R1 RCM posted $314.7 million in revenue for this year's second quarter, up 6.7% compared to the year-ago quarter.
The company's operating income was $25.1 million, up 102.4% from last year.
R1's revenue growth was in part driven by signing new customers, as the COVID-19 pandemic has spurred more providers to look into end-to-end revenue cycle management agreements as they look to save costs and make revenue cycle processes more efficient, according to company officials. Most new customers R1 signed were outsourcing revenue cycle for the first time.
"The pandemic has the potential to accelerate (providers') inclination to enter into end-to-end agreements," R1 CEO Joe Flanagan said on a call with investment analysts Tuesday.
Sixty-five percent of hospitals either have outsourced or plan to outsource full revenue cycle management, according to a report Black Book Market Research released in May.
R1 reported $287.8 million in revenue from net operating fees for the second quarter, up 13.8% year-over-year, and $1.3 million in revenue from incentive fees, down 92.5%.
Most of the second quarter's net operating fees were from customer cash collection tied to services from late 2019 and early 2020, before the COVID-19 pandemic, noted Rachel Wilson, R1's chief financial officer and treasurer. She added that incentive fees were down, driven by a sharp decline in patient volumes at customer sites.
Revenues from incentive fees are expected to recover in the second half of 2020, as patient volumes have been returning.
R1's cost of services was $229.8 million, down from $232.5 million in the year-ago quarter, which Wilson in part attributed to cost-cutting efforts implemented in February.
R1 in May had suspended its full-year 2020 financial guidance—an expected revenue in the range of $1.3 billion to $1.4 billion—due to uncertainty from the COVID-19 pandemic.
The company on Tuesday reintroduced its guidance, now pegging its expected full-year revenue to be in the range of $1.22 million to $1.25 million. The new guidance factors in the company's recent acquisition of SCI Solutions and Cerner Corp.'s RevWorks, as well as the sale of its emergency medical services business.
R1 this week also launched a joint innovation lab with Rush University System for Health in Chicago. Through the innovation lab, R1 will commercialize care quality, value-based care and patient experience technologies that Rush develops using the company's platform. R1 expects to begin commercializing technologies from the innovation lab in 2021.
R1 and Rush did not disclose financial details of the agreement.
Rush has "built a number of advanced algorithms that they've used inside their system," Flanagan said on Tuesday's call. "(We) look forward to commercializing our solutions."