R1 RCM has completed its acquisition of Cerner Corp.'s revenue cycle outsourcing business, a transaction it first announced in June.
R1 in June valued the purchase of Cerner's RevWorks at $30 million, according to an investor presentation the company filed with the Securities and Exchange Commission. R1 plans to pay Cerner in three installments.
Under the deal, R1 acquires RevWorks' services business and nonfederal commercial clients.
R1 and Cerner will continue to work together as part of the agreement, integrating their digital patient experience tools and possibly collaborating on analytics, transaction processing and other services. Cerner will offer R1's revenue cycle capabilities to its customers as part of an integrated service.
"We are pleased to complete the acquisition of RevWorks," said Gary Long, R1's executive vice president and chief commercial officer, in a statement Monday. "We look forward to delivering scalable innovations and successful client outcomes to Cerner's customers, as well as other healthcare organizations."
R1 in June said the company would offer positions to RevWorks employees.
RevWorks generates $80 million in annual revenue across more than 150 clients, including hospitals and ambulatory providers, according to R1's June SEC filing.
The RevWorks divestiture is "consistent with the portfolio management activities we have discussed," Marc Naughton, Cerner's chief financial officer, said on a call with investment analysts July 29. Cerner executives since last year have been highlighting efforts to improve the company's adjusted operating margin through cost cutting, portfolio management and business simplification initiatives.
Cerner's adjusted operating margin for this year's second quarter was 18.44%, up from 18% during the same period last year. The company posted $1.3 billion in revenue, down 7% year-over-year, which company officials attributed to the COVID-19 pandemic, as well as to the termination of a RevWorks contract with Adventist Health in Roseville, Calif., in late 2019.
Cerner's net earnings were $134.7 million, up 6.1% since 2019's second quarter.
Cerner last week lowered its full-year 2020 revenue expectations to $5.45 billion to $5.55 billion vs. the $5.55 billion to $5.7 billion guidance range it issued in April. Naughton on the July 29 call said Cerner made the adjustment to reflect the "lower Q2, more current view of the COVID impact going forward and the anticipated sale of our remaining RevWorks services."
R1 releases its second-quarter earnings results Tuesday. The company, which also acquired SCI Solutions in April, saw its revenue jump 16.2% year-over-year to $320.5 million during the first quarter of 2020, which ended March 31. Profit soared to $18.2 million in that time.