference to Exhibit 10.1 to Amendment No. 4 to the Registration Statement on Form S-1 (File No. 333-162186) filed on April 26, 2010)
10.2*			Form of Acknowledgment of Grant, used to evidence option grants under the Amended and Restated Stock Option Plan (incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-1 (File No. 333-162186) filed on September 29, 2009)
10.3*			Restricted Stock Plan, as amended (incorporated by reference to Exhibit 10.3 to Amendment No. 4 to the Registration Statement on Form S-1 (File No. 333-162186) filed on April 26, 2010)
10.4*			Form of Restricted Stock Award Agreement under the Restricted Stock Plan, as amended (incorporated by reference to Exhibit 10.4 to the Registration Statement on Form S-1 (File No. 333-162186) filed on September 29, 2009)
10.5*			Form of Indemnification Agreement, entered into between the Registrant and each director and executive officer (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K (File No. 001-34746) filed on February 16, 2016)
10.6*			Form of Incentive Stock Option Agreement under the 2010 Stock Incentive Plan (incorporated by reference to Exhibit 10.24 to Amendment No. 4 to the Registration Statement on Form S-1 (File No. 333-162186) filed on April 26, 2010)
10.7*			Form of Restricted Stock Unit Grant Agreement under the Amended and Restated 2010 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 (File No. 001-34746) filed on November 2, 2016)
10.8*			Form of Performance Based Restricted Stock Unit Grant Agreement under the Amended and Restated 2010 Stock Incentive Plan (incorporated by reference to Exhibit 10.3 to Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 (File No. 001-34746) filed on November 2, 2016)
10.9*			Form of Nonstatutory Stock Option Agreement under the Amended and Restated 2010 Stock Incentive Plan (incorporated by reference to Exhibit 10.4 to Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 (File No. 001-34746) filed on November 2, 2016)
10.10*			Accretive Health, Inc. Second Amended and Restated 2010 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-34746) filed on December 12, 2016)
10.11*			Form of Grant of Performance Based Restricted Stock Unit Awards pursuant to the Second Amended and Restated 2010 Stock Incentive Plan (to be used for awards to a senior vice president or executive vice president) (incorporated by reference to Exhibit 10.2 to the Quarterly Report on 10-Q (File No. 001-34746) filed on October 31, 2017)
10.12*			Form of Grant of Performance Based Restricted Stock Unit Awards pursuant to the Second Amended and Restated 2010 Stock Incentive Plan (to be used for awards to a vice president or director-level employee) (incorporated by reference to Exhibit 10.3 to the Quarterly Report on 10-Q (File No. 001-34746) filed on October 31, 2017)
10.13*			Form of Letter Agreement (to be used for executive vice presidents) (incorporated by reference to Exhibit 10.4 to the Quarterly Report on 10-Q (File No. 001-34746) filed on October 31, 2017)
10.14			Third Amended and Restated Stockholders’ Agreement, dated as of February 22, 2009, among the Registrant and the parties named therein, as amended (incorporated by reference to Exhibit 10.5 to the Registration Statement on Form S-1 (File No. 333-172707) filed on March 9, 2011)
10.15			Form of Share Exchange Agreement, entered into in February 2009, with each of Etienne H. Deffarges, Steven N. Kaplan, Gregory N. Kazarian, The Shultz 1989 Family Trust, Spiegel Family LLC and John T. Staton Declaration of Trust (incorporated by reference to Exhibit 10.6 to the Registration Statement on Form S-1 (File No. 333-162186) filed on September 29, 2009)


10.16*			Form of Nonstatutory Stock Option Agreement under the 2010 Stock Incentive Plan (incorporated by reference to Exhibit 10.25 to Amendment No. 4 to the Registration Statement on Form S-1 (File No. 333-162186) filed on April 26, 2010)
10.17+			Amended and Restated Master Professional Services Agreement by and between Ascension Health and the Registrant effective as of February 16, 2016 (incorporated by reference to Exhibit 10.4 to Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 (File No. 001-34746) filed on May 10, 2016)
10.18+			Amendment No. 1 to the Amended and Restated Master Professional Services Agreement by and between the Company and Ascension Health, dated May 4, 2017 (incorporated by reference to Exhibit 10.1 to Quarterly Report on 10-Q for the quarter ended June 30, 2017 (File No. 001-34746) filed on August 2, 2017)
10.19*			Offer Letter, dated April 27, 2013, between Registrant and Joseph Flanagan (incorporated by reference to Exhibit 10.18 to Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (File No. 001-34746) filed on December 30, 2014)
10.20*			Restricted Stock Award, dated June 3, 2013, between Registrant and Joseph Flanagan (incorporated by reference to Exhibit 10.19 to Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (File No. 001-34746) filed on December 30, 2014)
10.21*			Nonstatutory Stock Option Award Agreement, dated June 3, 2013, between Registrant and Joseph Flanagan (incorporated by reference to Exhibit 10.20 to Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (File No. 001-34746) filed on December 30, 2014)
10.22*			Amendment to Offer Letter, dated April 29, 2014, between Registrant and Joseph Flanagan (incorporated by reference to Exhibit 10.25 to Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (File No. 001-34746) filed on December 30, 2014)
10.23*			Nonstatutory Stock Option Award Agreement, dated April 29, 2014, between Registrant and Joseph Flanagan (incorporated by reference to Exhibit 10.26 to Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (File No. 001-34746) filed on December 30, 2014)
10.24*			Restricted Stock Award Agreement, dated April 29, 2014, between Registrant and Joseph Flanagan (incorporated by reference to Exhibit 10.27 to Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (File No. 001-34746) filed on December 30, 2014)
10.25*			Offer Letter, dated January 9, 2015, between Registrant and Richard Evans (incorporated by reference to Exhibit 10.37 to Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (File No. 001-34746) filed on June 23, 2015)
10.26*			Form of Restricted Stock Award Agreement under the Amended and Restated 2010 Stock Incentive Plan (incorporated by reference to Exhibit 10.43 to Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (File No. 001-34746) filed on March 10, 2016.
10.27*			Letter Agreement, dated December 7, 2015, between Registrant and Joseph Flanagan (incorporated by reference to Exhibit 10.46 to Annual Report on Form 10-K for the year ended December 31, 2015 (File No. 001-34746) filed on March 10, 2016)
10.28*			Restricted Stock Award Agreement, dated December 31, 2015, between Registrant and Joseph Flanagan (incorporated by reference to Exhibit 10.48 to Annual Report on Form 10-K for the year ended December 31, 2015 (File No. 001-34746) filed on March 10, 2016)
10.29			Securities Purchase Agreement, dated as of December 7, 2015, by and among Accretive Health, Inc., TCP-ASC ACHI Series LLLP, and, solely for the purposes set forth therein, Ascension Health Alliance d/b/a Ascension (incorporated by reference to Exhibit 10.1 to Current Report on 8-K (File No. 001-34746) filed December 8, 2015).
10.30			Investor Rights Agreement, dated as of February 16, 2016, by and among the Registrant, TCP-ASC ACHI Series LLLP, and the other parties thereto (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 (File No. 001-34746) filed on May 10, 2016)
10.31			Registration Rights Agreement, dated as of February 16, 2016, by and between the Registrant and TCP-ASC ACHI Series LLLP (incorporated by reference to Exhibit 10.2 to Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 (File No. 001-34746) filed on May 10, 2016)
10.32			Warrant, dated as of February 16, 2016, by and between the Registrant and TCP-ASC ACHI Series LLLP (incorporated by reference to Exhibit 10.3 to Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 (File No. 001-34746) filed on May 10, 2016)


10.33			Agreement by and between TCP-ASC ACHI Series LLLP and the Registrant dated September 9, 2016 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-34746) filed on September 9, 2016)
10.34*			Non-Statutory Stock Option Award Grant Agreement, dated as of October 3, 2016, by and between Joseph G. Flanagan and the Registrant (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K (File No. 001-34746) filed on October 5, 2016)
10.35*			Non-Statutory Stock Option Award Grant Agreement, dated as of October 3, 2016, by and between Joseph G. Flanagan and the Registrant (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K (File No. 001-34746) filed on October 5, 2016)
10.36*			Employment Offer Letter Agreement, dated June 19, 2017, by and between the Registrant and Gary Long (incorporated by reference to Exhibit 10.55 to Annual Report on Form 10-K for the fiscal year ended December 31, 2017 (File No. 001-34746) filed on March 9, 2018)
10.37*			Amended and Restated Grant of Performance Based Awards pursuant to the R1 RCM Inc. Second Amended and Restated 2010 Stock Incentive Plan to Joseph Flanagan (incorporated by reference to Exhibit 10.1 to the Current Report on 8-K/A (File No. 001-34746) filed on January 18, 2018)
10.38			Amended and Restated Registration Rights Agreement among the Registrant, IHC Health Services, Inc. and TCP-ASC ACHI Series LLLP dated as of January 23, 2018 (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-34746) filed on January 24, 2018)
10.39			Securities Purchase Agreement between the Company and IHC Health Services, Inc. dated as of January 23, 2018 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-34746) filed on January 24, 2018)
10.40			Warrant between the Company and IHC Health Services, Inc. dated as of January 23, 2018 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K (File No. 001-34746) filed on January 24, 2018)
10.41			Credit Agreement, dated as of May 8, 2018, by and among the Registrant, the other parties party thereto as Credit Parties (as defined therein), Bank of America, N.A., as administrative agent and the financial institutions party thereto as lenders (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-34746) filed on May 8, 2018)



10.42*			Form of Grant of Performance Based Restricted Stock Unit Awards - 2018 Form pursuant to the Second Amended and Restated 2010 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on 8-K (File No. 001-34746) filed on May 31, 2018)

10.43+			Supplement 26 to Amended and Restated Master Professional Services Agreement between the Registrant and Ascension Health dated as of June 24, 2018 (incorporated by reference to Exhibit 10.5 to the Quarterly Report on 10-Q (File No. 001-34746) filed on August 9, 2018)
10.44+			Amendment No. 2 to Amended and Restated Master Professional Services Agreement between the Registrant and Ascension Health dated as of June 24, 2018 (incorporated by reference to Exhibit 10.6 to the Quarterly Report on 10-Q (File No. 001-34746) filed on August 9, 2018)
10.45+			Amendment No. 3 to Amended and Restated Master Professional Services Agreement between the Registrant and Ascension Health dated as of July 5, 2018 (incorporated by reference to Exhibit 10.1 to the Quarterly Report on 10-Q (File No. 001-34746) filed on November 7, 2018)

10.46*			Form of Grant of Performance-Based Restricted Stock Unit Awards Agreement pursuant to the Second Amended and Restated 2010 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-34746) filed on April 10, 2019)
10.47*			Amendment No. 2 to Offer Letter, dated March 6, 2019, between the Registrant and Joseph Flanagan (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No. 001-34746) filed on May 9, 2019)
10.48			Credit Agreement, dated as of June 26, 2019, by and among the Registrant, the other parties party thereto as Credit Parties (as defined therein), Bank of America, N.A., as administrative agent and the financial institutions party thereto as lenders (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No.001-34746) filed on June 26, 2019)

10.49+			Amendment No. 4 to Amended and Restated Master Professional Services Agreement between the Registrant and Ascension Health dated as of December 20, 2019 (incorporated by reference to Exhibit 10.61 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (File No. 001-34746) filed on February 20, 2020)


10.50+			Amendment No. 1 to Credit Agreement, dated as of March 20, 2020, by and among the Registrant, the other parties party thereto as Credit Parties (as defined therein), Bank of America, N.A., as administrative agent and the financial institutions party thereto as lenders (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-34746) filed on March 23, 2020)
10.51*			Form of Grant of Performance-Based Restricted Stock Unit Awards Agreement (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-34746) filed on July 15, 2020)
10.52*			Offer Letter Agreement between the Registrant and Rachel Wilson dated April 29, 2020 (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No. 001-34746) filed on August 5, 2020)

10.53			Form of Amendment to Investor Rights Agreement between the Registrant and TCP-ASC ACHI Series LLLP (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-34746) filed on January 6, 2021)
10.54			Preferred Stock Agreement, dated as of January 5, 2021, between R1 RCM Inc. and TCP-ASC ACHI Series LLLP (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-34746) filed on January 6, 2021)
10.55			Amendment No. 2 and Waiver, dated as of January 13, 2021, to Credit Agreement, by and among the Registrant, the other parties party thereto as Credit Parties (as defined therein), Bank of America N.A., as administrative agent and the financial institutions party thereto as lenders (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-34746) filed on January 15, 2021)
10.56			Joinder and Amendment to the Amended and Restated Registration Rights Agreement, dated as of January 23, 2018, by and among the Registrant, TCP-ASC ACHI Series LLLP, and Shared Business Services, LLC (incorporated by reference to Exhibit 10.70 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (File No. 001-34746) filed on February 18, 2021)
10.57*			Form of Restricted Stock Unit Award Agreement under the Registrant’s Second Amended and Restated 2010 Stock Incentive Plan (incorporated by reference to Exhibit 10.71 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (File No. 001-34746) filed on February 18, 2021)
10.58*			Amended and Restated Offer Letter Agreement between the Registrant and Joseph Flanagan dated March 23, 2021 (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No. 001-34746) filed on May 4, 2021)

10.59*			R1 RCM Inc. Third Amended and Restated Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-34746) filed on May 21, 2021)
10.60+			Amendment No. 5 to the Amended & Restated Master Professional Services Agreement between the Registrant and Ascension Health effective May 1, 2021 (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No. 001-34746) filed on August 3, 2021)
10.61			Amended and Restated Credit Agreement, dated as of July 1, 2021, by and among the Registrant, the other parties party thereto as Credit Parties (as defined therein), Bank of America, N.A., as administrative agent and the financial institutions party thereto as lenders (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q (File No. 001-34746) filed on August 3, 2021)
10.62*			Offer Letter, dated September 27, 2019, between Registrant and Vijay Kotte
21.1			Subsidiaries of the Registrant
23.1			Consent of Ernst & Young LLP
31.1			Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2			Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1			Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2			Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS			XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH			XBRL Taxonomy Extension Schema Document
101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB			XBRL Taxonomy Extension Label Linkbase Document


101.DEF			XBRL Taxonomy Extension Definition Linkbase Document
101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document
104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


*			Management contract or compensatory plan or arrangement required to be filed pursuant to Item 15(b) of Form 10-K.


+			Portions of this exhibit (indicated therein by asterisks) have been omitted for confidential treatment.


Item 16.			Form 10-K Summary

None

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


			R1 RCM INC.

By:			/s/ *Joseph Flanagan*
			Joseph Flanagan
			President and Chief Executive Officer

By:			/s/ *Rachel Wilson*
			Rachel Wilson
			Chief Financial Officer and Treasurer

Date: February 17, 2022

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant in the capacities and on the dates indicated.

Signature

Title

Date

/s/ Joseph Flanagan
Joseph Flanagan

President, Chief Executive Officer, and Director
(Principal Executive Officer)

/s/ Rachel Wilson
Rachel Wilson

Chief Financial Officer and Treasurer
(Principal Financial Officer)

/s/ Richard B. Evans, Jr.
Richard B. Evans, Jr.

Corporate Controller
(Principal Accounting Officer)

/s/ Agnes Bundy Scanlan

Agnes Bundy Scanlan

Director

/s/ David M. Dill

David M. Dill

Director

/s/ Michael C. Feiner

Michael C. Feiner

Director

/s/ John B. Henneman III
John B. Henneman III

Lead Director

/s/ Alex J. Mandl
Alex J. Mandl

Director

/s/ Neal Moszkowski
Neal Moszkowski

Director

/s/ Ian Sacks
Ian Sacks

Director

/s/ Jill Smith

Jill Smith

Director

/s/ Anthony J. Speranzo

Anthony J. Speranzo

Chair of the Board

/s/ Anthony R. Tersigni

Anthony R. Tersigni

Director

/s/ Albert R. Zimmerli

Albert R. Zimmerli

Director

R1 RCM Inc.

Index to Consolidated Financial Statements



									Page
Audited Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID: i 42)									F-2
Consolidated Balance Sheets									F-5
Consolidated Statements of Operations and Comprehensive Income									F-6
Consolidated Statements of Stockholders’ Equity									F-7
Consolidated Statements of Cash Flows									F-8
Notes to Consolidated Financial Statements									F-9

F-1

Report of Independent Registered Public Accounting Firm

The Stockholders and Board of Directors of R1 RCM Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of R1 RCM Inc. (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations and comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 17, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

F-2


						Revenue recognition - Incentive fee arrangements
Description of the Matter						As described in Note 2 to the consolidated financial statements, the Company recognizes revenue related to financial performance-based incentive fees ratably as the performance obligation for revenue cycle management services is satisfied. Incentive fees are structured to reflect quarterly or annual performance and are evaluated on a contract-by-contract basis. Auditing the Company’s recognition and measurement of variable incentive fees revenues is subjective due to the estimation uncertainty in the calculations for amounts recognized but unbilled at year end. In these situations, the Company performs an assessment of the estimated total incentive fees expected and the related revenues to be recognized. Further, the nature and terms of each individual customer agreement for end-to-end revenue cycle management services varies, and each contract requires separate analysis to ensure that incentive fee revenue recognition is appropriate.

How We Addressed the Matter in Our Audit						We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the review of customer agreements and related amendments and incentive fee calculations, including management’s internal controls over unbilled incentive fees at year-end and the assessment of the estimated constraint applied to the incentive fee revenues, if any. To test the appropriateness of the timing of recognition and measurement of incentive fee revenues at year end, our audit procedures included, among others, obtaining and reviewing the customer contracts and any related amendments, and independently confirming the unbilled incentive fee amounts recognized at year end directly with external customers. In addition, we compared historically estimated and recognized incentive fees to the actual amounts billed and collected in subsequent periods to assess the accuracy of management’s estimation process.
						Acquisition - VisitPay business combination
Description of the Matter						As described in Note 3 to the consolidated financial statements, the Company completed its acquisition of all the outstanding equity interests of iVinci Partners, LLC (VisitPay) for consideration of $305.4 million in 2021. The transaction was accounted for as a business combination. Auditing the Company’s accounting for its acquisition of VisitPay was complex due to the significant estimation required by management to determine the fair value of the acquired identified intangible assets of $117.3 million, which principally consisted of developed technology of $114.0 million. The significant estimation uncertainty was primarily due to the sensitivity of the respective fair values to the key assumptions included in the valuation. The Company used a discounted cash flow model to measure the developed technology intangible assets. The significant assumptions used to estimate the value of the intangible assets included discount rates and certain assumptions that form the basis of the forecasted results (e.g., revenue and cost growth rates and technology obsolescence curves). These significant assumptions are forward looking and could be affected by future economic and market conditions.

F-3



How We Addressed the Matter in Our Audit						We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls addressing the risks of material misstatement over its accounting for the VisitPay acquisition including, among others, management’s process to establish the significant assumptions and measure the acquired developed technology intangible asset. This included testing controls over management’s review of the significant assumptions and other inputs used in the determination of fair value. The testing was inclusive of key management review controls to evaluate the acquired developed technology and estimated future sales, and controls to ensure that the data used to evaluate and support the significant assumptions was complete, accurate and, where applicable, verified to appropriate data sources. To test the Company’s accounting for the VisitPay acquisition, our audit procedures included, among others, inspecting the terms of the executed agreement, evaluating the Company’s selection of the valuation methodology, evaluating the methods and significant assumptions used by the Company’s valuation specialist, and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates. We involved our valuation specialists to assist with the evaluation of methodologies used by the Company and the significant assumptions included in the fair value estimates. We also evaluated the Company’s disclosures in the consolidated financial statements.

/s/ i Ernst & Young LLP

We have served as the Company's auditor since 2004.

i Chicago, Illinois

F-4

R1 RCM Inc.

Consolidated Balance Sheets

(In millions, except per share data)

December 31,

2021

2020

Assets

Current assets:

Cash and cash equivalents

i 130.1

i 173.8

Accounts receivable, net of $ i 2.4 million and $ i 3.7 million allowance

i 131.3

i 91.3

Accounts receivable, net of $ i 0.1 million and $ i 0.1 million allowance - related party

i 26.1

i 30.9

Prepaid expenses and other current assets

i 77.2

i 59.4

Total current assets

i 364.7

i 355.4

Property, equipment and software, net

i 94.7

i 93.7

Operating lease right-of-use assets

i 48.9

i 57.8

Non-current portion of deferred contract costs

i 23.4

i 19.6

Intangible assets, net

i 265.4

i 171.1

Goodwill

i 554.7

i 375.3

Non-current deferred tax assets

i 51.8

i 73.7

Non-current portion of restricted cash equivalents

i —

i 1.0

Other assets

i 45.7

i 41.4

Total assets

i 1,449.3

i 1,189.0

Liabilities

Current liabilities:

Accounts payable

i 17.7

i 18.2

Current portion of customer liabilities

i 41.5

i 16.7

Current portion of customer liabilities - related party

i 7.9

i 15.3

Accrued compensation and benefits

i 97.0

i 51.9

Current portion of operating lease liabilities

i 13.5

i 12.2

Current portion of long-term debt

i 17.5

i 32.3

Accrued expenses and other current liabilities

i 59.1

i 59.7

Total current liabilities

i 254.2

i 206.3

Non-current portion of customer liabilities

i 3.3

i —

Non-current portion of customer liabilities - related party

i 15.4

i 16.3

Non-current portion of operating lease liabilities

i 53.4

i 71.0

Long-term debt

i 754.9

i 519.7

Other non-current liabilities

i 21.4

i 36.3

Total liabilities

i 1,102.6

i 849.6

i i 8.00 / % Series A convertible preferred stock, par value $ i i 0.01 / , i i i no / / shares authorized, issued or outstanding as of December 31, 2021; i 370,000 shares authorized, i i 288,497 / shares issued and outstanding as of December 31, 2020 (aggregate liquidation value of $ i i 294.3 / )

i —

i 251.5

Stockholders’ equity:

Common stock, $ i i 0.01 / par value, i i 500,000,000 / shares authorized, i 298,320,928 shares issued and i 278,226,242 shares outstanding at December 31, 2021; i 137,812,559 shares issued and i 121,144,038 shares outstanding at December 31, 2020

i 3.0

i 1.4

Additional paid-in capital

i 628.5

i 393.7

Accumulated deficit

( i 64.3)

( i 161.5)

Accumulated other comprehensive loss

( i 5.3)

( i 6.5)

Treasury stock, at cost, i 20,094,686 shares as of December 31, 2021; i 16,668,521 shares as of December 31, 2020

( i 215.2)

( i 139.2)

Total stockholders’ equity

i 346.7

i 87.9

Total liabilities and stockholders’ equity

i 1,449.3

i 1,189.0

See accompanying notes to consolidated financial statements.

F-5

R1 RCM Inc.

Consolidated Statements of Operations and Comprehensive Income

(In millions, except per share data)

Year Ended December 31,

2021

2020

2019

Net services revenue ($ i 893.5 million, $ i 809.5 million and $ i 790.4 million from related party for the years ended December 31, 2021, 2020 and 2019, respectively)

i 1,474.6

i 1,270.8

i 1,186.1

Operating expenses:

Cost of services

i 1,162.8

i 1,021.1

i 987.8

Selling, general and administrative

i 120.0

i 102.4

i 104.4

Other

i 46.1

i 67.3

i 36.2

Total operating expenses

i 1,328.9

i 1,190.8

i 1,128.4

Income from operations

i 145.7

i 80.0

i 57.7

Gain on business disposition

i —

i 55.7

i —

Loss on debt extinguishment

i —

( i 18.8)

Net interest expense

( i 18.9)

( i 17.3)

( i 29.1)

Income before income tax provision (benefit)

i 126.8

i 118.4

i 9.8

Income tax provision (benefit)

i 29.6

i 1.3

( i 2.2)

Net income

i 97.2

i 117.1

i 12.0

Net income (loss) per common share:

Basic

( i 1.86)

i 0.41

( i 0.08)

Diluted

( i 1.86)

i 0.33

( i 0.08)

Weighted average shares used in calculating net income (loss) per common share:

Basic

i 266,183,565

i 115,729,645

i 111,505,993

Diluted

i 266,183,565

i 174,573,270

i 111,505,993

Consolidated statements of comprehensive income

Net income

i 97.2

i 117.1

i 12.0

Other comprehensive income (loss):

Net change on derivatives designated as cash flow hedges, net of tax

i 2.1

( i 1.7)

( i 0.2)

Foreign currency translation adjustments

( i 0.9)

( i 0.3)

( i 0.8)

Total other comprehensive income (loss), net of tax

i 1.2

( i 2.0)

( i 1.0)

Comprehensive income

i 98.4

i 115.1

i 11.0

Basic:

Net income

i 97.2

i 117.1

i 12.0

Less dividends on preferred shares

( i 592.3)

( i 22.4)

( i 20.7)

Less income allocated to preferred shareholders

i —

( i 47.3)

i —

Net income (loss) available/allocated to common shareholders - basic

( i 495.1)

i 47.4

( i 8.7)

Diluted:

Net income

i 97.2

i 117.1

i 12.0

Less dividends on preferred shares

( i 592.3)

( i 22.4)

( i 20.7)

Less income allocated to preferred shareholders

i —

( i 37.7)

i —

Net income (loss) available/allocated to common shareholders - diluted

( i 495.1)

i 57.0

( i 8.7)

See accompanying notes to consolidated financial statements.

F-6

R1 RCM Inc.

Consolidated Statements of Stockholders’ Equity

(In millions, except per share data)

Common Stock

Treasury Stock

Additional
Paid-In
Capital

Accumulated
Deficit

Accumulated
other
comprehensive
(loss)

Total

Amount

Balance at December 31, 2018

i 123,353,656

i 1.2

( i 12,811,755)

( i 62.6)

i 361.0

( i 289.8)

( i 3.5)

i 6.3

Share-based compensation expense

—

i 18.8

—

i 18.8

Issuance of common stock related to share-based compensation plans

i 1,812,993

—

Exercise of vested stock options

i 2,640,897

i 0.1

—

i 13.6

—

i 13.7

Dividends paid/accrued on preferred stock

—

( i 20.7)

—

( i 20.7)

Acquisition of treasury stock related to equity award plans

—

( i 973,303)

( i 11.0)

—

( i 11.0)

Forfeitures

—

( i 1,208)

—

Net change on derivatives designated as cash flow hedges, net of tax of $ i 0.1

—

( i 0.2)

Foreign currency translation adjustments

—

( i 0.8)

Net income

—

i 12.0

—

i 12.0

Balance at December 31, 2019

i 127,807,546

i 1.3

( i 13,786,266)

( i 73.6)

i 372.7

( i 277.8)

( i 4.5)

i 18.1

Impact of credit-loss standard adoption, net of tax of $ i 0.3

—

( i 0.8)

—

( i 0.8)

Adjusted balance at January 1, 2020

i 127,807,546

i 1.3

( i 13,786,266)

( i 73.6)

i 372.7

( i 278.6)

( i 4.5)

i 17.3

Share-based compensation expense

—

i 24.2

—

i 24.2

Issuance of common stock related to share-based compensation plans

i 6,848,859

i 0.1

—

( i 0.1)

—

i —

Exercise of vested stock options

i 3,156,154

—

i 19.3

—

i 19.3

Dividends paid/accrued on preferred stock

—

( i 22.4)

—

( i 22.4)

Acquisition of treasury stock related to equity award plans

—

( i 2,882,255)

( i 65.6)

—

( i 65.6)

Net change on derivatives designated as cash flow hedges, net of tax of $ i 0.6

—

( i 1.7)

Foreign currency translation adjustment

—

( i 0.3)

Net income

—

i 117.1

—

i 117.1

Balance at December 31, 2020

i 137,812,559

i 1.4

( i 16,668,521)

( i 139.2)

i 393.7

( i 161.5)

( i 6.5)

i 87.9

Share-based compensation expense

—

i 74.9

—

i 74.9

Issuance of common stock related to share-based compensation plans

i 2,325,918

—

Issuance of common stock

i 324,212

—

i 7.0

—

i 7.0

Exercise of vested stock options

i 1,819,039

—

i 8.0

—

i 8.0

Acquisition of treasury stock related to equity award plans

—

( i 796,908)

( i 19.1)

—

( i 19.1)

Repurchases of common stock

—

( i 2,629,257)

( i 56.9)

—

( i 56.9)

Net change on derivatives designated as cash flow hedges, net of tax of $ i 0.7

—

i 2.1

Foreign currency translation adjustment

—

( i 0.9)

Conversion of preferred shares

i 117,706,400

i 1.2

—

i 250.3

—

i 251.5

Inducement dividend

—

( i 592.3)

—

( i 592.3)

Issuance of common stock related to inducement

i 21,582,800

i 0.2

—

i 487.1

—

i 487.3

Exercise of warrants pursuant to cashless provisions

i 16,750,000

i 0.2

—

( i 0.2)

—

i —

Net income

—

i 97.2

—

i 97.2

Balance at December 31, 2021

i 298,320,928

i 3.0

( i 20,094,686)

( i 215.2)

i 628.5

( i 64.3)

( i 5.3)

i 346.7

See accompanying notes to consolidated financial statements.

F-7

R1 RCM Inc.

Consolidated Statements of Cash Flows

(In millions)

Year Ended December 31,

2021

2020

2019

Operating activities

Net income

i 97.2

i 117.1

i 12.0

Adjustments to reconcile net income to net cash provided by operations:

Depreciation and amortization

i 77.5

i 68.7

i 55.7

Amortization of debt issuance costs

i 1.2

i 1.0

i 1.6

Share-based compensation

i 74.3

i 24.1

i 18.6

Gain on sale of Emergency Medical Services business

i —

( i 55.7)

i —

(Gain)/loss on disposal and right-of-use asset write-downs

( i 0.4)

i 17.0

i 0.1

Loss on debt extinguishment

i —

i 18.8

Provision for credit losses

i 0.7

i 0.6

i 2.9

Deferred income taxes

i 23.0

( i 1.2)

( i 5.1)

Non-cash lease expense

i 9.7

i 7.3

i 11.4

Change in value of contingent consideration

( i 2.2)

i 4.7

i —

Other

i 0.3

i —

Changes in operating assets and liabilities:

Accounts receivable and related party accounts receivable

( i 33.2)

( i 56.5)

i 11.5

Prepaid expenses and other assets

( i 18.0)

( i 12.9)

( i 17.9)

Accounts payable

i 0.1

( i 3.4)

i 9.9

Accrued compensation and benefits

i 42.0

( i 40.3)

i 18.2

Lease liabilities

( i 12.7)

( i 13.6)

( i 11.8)

Other liabilities

( i 13.3)

i 25.3

i 4.8

Customer liabilities and customer liabilities - related party

i 18.6

( i 20.4)

( i 16.8)

Net cash provided by operating activities

i 264.8

i 61.8

i 113.9

Investing activities

Purchases of property, equipment, and software

( i 51.7)

( i 49.3)

( i 61.0)

Payment for business acquisitions, net of cash acquired

( i 294.7)

( i 196.0)

i —

Proceeds from sale of Emergency Medical Services business, net of cash disposed

i —

i 128.3

i —

Proceeds from disposal of assets

i 6.0

i —

Net cash used in investing activities

( i 340.4)

( i 117.0)

( i 61.0)

Financing activities

Issuance of senior secured debt, net of discount and issuance costs

i 698.6

i 190.6

i 321.8

Borrowings on revolver

i 120.0

i 50.0

i 60.0

Payment of debt issuance costs

( i 1.9)

i —

Repayment of senior secured debt

( i 488.9)

( i 23.4)

( i 276.8)

Repayment of subordinated notes and prepayment penalty

i —

( i 112.2)

Repayments on revolver

( i 110.0)

( i 20.0)

Payment of contingent consideration liability

( i 4.8)

i —

Deferred payment related to acquisition of RevWorks

( i 12.5)

i —

Inducement of preferred stock conversion

( i 105.0)

i —

Exercise of vested stock options

i 8.9

i 18.4

i 13.7

Purchase of treasury stock

( i 56.5)

i —

Shares withheld for taxes

( i 16.3)

( i 71.9)

( i 11.0)

Other

( i 0.2)

( i 5.8)

( i 0.8)

Net cash provided by (used in) financing activities

i 31.4

i 137.9

( i 25.3)

Effect of exchange rate changes in cash

( i 0.5)

( i 0.4)

( i 0.2)

Net (decrease) increase in cash, cash equivalents, and restricted cash

( i 44.7)

i 82.3

i 27.4

Cash, cash equivalents, and restricted cash at beginning of period

i 174.8

i 92.5

i 65.1

Cash, cash equivalents, and restricted cash at end of period

i 130.1

i 174.8

i 92.5

Supplemental disclosures of cash flow information

Accrued dividends payable to preferred stockholders

i —

i 5.8

i 5.3

Property, equipment and software purchases not paid

i 19.5

i 11.0

i 21.8

Interest paid

i 17.3

i 15.8

i 26.5

Income taxes paid

i 5.2

i 4.2

i 4.0

Income taxes refunded

i 0.2

i 0.4

i 0.2

See accompanying notes to consolidated financial statements.

F-8

R1 RCM Inc.

Notes to Consolidated Financial Statements

(Dollars in millions, except per share data)

1. i Description of Business

R1 RCM Inc. (the “Company”) is a leading provider of technology-driven solutions that transform the patient experience and financial performance of healthcare 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.

The Company achieves these results for its customers by managing healthcare providers’ revenue cycle operations, which encompass processes including patient registration, insurance and benefit verification, medical treatment documentation and coding, bill preparation, and collections from patients and payers. The Company does so by deploying a unique operating model that leverages its extensive healthcare domain experience, innovative technology and intelligent automation, and process excellence. The Company assists its Revenue Cycle Management (“RCM”) customers in managing their revenue cycle operating costs while simultaneously increasing the portion of the maximum potential services revenue they receive. Together, these benefits can generate significant and sustainable improvements in operating margins and cash flows for the Company's customers.

The Company's primary service offering consists of end-to-end RCM services for health systems, hospitals, and physician groups, which the Company deploys through an operating partner relationship or a co-managed relationship. Under an operating partner relationship, the Company provides comprehensive revenue cycle infrastructure to providers, including all revenue cycle personnel, technology solutions, and process workflow. Under a co-managed relationship, the Company leverages its customers’ existing RCM staff and processes, and supplements them with the Company's infused management, subject matter specialists, proprietary technology solutions, and other resources. Under the operating partner model, the Company records higher revenue and expenses due to the fact that almost all of the revenue cycle personnel are employees of the Company and more third-party vendor contracts are controlled by the Company. Under the co-managed model, the majority of the revenue cycle personnel and more third-party vendor contracts remain with the customer and those costs are netted against the Company's co-managed revenue. For the years ended December 31, 2021, 2020, and 2019, substantially all of the Company's net operating and incentive fees from end-to-end RCM services were generated under the operating partner model.

The Company also offers modular services, allowing customers to engage the Company for only specific components of its end-to-end RCM service offering, such as patient experience, physician advisory services (“PAS”), clinical documentation integrity (“CDI”), coding management, revenue integrity solutions (“RIS”), business office services, and practice management (“PM”). The Company’s patient experience offering, R1 EntriTM, unifies scheduling, clearance, intake and payments into one welcoming experience. The Company’s PAS offering assists healthcare organizations in complying with payer requirements regarding whether to classify a hospital visit as an in-patient or an out-patient observation case for billing purposes. The Company’s CDI solution helps customers improve Hospital Compare Star Ratings, which in turn can increase volume and reimbursement. The Company’s coding management offering drives performance, quality, and consistent results via business intelligence and analysis, human capital management, an accountability framework, and a quality management program. The Company’s RIS offering includes charge capture, charge description master (“CDM”) maintenance, and pricing services that help providers ensure they are capturing the maximum net compliant revenue for services delivered. The Company’s business office services can help providers with the entire billing function or to specifically recoup revenue that may otherwise be lost by focusing skilled resources in lower priority areas with significant revenue potential. The Company’s PM services offer administrative and operational support to allow healthcare providers to focus on delivering high quality patient care and outsource non-core functions to the Company.

Once implemented, the Company's technology solutions, processes and services are deeply embedded in its customers’ day-to-day revenue cycle operations. The Company believes its service offerings are adaptable to meet an evolving healthcare regulatory environment, technology standards and market trends.

F-9

R1 RCM Inc.

Notes to Consolidated Financial Statements

(Dollars in millions, except per share data)

Ascension

On February 16, 2016, the Company entered into a long-term strategic partnership with Ascension Health Alliance, the parent of the Company's largest customer and the nation’s largest Catholic and non-profit health system, and TowerBrook Capital Partners (“TowerBrook”), an investment management firm (the “Transaction”). As part of the Transaction, the Company amended and restated its Master Professional Services Agreement (“A&R MPSA”) with Ascension Health (“Ascension”) effective February 16, 2016 with an initial term of i ten years. Pursuant to the A&R MPSA and with certain limited exceptions, the Company is the exclusive provider of RCM services and PAS with respect to acute care services provided by the hospitals affiliated with Ascension that execute supplement agreements with the Company.

On April 30, 2021, the Company and Ascension entered into Amendment No. 5 to the A&R MPSA, effective as of May 1, 2021, extending the agreement to April 30, 2031, among other amendments.

VisitPay Acquisition

On July 1, 2021, the Company completed the acquisition of all the outstanding equity interests of iVinci Partners, LLC d/b/a VisitPay (“VisitPay”), a provider of digital payment solutions located in Idaho, pursuant to an Agreement and Plan of Merger dated as of May 3, 2021 by and among the Company, iVinci Partners, LLC, Vine Merger Sub, LLC, Flare Capital Partners I, L.P., Flare Capital Partners Investment Company, and Vine Sellers’ Representative, LLC (the “VisitPay Acquisition”). VisitPay’s proprietary analytics are designed to deliver consistent and compliant financing options that meet the unique needs of each patient and their family. VisitPay’s payment platform is purpose-built for healthcare with integrations across all major acute and ambulatory billing systems. The combination of the Company and VisitPay will enable the Company to increase price transparency, provide flexible and personalized payment options, and enhance big data analytics.

Emergency Medical Services Disposition

As part of our portfolio analysis and strategic initiatives, the Company disposed the emergency medical services (“EMS”) business on October 30, 2020 for $ i 140.0 million, inclusive of a $ i 5.0 million hold-back amount subject to the completion of certain transition services, to be paid approximately i one year from the date of the disposition (the “EMS Disposition”). The total sale price net of costs to sell was $ i 132.7 million, which included customary adjustments for working capital, indebtedness, cash, and transaction expenses. R1 allocated goodwill to the disposed business based on the relative fair value methodology. The total goodwill allocated to the EMS Disposition was $ i 7.1 million. The gain recognized on the EMS Disposition was $ i 55.7 million.

2. i Summary of Significant Accounting Policies

i Basis of Presentation

The consolidated financial statements include the assets, liabilities and results of operations of the Company and its wholly owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation. The preparation of financial statements in conformity with the United States generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Actual results can differ from those estimates.

Revenue Recognition

The Company's primary source of revenue is its end-to-end RCM services fees. The Company also generates revenue through modular RCM services, where customers will engage the Company for only specific components of its end-to-end RCM service offering on a fixed-fee or transactional basis.

F-10

R1 RCM Inc.

Notes to Consolidated Financial Statements

(Dollars in millions, except per share data)

Revenue Cycle Management

RCM services fees are primarily variable and performance related, and are generally viewed as the consideration earned in satisfaction of a single performance obligation which is considered a series. Variable consideration for end-to-end RCM services are allocated to and recognized over the related time period as the amounts reflect the consideration the Company is entitled to and relate specifically to the Company’s efforts to satisfy its performance obligation. Fees for physician group RCM services include variable consideration contingent on customer collections, and inputs to the Company’s revenue estimates typically include historical service fees and historical customer collection amounts. RCM services fees consist of net operating fees, incentive fees, and other fees.

Net Operating Fees

The Company’s net operating fees consist of:

i) gross base fees invoiced to customers; less

ii) corresponding costs of customers’ revenue cycle operations which the Company pays pursuant to its RCM agreements, including salaries and benefits for the customers' RCM personnel, and related third-party vendor costs; plus

iii) fees accrued for physician group RCM services.

The Company recognizes revenue related to net operating fees ratably as the performance obligation for the RCM services is satisfied. Base fees are typically billed in advance of the quarter and paid in i three monthly payments as the entity performs and the customer simultaneously receives and consumes the benefits of the services provided. The costs of customers’ revenue cycle operations, which the Company pays pursuant to its RCM agreements, are accrued based on the service period. Net operating fees for physician groups are invoiced on a monthly basis and payment terms are typically 30 days.

Incentive Fees

Other

The Company recognizes revenue related to other RCM fees as RCM services are provided. These services consist of an obligation to provide a specific component of its end-to-end RCM service offering. Fees are typically variable in nature with the entire amount being included in revenue in the month of service. The customer simultaneously receives and consumes the benefits provided by the services and the fees are typically billed on a monthly basis and payment terms are typically 30 days. To the extent that certain service fees are fixed and not subject to refund, adjustment, or concession, these fees are generally recognized into revenue ratably as the performance obligation is satisfied.

The Company recognizes revenue from PAS in the period in which the service is performed. The Company’s PAS arrangements typically consist of an obligation to provide specific services to customers on an if and when needed basis. These services are provided under a fixed price per unit arrangement. Fees for the Company's PAS arrangements are typically billed on a monthly basis with 30 to 60 day payment terms.

F-11

R1 RCM Inc.

Notes to Consolidated Financial Statements

(Dollars in millions, except per share data)

PM services arrangements include a single performance obligation, constituting a series, to manage and administer various non-clinical aspects of a customer's physician practice, which may be comprised of numerous physical office locations. Consideration for PM services is typically variable in nature and allocated to and recognized over the related time period as the amounts reflect the consideration the Company is entitled to and relate specifically to the Company’s effort to satisfy its performance obligation. PM services fees are invoiced on a monthly basis and payment terms are typically 30 days.

Bundled Services

Modular RCM services may be sold separately or bundled in a contract. End-to-end RCM services are typically sold separately but may be bundled with PAS. PAS are commonly sold separately. The typical length of an end-to-end RCM contract is five to i ten years (subject to the parties' respective termination rights) but varies from customer to customer. Modular RCM agreements generally vary in length between one and i three years.

For bundled arrangements, the Company accounts for individual services as a separate performance obligation if a service is separately identifiable from other items in the bundled arrangement and if a customer can benefit from it on its own or with other resources that are readily available to the customer. The transaction price is allocated between separate services in a bundle based on their relative standalone selling prices. The standalone selling prices are determined based on the prices at which the Company separately sells its modular services. PAS are provided at a customer’s election but do not represent material rights as the services are priced at standalone selling price throughout the life of the agreement.

Cost of Services

Cost of services consist of (i) on-site personnel and technology costs, (ii) global business services costs, and (iii) other costs. On-site personnel and technology costs consist primarily of wages, bonuses, benefits, share-based compensation, travel, and other costs associated with employees who are assigned to customer sites to help manage the Company’s customers’ revenue cycle operations. The other significant portion of such expenses is an allocation of the costs associated with maintaining, improving, and deploying our integrated proprietary technology suite. Global business services costs relate to the Company’s global business services centers in the U.S. and internationally that perform patient scheduling and pre-registration, medical transcription, cash posting, reconciliation of payments to billing records, patient follow-up, and Medicaid eligibility determination for our customers. The Company incurs expenses related to salaries and benefits for employees in its global business services centers and non-payroll costs associated with operating its global business services centers. Other expenses consist of costs related to managing other services. These expenses consist primarily of wages, bonuses, benefits, share-based compensation, and facilities costs.

Costs associated with generating the Company’s net services revenue are expensed as incurred, with the exception of deferred contract costs, which are certain costs associated with the initial phases of customer contracts and the related transition of customer hospitals and physician groups that are deferred. These fulfillment costs relate directly to the Company’s responsibilities under the corresponding customer contracts, generate or enhance resources of the Company that will be used in satisfying its performance obligations in the future, and are expected to be recovered through the margins realized.

The following table summarizes the breakout of deferred contract costs:

Prepaid expenses and other current assets

i 3.7

i 4.5

Non-current portion of deferred contract costs

i 23.4

i 19.6

Total deferred contract costs

i 27.1

i 24.1

F-12

R1 RCM Inc.

Notes to Consolidated Financial Statements

(Dollars in millions, except per share data)

The associated assets are amortized as services are transferred to the customer over the remaining life of the contracts. For the years ended December 31, 2021 and 2020, total amortization was $ i 4.6 million and $ i 4.8 million, respectively, and there were i i no / associated impairment losses.

Comprehensive Income

Comprehensive income is the net income of the Company combined with other changes in stockholders’ equity not involving ownership interest changes. For the Company, such changes are foreign currency translation adjustments and changes in derivatives designated as cash flow hedges.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Cloud Computing Arrangements

The Company capitalizes qualifying set-up and implementation costs related to the Company’s cloud computing arrangements. The deferred costs are amortized over the term of the associated cloud computing arrangement on a straight-line basis unless another systematic and rational basis is more representative of the pattern in which the Company expects to benefit from access to the cloud computing arrangement.

Capitalized cloud computing implementation costs are presented in other assets on the Consolidated Balance Sheets. As of December 31, 2021 and 2020, the Company had net capitalized cloud computing implementation costs of $ i 8.6 million and $ i 3.0 million, respectively.

Property, Equipment and Software

Property, equipment and software are stated at cost, and related depreciation and amortization are calculated on the straight-line method over the estimated useful lives of the assets.

The Company capitalizes qualifying internal and third-party costs and hardware and software costs related to the Company’s software development activities in accordance with ASC 350-40. The Company amortizes the capitalized software development costs over their estimated life on a straight-line basis.

The major classifications of property, equipment and software and their expected useful lives are as follows:


Buildings and land						i 30 to i 42 years and indefinite
Computers and other equipment						i 3 to i 5 years
Leasehold improvements						Shorter of i 10 years or lease term
Office furniture						i 5 years
Software						i 3 to i 5 years

i Property, equipment and software consist of the following:

F-13

R1 RCM Inc.

Notes to Consolidated Financial Statements

(Dollars in millions, except per share data)

Buildings and land

i —

i 4.6

Computer and other equipment

i 60.4

i 55.0

Leasehold improvements

i 23.3

i 23.2

Software

i 177.0

i 135.7

Office furniture

i 6.5

i 6.4

Property, equipment and software, gross

i 267.2

i 224.9

Less accumulated depreciation and amortization

( i 172.5)

( i 131.2)

Property, equipment and software, net

i 94.7

i 93.7

Property, equipment and software, net, located internationally was $ i 13.9 million and $ i 17.1 million as of December 31, 2021 and 2020, respectively. The remaining property, equipment and software was located in the U.S.

The following table summarizes the allocation of depreciation and amortization expense between cost of services and selling, general and administrative expenses:


	Year Ended December 31,
	2021		2020		2019
Cost of services	$	i 51.8	$	i 46.6	$	i 37.8
Selling, general and administrative	i 2.8		i 4.0		i 4.0
Total depreciation and amortization	$	i 54.6	$	i 50.6	$	i 41.8

i Impairment of Long-Lived Assets

Property, equipment, software, right-of-use (“ROU”) assets, deferred contract costs, and other acquired intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If circumstances require a long-lived asset or asset group be reviewed for possible impairment, the Company first compares undiscounted cash flows expected to be generated by each asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment charge is recognized to the extent that the carrying value exceeds the fair value. There was i i i no / / material impairment of property, equipment, software, deferred contract costs, or other acquired intangible assets for the years ended December 31, 2021, 2020, and 2019. For the years ended December 31, 2021 and 2020, we impaired ROU assets related to leased facilities which we exited. See Note 14, Other, for more information. For the year ended December 31, 2019, there was i no material impairment of ROU assets.

i Accrued Compensation and Benefits

Accrued compensation and benefits consists of accrued payroll, bonus, paid time off, health benefits, severance, and compensation and benefits related taxes. Deferred FICA taxes are split between accrued compensation and benefits and other non-current liabilities based on their due date.

F-14

R1 RCM Inc.

Notes to Consolidated Financial Statements

(Dollars in millions, except per share data)

Fair Value of Financial Instruments

The Company records its financial assets and liabilities at fair value. The accounting standard for fair value (i) defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date, (ii) establishes a framework for measuring fair value, (iii) establishes a hierarchy of fair value measurements based upon the ability to observe inputs used to value assets and liabilities, (iv) requires consideration of nonperformance risk, and (v) expands disclosures about the methods used to measure fair value. The accounting standard establishes a three-level hierarchy of measurements based upon the reliability of observable and unobservable inputs used to arrive at fair value. Observable inputs are independent market data, while unobservable inputs reflect the Company’s assumptions about valuation. The three levels of the hierarchy are defined as follows:

•Level 1: Observable inputs such as quoted prices in active markets for identical assets and liabilities;

•Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and

•Level 3: Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The carrying amounts of the Company’s financial instruments, which include financial assets and liabilities such as cash and cash equivalents, restricted cash equivalents, accounts receivable, net, accounts payable, accrued service costs, accrued compensation and benefits, and certain other current assets and accrued expenses, approximate their fair values, due to their short-term nature. See Note 11, 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 revolver and term loan (see Note 10, Debt) approximates fair value as they are variable rate bank debt.

Other than the items discussed above, the Company does i i no / t have any financial assets or liabilities that are required to be measured at fair value on a recurring basis.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using current tax laws and enacted tax rates in effect for the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company records a valuation allowance for deferred tax assets if, based upon the weight of all available evidence, both positive and negative, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the relevant tax authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest amount of benefit that has a greater than 50% percent likelihood of being realized upon ultimate settlement. Interest and penalties relating to income taxes are recognized in our income tax provision in the consolidated statements of operations and comprehensive income.

F-15

R1 RCM Inc.

Notes to Consolidated Financial Statements

(Dollars in millions, except per share data)

Legal and Other Contingencies

In the normal course of business, the Company is subject to regulatory investigations or legal proceedings, as well as demands, claims and threatened litigation. The Company records an estimated loss for any claim, lawsuit, investigation or proceeding when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Significant judgment is required in both the determination of the probability and whether the loss can be reasonably estimated. Actual expenses could differ from such estimates.

i Foreign Currency Translation and Transaction Gains (Losses)

Assets and liabilities of non-U.S. subsidiaries that operate in a local currency environment, where such local currency is the functional currency, are translated to U.S. dollars at exchange rates in effect at the balance sheet date. As of December 31, 2021 and 2020, the Company had net assets of $ i 51.0 million and $ i 44.4 million in foreign entities, respectively. Income and expense accounts are translated at average exchange rates during the year which approximates the rates in effect at the transaction dates. The resulting translation adjustments are recorded as a separate component of accumulated other comprehensive income (loss).

Share-Based Compensation Expense

The Company determines the expense for all employee share-based compensation awards by estimating their fair value and recognizing such value as an expense, on a ratable basis, in the consolidated financial statements over the requisite service period in which the employees earn the awards. Performance-based stock awards are recognized in expense when the performance metrics are probable to be achieved. Changes in the estimate of achievement of the performance metrics are recognized in the period of the change through a cumulative catch-up. The Company assesses the performance metrics in its awards on a quarterly basis to determine if a cumulative catch-up is necessary. The fair value of stock options is calculated using the Black-Scholes option pricing model. For the year ended December 31, 2021, the number of options granted ( i 6,424) was immaterial.

The Company recognizes compensation expense using a straight-line method over the applicable service or performance period. During each quarter, the share-based compensation expense is adjusted to reflect forfeitures during the period.

/ i

Treasury Stock

The Company records treasury stock at the cost to acquire such shares, including commissions paid to brokers. Treasury stock is included as a component of stockholders’ equity.

Earnings (Loss) Per Share

Basic net income per share is computed by dividing net income, less any dividends, accretion or decretion, redemption or induced conversion on the preferred stock, by the weighted average number of common shares outstanding during the period. As the preferred stock (as defined in Note 12) participates in dividends alongside the Company’s common stock (per their participating dividends), the preferred stock would constitute participating securities under ASC 260-10 and are applied to earnings per share using the two-class method. Under this method, all earnings (distributed and undistributed) are allocated to common shares and participating securities based on their respective rights to receive dividends.

Diluted net income per share is calculated using the more dilutive of the if-converted or the two-class method. For the years ended December 31, 2021 and 2020, the two-class method was more dilutive and was computed by adjusting the denominator used in the basic net income per share computation by potentially dilutive securities outstanding during the period plus, when their effect is dilutive, incremental shares consisting of shares subject to stock options, restricted stock units (“RSUs”), performance-based restricted stock units (“PBRSUs”), and shares issuable upon conversion of preferred stock.

F-16

R1 RCM Inc.

Notes to Consolidated Financial Statements

(Dollars in millions, except per share data)

Recently Issued Accounting Standards and Disclosures

No new accounting pronouncements issued or effective during the fiscal year had, or are expected to have, a material impact on the Company’s consolidated financial statements.

3. i Acquisitions

Assets acquired and liabilities assumed in a business combination are recorded at their estimated fair value on the date of the acquisition. The difference between the purchase price amount and the net fair value of assets acquired and liabilities assumed is recognized as goodwill on the balance sheet if the purchase price exceeds the estimated net fair value or as a bargain purchase gain on the income statement if the purchase price is less than the estimated net fair value. The allocation of the purchase price may be modified up to one year after the acquisition date as more information is obtained about the fair value of assets acquired and liabilities assumed.

VisitPay

On July 1, 2021, the Company completed the acquisition of VisitPay. The purchase price for the VisitPay Acquisition was $ i 305.4 million. The Company funded the purchase price for the VisitPay Acquisition and the Company’s associated transaction expenses with a combination of cash on hand and the incurrence of additional indebtedness (see Note 10, Debt).

The purchase price has been provisionally allocated to assets acquired and liabilities assumed based on their established fair value as of the acquisition date. The fair value estimate of assets acquired and liabilities assumed is pending the completion of multiple elements, including gathering further information about the identification and completeness of all assets and liabilities acquired, the finalization of an independent appraisal and valuation of fair value of the assets acquired and liabilities assumed, and final review by the Company's management. Accordingly, management considers the balances shown in the following table to be preliminary. Some of the more significant amounts that are not yet finalized relate to the fair value of intangible assets and income and non-income related taxes. Accordingly, there could be adjustments to the consolidated financial statements, including changes in our amortization expense related to the valuation of intangible assets acquired and their respective useful lives, among other adjustments.

i The preliminary fair value of assets acquired and liabilities assumed is:

F-17

R1 RCM Inc.

Notes to Consolidated Financial Statements

(Dollars in millions, except per share data)



	Purchase Price Allocation
Total purchase consideration	$	i 305.4

Allocation of consideration to assets acquired and liabilities assumed:
Cash and cash equivalents	$	i 10.7
Accounts receivable	i 4.7
Prepaid expenses and other current assets	i 0.4
Property, equipment and software	i 0.3
Operating lease right-of-use assets	i 1.7
Intangible assets	i 117.3
Goodwill	i 179.2
Accounts payable	( i 0.5)
Current portion of customer liabilities	( i 1.1)
Accrued compensation and benefits	( i 0.7)
Current portion of operating lease liabilities	( i 0.4)
Other accrued expenses	( i 2.0)
Non-current portion of customer liabilities	( i 1.0)
Non-current portion of operating lease liabilities	( i 1.3)
Deferred income tax liabilities	( i 1.9)
Net assets acquired	$	i 305.4

The intangible assets preliminarily identified in conjunction with the VisitPay Acquisition are as follows:

Useful Life

Gross Carrying Value

Customer Relationships

i 10 years

i 2.3

Technology

i 11 years

i 114.0

Tradename

i 3 years

i 1.0

The goodwill recognized is primarily attributable to synergies that are expected to be achieved from the integration of VisitPay. The goodwill recognized in the acquisition will be partially deductible for income tax purposes.

Included in the Consolidated Statements of Operations and Comprehensive Income for the year ended December 31, 2021 are net sales of $ i 9.6 million and net loss before income taxes of $ i 8.1 million related to the operations of VisitPay since the acquisition date of July 1, 2021.

i During 2020, the Company acquired the following businesses:

F-18

R1 RCM Inc.

Notes to Consolidated Financial Statements

(Dollars in millions, except per share data)


Company Name	Description of the Business	Description of the Acquisition
SCHEDULING.COM, INC. d/b/a SCI Solutions, Inc. (“SCI”)	Provider of software-as-a-service (“SaaS”)-based scheduling and patient access solutions	Purchased all outstanding equity interests
RevWorks services business (acquired from Cerner Corporation)	Provider of revenue cycle management services	Purchased certain assets relating to the RevWorks services business

During the year ended December 31, 2021, there have been no significant purchase accounting adjustments to the fair value of assets acquired or the liabilities assumed in connection with the SCI and RevWorks acquisitions.

The purchase price for SCI included contingent consideration that was based on achieving certain revenue and operational targets in the year following the acquisition, which had a fair value of $ i 4.8 million at the time of the acquisition. During the year ended December 31, 2021, the maximum amount of contingent consideration of $ i 10.0 million was finalized and paid. Changes to the fair value of the contingent consideration were recorded as a component of other expenses.

With respect to the RevWorks acquisition, the Company paid the first deferred payment of $ i 12.5 million in the third quarter of 2021. There is i one remaining deferred payment of $ i 12.5 million which is payable on the second anniversary of the closing date (August 2022), and is included in other accrued expenses on the Consolidated Balance Sheets as of December 31, 2021. At the time of the acquisition, the Company recorded a present value liability for the contractual deferred payments of $ i 24.3 million.

The i two deferred payments related to the RevWorks acquisition are contractual obligations of the Company; however, they are potentially effectively refundable to the Company if certain RevWorks customer revenue targets defined in the purchase agreement for the first i two years following the acquisition are not achieved. At the time of the acquisition, the Company recorded an asset for the fair value of the contingently returnable consideration of $ i 22.3 million. As of December 31, 2021, the Company updated the contingently returnable consideration to $ i 25.0 million, with the change being recorded as a component of other expenses and interest expense. The full amount is included in prepaid expenses and other current assets on the Consolidated Balance Sheets as of December 31, 2021.

Pro Forma Results (Unaudited)

The following table summarizes, on a pro forma basis, the combined results of the Company as though the VisitPay Acquisition had occurred as of January 1, 2020 and the SCI and RevWorks acquisitions had occurred as of January 1, 2019. These pro forma results are not necessarily indicative of either the actual consolidated results had the acquisitions occurred as of those dates or of the future consolidated operating results for any period. Pro forma results are:


	Year Ended December 31,
	2021		2020
Net services revenue	$	i 1,482.1	$	i 1,330.6
Net income	$	i 94.4	$	i 96.7

Adjustments were made to earnings to adjust depreciation and amortization to reflect the fair value of identified assets acquired, to record the effects of extinguishing the debt of the acquired companies and replacing it with the debt of the Company, to adjust timing of acquisition related costs incurred by the Company, and to record the income tax effect of these adjustments.

F-19

R1 RCM Inc.

Notes to Consolidated Financial Statements

(Dollars in millions, except per share data)

4. i Intangible Assets

The following table provides the gross carrying value and accumulated amortization for each major class of intangible asset at December 31, 2021 and December 31, 2020:

Gross Carrying Value

Accumulated Amortization

Net Book Value

Gross Carrying Value

Accumulated Amortization

Net Book Value

Customer relationships

i 100.0

( i 20.8)

i 79.2

i 97.7

( i 14.7)

i 83.0

Technology

i 215.5

( i 30.2)

i 185.3

i 101.7

( i 13.6)

i 88.1

Tradename

i 1.0

( i 0.1)

i 0.9

i —

Total intangible assets

i 316.5

( i 51.1)

i 265.4

i 199.4

( i 28.3)

i 171.1

The fair value of the identifiable intangible assets was derived utilizing an income approach to derive the present value of future cash flows from developed technology, customer relationships, and tradename.

Intangible asset amortization expense was $ i 22.9 million and $ i 18.1 million for the years ended December 31, 2021 and 2020, respectively.

Estimated annual amortization expense related to intangible assets with definite lives as of December 31, 2021 is as follows:


2022	$	i 28.4
2023	i 28.4
2024	i 26.5
2025	i 24.9
2026	i 24.9
Thereafter	i 132.3
Total	$	i 265.4

5. i i Goodwill /

Goodwill represents the difference between the purchase price of acquired companies and the related fair value of the net assets acquired, which applies the acquisition method of accounting. The Company annually tests goodwill for impairment on the first day of its fiscal fourth quarter, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value below its carrying value. The goodwill impairment test consists of a qualitative assessment of impairment indicators, followed by, if necessary, a quantitative assessment comparing the carrying amount to the reporting unit's fair value. To the extent that the carrying value exceeds the fair value, an impairment charge would be recorded. The Company has determined there to be i one reporting unit, consistent with its single operating and reportable segment. As part of its annual impairment analysis, the Company performed a qualitative assessment and determined there was i no impairment of goodwill for the year ended December 31, 2021.

i Changes in the carrying amount of goodwill for the year ended December 31, 2021 were:

F-20

R1 RCM Inc.

Notes to Consolidated Financial Statements

(Dollars in millions, except per share data)


	Goodwill
Balance as of December 31, 2020	$	i 375.3
Acquisitions	i 179.2
Measurement period adjustments	i 0.2
Balance as of December 31, 2021	$	i 554.7

6. i Revenue Recognition

Disaggregation of Revenue

In the following table, revenue is disaggregated by source of revenue:

Year Ended December 31,

2021

2020

2019

Net operating fees

i 1,211.8

i 1,093.8

i 1,037.4

Incentive fees

i 143.8

i 70.6

i 56.2

Other (1)

i 119.0

i 106.4

i 92.5

Net services revenue

i 1,474.6

i 1,270.8

i 1,186.1

(1) Other revenue primarily consists of PAS, PM services, and revenue related to Entri modular services.

Contract Balances

The following table provides information about contract liabilities from contracts with customers:


	December 31, 2021	December 31, 2020


Contract liabilities	i 29.0	i 28.6

Contract liabilities are included in other customer liabilities and contains related party amounts, including $ i 2.5 million and $ i 5.6 million of current customer liabilities and $ i 15.4 million and $ i 16.3 million of non-current customer liabilities for the years ended December 31, 2021 and 2020, respectively. There were i i no / contract assets as of December 31, 2021 and 2020.

A receivable is recognized in the period the Company provides services when the Company’s right to consideration is unconditional. Payment terms on invoiced amounts are typically 30-60 days.

The Company recognized revenue of $ i 98.0 million and $ i 91.6 million during the years ended December 31, 2021 and 2020, which amounts were included in contract liabilities at the beginning of the respective periods. These revenue amounts include $ i 88.1 million and $ i 85.0 million for the years ended December 31, 2021 and 2020, respectively, related to advanced billings which become accounts receivable and contract liabilities on the first day of the respective service period.

Transaction Price Allocated to the Remaining Performance Obligation

i The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period. The estimated revenue does not include amounts of variable consideration that are constrained.

F-21

R1 RCM Inc.

Notes to Consolidated Financial Statements

(Dollars in millions, except per share data)

Net operating fees

Incentive fees

Other

2022

i 123.6

i 24.4

i 1.5

2023

i 97.5

i —

2024

i 86.6

i —

2025

i 34.4

i —

2026

i 34.4

i —

Thereafter

i 162.5

i —

Total

i 539.0

i 24.4

i 1.5

The amounts presented in the table above include variable fee estimates for the non-cancellable term of the Company's physician groups RCM services contracts, fixed fees which are typically recognized ratably as the performance obligation is satisfied, and forecasted incentive fees which are measured cumulatively over the contractually defined performance period.

Estimates of revenue expected to be recognized in future periods also exclude unexercised customer options to purchase services within the Company's PAS contracts that do not represent material rights to the customer.

The Company does not disclose information about remaining performance obligations with an original expected duration of one year or less. The Company has elected certain of the optional exemptions from the disclosure requirement for remaining performance obligations for specific situations in which an entity need not estimate variable consideration to recognize revenue. Accordingly, the Company applies a practical expedient to its modular RCM services and does not disclose information about variable consideration from remaining performance obligations when the Company has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the entity's performance completed to date. PAS performance obligations are typically short in duration (often less than 1 day) with any uncertainty related to the associated variable consideration resolved as each increment of service (completion of a level of care review or an appeal) is completed which reflects the value the customer receives from the Company’s fulfillment of the performance obligation. Modular RCM services performance obligations for variable consideration are of short duration with fees corresponding to the value the customer has realized, for example, patient accounts collected on behalf of the customer or medical record lines transcribed.

For end-to-end RCM contracts, the Company does not disclose information about remaining, wholly unsatisfied performance obligations for variable consideration that the Company is able to allocate to one or more, but not all, of the performance obligations in its contracts. The Company’s end-to-end RCM services performance obligations are satisfied over time and are substantially the same from period to period under either a co-managed or operating partner model. Fees are variable and consist of net operating fees and incentive fees, with the uncertainty related to net operating fees and certain incentive fees being resolved quarterly, and with the uncertainty of other incentive fees being resolved annually. The information presented in the table above includes estimates for incentive fees where the uncertainty related to the final fee is resolved on longer than a quarterly basis and to the extent the Company does not believe the associated consideration is constrained.

7. i i 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.

F-22

R1 RCM Inc.

Notes to Consolidated Financial Statements

(Dollars in millions, except per share data)

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.

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 $ i 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 has presented the rollforward below on a consolidated basis as the currently expected credit losses for its large integrated healthcare system customers are not anticipated to be material.

Movements in the allowance for credit losses are as follows:


	Year Ended December 31,
	2021		2020
Beginning balance	$	i 3.8	$	i 2.8
Cumulative effect of ASC 326 adoption	i —		i 1.1
Provision (recoveries)	i 0.7		i 0.6
EMS Disposition	i —		( i 0.6)
Write-offs	( i 2.0)		( i 0.1)
Ending balance	$	i 2.5	$	i 3.8

8. i Leases

The Company determines if an arrangement is a lease at inception. The Company has operating leases for corporate offices, operational facilities, global business services centers, and certain equipment. Operating leases with terms greater than one year at commencement are included in operating lease ROU assets and operating lease liabilities (current and non-current) on the Consolidated Balance Sheets.

Operating ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As the Company's leases do not provide an implicit rate, the incremental borrowing rate, determined based on the information available at the lease commencement date, is used in calculating the present value of lease payments. ROU assets also include any lease prepayments made and excludes any lease incentives. The Company's leases may include options to extend the lease term and the Company's determination of the likely lease term incorporates these options when it is reasonably certain that they will be exercised.

The Company elected to not separate lease and non-lease components for building and equipment leases. The Company will account for the lease and non-lease components, such as fixed service charges, as a single lease component. For leases with an initial term of 12 months or less, expense is recognized on a straight-line basis over the lease term.

F-23

R1 RCM Inc.

Notes to Consolidated Financial Statements

(Dollars in millions, except per share data)

Leases have remaining lease terms of up to i 12 years, some of which include options to extend the leases for up to i 10 years. In circumstances where there are significant foreign tax incentives, the Company has determined it to be reasonably certain to exercise the renewal options. The Company subleases certain office spaces to third parties.

The components of lease costs are as follows:

Year Ended December 31,

2021

2020

Operating lease cost

i 15.8

i 18.2

Sublease income

( i 2.3)

( i 2.2)

Total lease cost

i 13.5

i 16.0

The following table summarizes the supplemental information related to operating leases:

Year Ended December 31,

2021

2020

Weighted average remaining lease term

i 7 years

Weighted average incremental borrowing rate

i 8.10

i 8.94

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows for operating leases

i 22.8

i 20.7

ROU assets obtained in exchange for operating lease obligations

i 20.3

i 3.3

The Company presents all non-cash charges related to any modification or reassessment events triggering remeasurement, and obtaining new leases for non-cash consideration that result in adjustments to the lease liability or ROU asset as non-cash transactions. During 2021, the Company modified real estate leases, significantly reducing the lease terms, resulting in a reduction of ROU assets and lease liabilities of $ i 13.7 million and $ i 15.4 million, respectively.

Maturities of lease liabilities as of December 31, 2021 are as follows:

Operating Leases

2022

i 17.1

2023

i 12.2

2024

i 12.2

2025

i 12.3

2026

i 9.9

Thereafter

i 25.0

Total

i 88.7

Less:

Imputed interest

i 21.8

Present value of lease liabilities

i 66.9

F-24

R1 RCM Inc.

Notes to Consolidated Financial Statements

(Dollars in millions, except per share data)

9. i Customer Liabilities

Customer liabilities include (i) accrued service costs (amounts due and accrued for cost reimbursements), (ii) collections payable to clients (consisting primarily of amounts collected on behalf of the Company’s physician group customers to be remitted within twelve months), (iii) refund liabilities (amounts potentially due as a refund to the Company's customers on incentive fees), and (iv) deferred revenue (contract liabilities) (fixed or variable fees amortized to revenue over the service period).

Customer liabilities consist of the following:


	December 31, 2021		December 31, 2020
Accrued service costs, current	$	i 32.3	$	i 12.2
Collections payable to clients, current	i 3.0		i 4.6

Refund liabilities, current	i 3.8		i 2.9
Deferred revenue (contract liabilities), current	i 10.3		i 12.3
Current portion of customer liabilities (1)	i 49.4		i 32.0

Deferred revenue (contract liabilities), non-current	i 18.7		i 16.3
Non-current portion of customer liabilities (1)	i 18.7		i 16.3
Total customer liabilities	$	i 68.1	$	i 48.3

(1) Current and non-current portion of customer liabilities include amounts for a related party. See Note 19, Related Party Transactions, for further discussion.

10. i Debt

The carrying amounts of debt consist of the following: