R1 RCM saw revenues increase sequentially in the third quarter of 2017, but the Chicago-based revenue cycle management and physician advisory services provider ended the period with a net loss.
R1 reported net services revenue of $123.2 million in the quarter ended Sept. 30, up $23.8 million compared to the second quarter of 2017 but down from the $125.5 million reported in the third quarter of 2016.
The company attributed the year-over-year decrease to the adoption of a new accounting standard Jan. 1, 2017. "Due to the adoption of Topic 606 as of Jan. 1, 2017, the non-GAAP measure of gross and net cash generated from customer contracting activities that were utilized by the company in 2016 are not applicable for 2017," R1 said. The company added if the accounting measure was applied to R1's financial report from the third quarter of 2016, its net services revenue that quarter would be $59.7 million instead of $125.5 million.
After factoring in expenses, R1 ended the third quarter of 2017 with a net loss of $3.6 million compared to a net loss of $6.7 million in the second quarter of 2017.
Overall, "we're pleased to report our fifth consecutive quarter of revenue growth, and more importantly, a turn to positive adjusted EBITDA and free cash flow," said Joe Flanagan, president and CEO of R1. "Our core revenue cycle business and our physician advisory services offering are both executing well. Our competitive position is strong, and we continue to make improvements to our offering to enhance our value proposition and positioning in the market."
R1 Treasurer and CFO Chris Ricaurte added, "I'm very pleased with the execution that drove our results for the third quarter. With the progress we have made onboarding new business, we remain on track to exit 2017 at an annualized revenue run rate of approximately $650 million."