R1 RCM
Annual Report 2015

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 Form 10-K ýANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934For the fiscal year ended December 31, 2015OR ¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934For the transition period from to Commission file number 001-34746 Accretive Health, Inc.(Exact name of registrant as specified in its charter) Delaware 02-0698101(State or other jurisdiction ofincorporation or organization) (I.R.S. EmployerIdentification No.)401 North Michigan AvenueSuite 2700Chicago, Illinois 60611(Address of principal executive offices) (Zip Code)(312) 324-7820Registrant’s telephone number, including area codeSecurities registered pursuant to Section 12(b) of the Act:Title of each class: Name of each exchange on which registered:None NoneSecurities registered pursuant to Section 12(g) of the Act:Common Stock, $0.01 par valueIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No ýIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No ýIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past90 days. Yes ý No ¨ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit andpost such files). Yes ý No ¨ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’sknowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of"large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ¨ Accelerated filerýNon-accelerated filer¨Smaller reporting companyo (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ýAggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, based on the last sale price for such stock on June 30, 2015:$480,464,667As of March 4, 2016, the registrant had 110,638,385 shares of common stock, par value $0.01 per share, outstanding.ACCRETIVE HEALTH, INC.TABLE OF CONTENTS PagePART I Item 1.Business1 Item 1A.Risk Factors17 Item 1B.Unresolved Staff Comments34 Item 2.Properties35 Item 3.Legal Proceedings35 49 Item 4.Mine Safety Disclosures37 PART II Item 5.Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities38 Item 6.Selected Consolidated Financial Data45 Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations49 Item 7A.Quantitative and Qualitative Disclosures About Market Risk63 Item 8.Consolidated Financial Statements and Supplementary Data63 Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure63 Item 9A.Controls and Procedures64 Item 9B.Other Information69 PART III Item 10.Directors, Executive Officers and Corporate Governance70 Item 11.Executive Compensation70 Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters70 Item 13.Certain Relationships and Related Transactions, and Director Independence70 Item 14.Principal Accountant Fees and Services71 PART IV Item 15.Exhibits and Financial Statement Schedules72 SIGNATURES73 FORWARD-LOOKING STATEMENTSThis Annual Report on Form 10-K contains forward-looking statements, within the meaning of the federal securities laws, that involve substantial risksand uncertainties. You should not place undue reliance on these statements. All statements, other than statements of historical facts, included in this AnnualReport on Form 10-K regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives ofmanagement and expected market growth are forward-looking statements. The words "anticipate", "believe", "estimate", "expect", "intend", "may", "plan","predict", "project", "would" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements containthese identifying words. These forward-looking statements include, among other things, statements about: •our ability to regain a listing on a national securities exchange;•our ability to attract and retain customers;•our financial performance;•the advantages of our solutions as compared to those of others;•our plans to incorporate our value based reimbursement capabilities within our revenue cycle management service offering;•our ability to establish and maintain intellectual property rights;•our ability to retain and hire necessary employees and appropriately staff our operations; and•our estimates regarding capital requirements and needs for additional financing.We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place unduereliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in theforward-looking statements we make. We have included important factors in the cautionary statements included in this Annual Report, particularly in "Part I -Item 1A - Risk Factors," that could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-lookingstatements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.You should read this Annual Report and the documents that we have filed as exhibits to the Annual Report completely and with the understanding thatour actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements,whether as a result of new information, future events or otherwise, except as required by law.PART IUnless the context indicates otherwise, references in this Annual Report to "Accretive Health," "Accretive," the "company," "we," "our" and "us"mean Accretive Health, Inc. and its subsidiaries.Item 1.BusinessOverviewAccretive Health is a leading provider of revenue cycle services that help healthcare providers generate sustainable improvements in their operatingmargins and cash flows while also enhancing patient, physician and staff satisfaction for our customers.We achieve these results for our customers through an integrated approach encompassing our end-to-end revenue cycle management service offeringand physician advisory services. We do so by deploying a unique operating model that leverages our extensive healthcare site experience, innovativetechnology and process excellence. We also offer modular services, allowing clients to engage us for only specific components of our end-to-end revenuecycle management service offering.Our primary service offering consists of revenue cycle management, or RCM, which helps healthcare providers to more efficiently manage their revenuecycles. This encompasses patient registration, insurance and benefit verification, medical treatment documentation and coding, bill preparation andcollections from patients and payers. We assist our RCM customers in increasing the portion of the maximum potential services revenue they receive whilesimultaneously reducing their revenue cycle operating costs. Together, these benefits can generate significant and sustainable improvements in operatingmargins and cash flows for our customers. Our management and staff supplement our customers’ existing RCM process and staff, and help operate ourcustomers’ processes. We educate and empower our customers’ employees so that over time we can jointly deliver improved results using the proprietarytechnology included in our applications. Once implemented, our technology applications, processes and services are deeply embedded in our customers’day-to-day operations. We believe this service offering is adaptable to meet an evolving healthcare regulatory environment, technology standards and markettrends. Importantly, our RCM agreements typically provide that we and our customers share in the benefits that are derived on behalf of our customers,particularly revenue increases and, in most cases, cost savings resulting from the application of our solutions. We believe that this sharing of benefits alignsour objectives and interests with those of our customers (including patient satisfaction).Our physician advisory services, or PAS, offering, which we incorporated into our RCM offering in the third quarter of 2014, assists hospitals incomplying with payer requirements regarding whether to classify a hospital visit as an in-patient or an out-patient observation case for billing purposes. Thisoffering consists of both concurrent review and retrospective chart audits to help our customers achieve compliant and accurate billing. We also providecustomers with retrospective appeal management service support for both governmental and commercial payers. Our physicians conduct detailedretrospective reviews of medical records to identify medical necessity for hospital services and the required documentation to appropriately support anappeal. We employ trained physicians to deliver these services.We offered our population health solutions, or PHS, services on a standalone basis until the third quarter of 2014. This offering was designed to enablehealthcare providers to more effectively manage the health of a defined patient population by identifying those individuals who are most likely toexperience an adverse health event and, as a result, incur high healthcare costs in the coming years. In the fourth quarter of 2014, we began integratingcapabilities from this offering into our core RCM offering in order to enhance our value-based reimbursement capabilities for our RCM customers and toprepare our customers for future changes in healthcare. We currently do not serve any customers for PHS.1We develop and refine our offerings based in part on information, processes and management experience garnered through working with some of thelargest and most prestigious hospitals and healthcare systems in the United States, as well as in anticipation of regulatory and market changes that impact ourcustomers. Our customers typically are single or multi-hospital healthcare systems, including faith-based healthcare systems, community healthcare systems,academic medical centers and their respective affiliated ambulatory clinics and physician practice groups, certain of which have common affiliations to largerumbrella healthcare organizations that are also parties to our customer contracts with their respective affiliates. We have developed strategic, long-termrelationships with our customers and focus on providers that we believe understand the value of our operating model and have demonstrated success inoperational outcomes.Our ServicesDrawing on our combination of our extensive healthcare-site expertise, innovative technology and process excellence, we seek to deliver measurableeconomic value to our customers across our revenue cycle management and physician advisory solutions.Revenue Cycle Management OfferingOur primary RCM service offering consists of comprehensive, integrated technology and RCM services, which address the full spectrum of revenuecycle operational issues faced by healthcare providers.To implement our integrated solution, we supplement each customer’s existing RCM process and staff with our qualified, experienced RCM specialists,leaders and staff and connect our proprietary technology and analytical applications to each customer’s existing technology systems. Our employees havesignificant experience in healthcare management, revenue cycle operations, technology, quality control and other management disciplines. Our solution isadapted to the hospital’s organizational structure to minimize disruption to existing operation and staff. We seek to integrate our technology, personnel, ouraccumulated body of knowledge and our culture within each customer’s revenue cycle activities, with the expectation that we will enjoy a long-termcollaborative relationship with each customer. We deliver technology and operational support in the form of both on-site management and centralizedstaffing to deliver improved efficiency and quality across all RCM functions.Our RCM agreements generally provide us with the opportunity to earn two types of performance-based fees associated with achieved efficiencies andimprovements in our customer’s revenue cycle processes: net operating fees and incentive fees. We have modified a portion of, and continue to attempt tomodify, our RCM agreements to eliminate the gross base fees along with our financial obligation to pay our customers' revenue cycle operation expenses.Net operating fees represent the gross base fees we charge our customers for operating the revenue cycle processes included in our agreements lesscorresponding costs of customers’ revenue cycle operations which we undertake to pay pursuant to our RCM agreements. For some customers, the amount ofour net operating fees is reduced by an agreed upon percentage of such difference, representing the customer’s share of cost reductions resulting from ourservices. We help our customers reduce their revenue cycle costs by implementing new operational practices, optimizing their technology suite anddeploying more efficient processes. In certain cases, we work with our customers to transfer aspects of their revenue cycle operations to our shared servicescenters, which typically results in lower operating costs than operating those aspects of the revenue cycle at the customers’ site.Incentive fees represent our negotiated share of the increases in our customers’ operating revenues and are earned by improving their net revenue yield.We help many of our customers improve their collection of amounts owed by payers and patients for healthcare services. We refer to this as net revenue yield.We use our proprietary technology or other financial metrics to calculate their improvement in net revenue yield. When using the method of calculating thisimprovement that employs our proprietary technology, we compare the customer’s actual cash collections for a given instance of care to the maximumpotential cash receipts that the customer should have received from the instance of care. We then aggregate these calculations for all instances of care andcompare the result to the aggregate calculation for a defined period before we began to provide our services to the customer.2When using other financial metrics to calculate this improvement, we typically employ metrics that are already being tracked by, or easily calculated from,our customers’ respective accounting systems and compare the results of those metrics against the results for the same metrics for a defined period before webegan to provide our services to the customer.We seek to improve our customers’ processes using a variety of techniques including:•Gathering Complete Patient and Payer Information. We focus on gathering complete patient information and validating insurance eligibility andbenefits so patient care services can be recorded and billed to the appropriate parties. For scheduled healthcare services, we educate patients as totheir potential financial responsibilities before receiving care. Through our systems, we maintain an automated electronic scorecard which measuresthe efficiency of up-front data capture, authorization, billing and collections throughout the life cycle of any given patient account. Thesescorecards are analyzed in the aggregate, and the results are used to help improve work flow processes and operational decisions for our customers.•Improving Claims Filing and Payer Collections. Through our proprietary technology and process expertise, we identify, for each patient encounter,the amount our customer should receive from a payer if terms of the applicable contract with the payer and patient policies are followed. Over time,we compare these amounts with the actual payments collected to help identify which payers, types of medical treatments and patients representvarious levels of payment risk for a customer. Using proprietary algorithms and analytics, we consider actual reimbursement patterns to predict thepayment risk associated with a customer’s claims to its payers, and we then direct increased attention and time to the riskiest accounts.•Identifying Alternative Payment Sources. We use various methods to find payment sources for uninsured patients and reimbursement for servicesnot covered by payers. Our patient financial screening technology and methodologies often identify federal, state or private grant sources to helppay for healthcare services. These techniques are designed to ease the financial burden on uninsured or underinsured patients, increase thepercentage of patient bills that are actually paid, and improve the total amount of reimbursement received by our customers.•Employing Proprietary Technology and Algorithms. We employ a variety of proprietary data analytics and algorithms. For example, we identifypatient accounts with financial risk by applying proprietary analysis techniques to the data we have collected. Our systems are designed tostreamline work processes through the use of proprietary algorithms that focus revenue cycle staff effort on those accounts deemed to have thegreatest potential for improving net revenue yield or charge capture. We adjust our proprietary predictive algorithms to reflect changes in payer andpatient behavior based upon the knowledge we obtain from our entire customer base. As new customers are added and payer and patient behaviorchanges, the information we use to create our algorithms expands, increasing the accuracy, reliability and value of such algorithms.•Using Analytical Capabilities and Operational Excellence. We draw on the experience that we have gained from working with some of the besthealthcare provider systems in the United States to train our customers’ staff about new and innovative RCM practices. We use sophisticatedanalytical procedures to identify specific opportunities to improve business processes.•Increasing Charge Capture. We are able to help our customers increase their charge capture by implementing optimization techniques and relatedprocesses. We use sophisticated analytics software to help improve the accuracy of claims filings and the resolution of disputed claims from payers.We also overlay a range of capabilities designed to reduce missed charges, improve the clinical/reimbursement interface and produce bills thatcomply with payer requirements and applicable healthcare regulations.•Leveraging our Shared Services Centers. We help our customers increase their revenue cycle efficiency by implementing improved practices,streamlining work flow processes and outsourcing aspects of their revenue cycle operations to our shared services centers. Examples of services thatcan be completed at our shared services centers in the United States and India include pre-registration, medical transcription, cash3posting, reconciliation of payments to billing records, and patient and payer follow-up. By leveraging the economies of scale and experience of ourshared services centers, we believe that we offer our customers better quality services at a lower cost.We believe that these techniques are enhanced by our proprietary and integrated technology, management experience and well-developed processes.Our proprietary technology applications include workflow automation and direct payer connection capabilities that enable revenue cycle staff to focus onproblem accounts rather than on manual tasks, such as searching payer websites for insurance and benefits verification for all patients. We employtechnology that identifies and isolates specific cases requiring review or action, using the same interface for all users, to automate a host of tasks thatotherwise can consume a significant amount of staff time. Our proprietary technology enhances the ability of our customers' revenue cycle staff to improvetheir interaction with patients. We use real-time feedback from our customers to improve the functionality and performance of our technology and processesand incorporate these improvements into our service offerings on a regular basis. We strive to apply operational excellence throughout our customers' entirerevenue cycle.Physician Advisory Services OfferingOur PAS offering provides concurrent level of care billing classification reviews, as well as retrospective chart audits to assist hospitals in properlybilling payers for selected services. These services complement our RCM offering and our ability to provide our customers end-to-end management services,and, accordingly, some of our RCM customers are also customers of our physician advisory services offering. According to the policies of the Centers forMedicare & Medicaid Services, or CMS, the decision to classify a patient as an in-patient or out-patient observation case for billing purposes is based oncomplex medical judgment that can only be made after the physician has considered a number of factors, including the patient’s medical history and currentmedical needs, the severity of signs and symptoms, the medical predictability of adverse events and the patient’s anticipated length of stay. Using our secureweb portal, hospital customers transmit pertinent data about the case at hand to our trained physicians, who then leverage our proprietary diagnosisguidelines and the extensive information within our knowledge database to reach an informed billing classification judgment, which we then provide to ourcustomers as a recommendation.We also provide customers with retrospective appeal management service support for both governmental and commercial payers. Our physiciansconduct detailed retrospective reviews of medical records to identify medical necessity for hospital services and the required documentation to appropriatelysupport an appeal.We believe that our PAS offering provides our customers with a number of operational benefits, such as•direct physician to physician contact,•improved service levels, and•real-time reporting and analytics.Business UpdateIn December 2015, we announced a long-term strategic partnership with Ascension Health Alliance, the parent of our largest customer and thenation’s largest Catholic and non-profit health system, and TowerBrook Capital Partners, or TowerBrook, an investment management firm, which transactionwas completed on February 16, 2016. As part of the transaction, we amended and restated our Master Professional Services Agreement, or A&R MPSA, withAscension Health, or Ascension, effective February 16, 2016 with a term of ten years. Pursuant to the A&R MPSA and with certain limited exceptions, we willbecome the exclusive provider of revenue cycle management services and PAS with respect to acute care services provided by the hospitals affiliated withAscension that execute supplement agreements with us. In addition, at the close of the transaction, we issued to TCP-ASC ACHI Series LLLP, a limitedliability limited partnership jointly owned by Ascension Health Alliance and investment funds affiliated with TowerBrook, or the Investor: (i) 200,000 sharesof our 8.00% Series A Convertible4Preferred Stock, par value $0.01 per share, or the Series A Preferred Stock, for an aggregate price of $200 million and (ii) a warrant with a term of ten years toacquire up to 60 million shares of our common stock, par value $0.01 per share, or common stock, at an exercise price of $3.50 per share, on the terms andsubject to the conditions set forth in the Warrant Agreement, or the Warrant. The Series A Preferred Stock is immediately convertible into shares of commonstock. We refer herein to the foregoing transactions consummated on February 16, 2016 with the Investor and Ascension as the "Transactions".We expect this long-term strategic partnership to expand our relationship with Ascension, grow our overall business, and improve our ability to wincustomers outside of the Ascension hospital base. Under the A&R MPSA, our RCM services for both Ascension hospitals that we currently service andAscension hospitals that we intend to service will be transitioning to an outsourced business model, whereby a significant number of Ascension's revenuecycle employees will become our employees as we begin implementing the A&R MPSA and providing our services to Ascension hospitals over a three yearperiod. As a result of the implementation of an outsourced business model in connection with the A&R MPSA, we expect to expand our operations in theUnited States and off shore and intend to invest in technology, facilities and talent to support our anticipated growth. Such outsourced business model willrequire the transition of the non-payroll related expenses supporting Ascension's revenue cycle operations to direct expenses of Accretive. These transitionednon-payroll expenses have historically been managed by our infused management staff but remained on the hospitals’ financial records. This new in-housecapability of managing these non-payroll related expenses will allow us to pursue new business opportunities which require an outsourced business model.We believe the ten year term of the A&R MPSA, together with the significant investment in Accretive by Ascension, our largest customer, will provide ourbusiness with stability and growth. In addition, our management team will benefit from the oversight provided by having TowerBrook involved as a strategicinvestor.Market OpportunityThe market for our service offerings consists primarily of multi-hospital systems and other healthcare providers in the United States. We believe thatmacroeconomic, regulatory and healthcare industry conditions will continue to impose financial pressures on healthcare providers and will increase theimportance of managing their revenue cycle operations effectively and efficiently. New reimbursement models in the healthcare industry measure bothfinancial and clinical performance metrics, and increasingly shift economic risk of clinical outcomes to providers. We believe our integrated revenue cycleoffering can help providers adapt to, and improve reimbursement levels under, such risk-based compensation structures.SegmentsAll of our significant operations are organized around the single business of providing end-to-end management services of revenue cycle operations forU.S.-based hospitals and other medical services providers.We view our operations and manage our business as one operating and reporting segment. All of our net services revenue and trade accountsreceivable are derived from healthcare providers domiciled in the United States. The information about our business should be read together with ourconsolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. See Note 11, Segments and CustomerConcentrations, to our consolidated financial statements for information regarding our segment and customer concentrations.CustomersOur customers typically are single or multi-hospital healthcare systems, including faith-based healthcare systems, community healthcare systems,academic medical centers and their respective affiliated ambulatory clinics and physician practice groups, certain of which have common affiliations to largerumbrella healthcare organizations that are also parties to our customer contracts with their respective affiliates. We seek to develop strategic, long-termrelationships with our customers and focus on providers that we believe understand the value of our operating model5and have demonstrated success in both the provision of healthcare services and the ability to achieve financial and operational results.Customer AgreementsWe generally provide our RCM offering pursuant to managed services agreements with our customers. In rendering our services, we must comply withcustomer policies and procedures regarding charity care, personnel, data security, compliance and risk management, as well as applicable federal, state andlocal laws and regulations.Our managed services agreements with our RCM customers typically span three to five years. After the initial term of the agreement, many of ourmanaged services agreements automatically renew unless terminated by either party upon prior written notice.In general, our RCM agreements provide that:•we are required to staff a sufficient number of our own employees on each customer’s premises and provide the technology necessary to implementand manage our services;•our management and staff work cooperatively with our customers’ management and staff to achieve mutually specified objectives;•we earn performance-based fees that are tied to the achievement of financial benchmarks related to increases in customer revenues and/or reductionsin operating costs;•the parties provide representations and indemnities to each other; and•in the event of a material breach, the non-breaching party may terminate the agreement if such breach is not cured.Our agreements for physician advisory services generally vary in length between one and three years. Generally, the agreements automatically renewafter their initial term unless terminated by either party upon prior written notice. Customers pay a contractually negotiated fee for this service on a per-usebasis.Sales and MarketingOur new business opportunities are generated through a combination of high-level industry contacts of members of our senior management team andsystematic relationship building by a team of senior sales executives. Our sales and marketing process generally begins by engaging senior executives of theprospective hospital or healthcare system, typically followed by our assessment of the prospect’s existing operations, and a review of the findings. We beginnegotiations with a standardized contract that is customized as necessary after collaborative discussions of operational and management issues and ourproposed working relationship. Our sales process for RCM managed services agreements typically lasts six to 18 months from the introductory meeting to theagreement’s execution, while our sales process for our physician advisory services offering typically lasts three to four months.TechnologyTechnology DevelopmentOur technology development organization operates out of various facilities in the United States and India. We are increasing the amount of resourcesthat we invest in the improvement of our technology in order to enhance the services that we provide our customers. All customer sites run the same base setof code. We use a beta-testing environment to develop and test new technology offerings at one or more customers, while keeping the rest of our customerson production-level code.6Our applications are deployed on a highly-scalable architecture based upon Microsoft and other industry leading platforms. We offer a commonexperience for end-users and believe the consistent look and feel of our applications allows our customers and staff to use our software suite quickly andeasily.We devote substantial resources to our development efforts and plan at an annual, bi-annual and quarterly release level. We employ a structured systemto assess the impact that potential new technologies or enhancements will have on net services revenue, costs, efficiency and customer satisfaction. Theresults of this analysis are evaluated in conjunction with our overall corporate goals when making development decisions. In addition to our technologydevelopment team, our operations personnel play an integral role in setting technology priorities in support of their objective of keeping our softwareoperating 24 hours a day, seven days a week.Technology Operations and SecurityOur applications are hosted in data centers located in Alpharetta, Georgia; Philadelphia, Pennsylvania; and Salt Lake City, Utah and our internalfinancial application suite is hosted in a data center in Minneapolis, Minnesota. These data centers are operated for us by third parties and are compliant withthe Statement on Standards for Attestation Engagements, or SSAE, No. 16, Reporting on Controls at a Service Organization (Service Organization Controls1). Our development, testing and quality assurance environments are operated from the third-party data centers in Alpharetta, Georgia and Philadelphia,Pennsylvania, with a separate server room in our Chicago, Illinois office. We have agreements with our hardware and system software suppliers for support24 hours a day, seven days a week. Our operations personnel also use our resources located in our other U.S. facilities, as well as our India facilities.Customers use high-speed internet connections or private network connections to access our business applications. We utilize commercially availablehardware and a combination of custom-developed and commercially available software. We designed our primary application in this manner to permitscalable growth. For example, database servers can be added without adding web servers, and vice versa.Databases are backed-up frequently by automatically shipping log files with accumulated changes to separate sets of back-up servers. In addition toserving as a back-up, these log files update the data in our online analytical processing engine, enabling the data to be more current than if only refreshedovernight. Data and information regarding our customers’ patients is encrypted when transmitted over the internet or traveling off-site on portable media suchas laptops or backup tapes.Customer system access requests are load-balanced across multiple application servers, allowing us to handle additional users on a per-customer basiswithout application changes. System utilization is monitored for capacity planning purposes. We believe that this architecture enables us to scale ouroperations effectively and efficiently.Our software interacts with our customers’ software through a series of real-time and batch interfaces. We do not require changes to the customer’s corepatient care delivery or financial systems. Instead of installing hardware or software in customer locations or data centers, we specify the information that acustomer needs to extract from its existing systems in order to interface with our systems. This methodology enables our systems to operate with manycombinations of customer systems, including custom and industry-standard implementations. We have successfully integrated our systems with older andnewer systems, with package and custom systems and with major industry-standard products and solutions.When these interfaces are in place, we provide an application suite across the hospital revenue cycle. For our purposes, the revenue cycle starts when apatient registers for future service or arrives at a hospital or clinic for unscheduled service, and ends when the hospital has collected all the appropriaterevenue from all possible sources. Thus, we provide eligibility, address validation, skip tracing, charge capture, patient and payer follow-up, analytics andtracking, charge master management, contract modeling, contract "what if" analysis, collections and other functions throughout the customer’s revenue cycle.Since our databases run on generally available hardware and software, we are able to use standard applications to develop, maintain and monitor oursolutions. Databases for one or more customers can run on a single database server with disk storage being provided from a shared storage area7network, or SAN, with physical separation maintained between customers. In the event of a server failure, we have maintenance contracts in place that requirethe service provider to have the server back on-line in four hours or less, or we move the customer processing to alternate servers. Our databases and serversare backed-up in full on a weekly basis and undergo incremental back-ups nightly. The SAN is configured as a redundant array of inexpensive disks, orRAID, which protects against disk failures having an impact on our operations. Database log files are stored separately from database files to reduce incidentsof data loss. Data and information regarding our customers' patients is encrypted when at rest, when transmitted over the internet and when traveling off-siteon portable media such as laptops or backup tapes.In the event that a combination of events causes a system failure, we typically can isolate the failure to one or a small number of customers. We believethat no combination of failures by our systems can impact a customer’s ability to deliver patient care.Our third-party data centers are designed to withstand many catastrophic events such as blizzards and hurricanes. To protect against a catastrophicevent in which our primary data center is completely destroyed and service cannot be restored within a few days, we store backups of our systems anddatabases off-site. In the event that we are required to move operations to a different data center, we would re-establish operations by provisioning newservers, restoring data from the off-site backups and re-establishing connectivity with our customers’ host systems. Because our systems are web-based, nochanges would need to be made on customer workstations, and customers would be able to reconnect as our systems became available again.We monitor the response time of our application in a number of ways. We monitor the response time of individual transactions by customer and placemonitors inside our operations and at key customer sites to run synthetic transactions that demonstrate our systems’ end-to-end responsiveness. Our hostingprovider reports on responsiveness server-by-server and identifies potential future capacity issues. In addition, we survey key customers regarding systemresponse time to make sure customer-specific conditions are not impacting performance of our applications.We dedicate significant resources to protecting our customers’ confidential and protected health information, or PHI. Our security strategy employsvarious practices and technologies to control, audit and protect access to sensitive information. We received, and have maintained since January 2013, acertification status from the Health Information Trust Alliance, or HITRUST. HITRUST is a healthcare industry group focused on identifying a prescriptiveset of information technology controls that are based on standards and regulations relevant to the healthcare industry. HITRUST certification is aligned withISO 27001 and ISO 27002. Our HITRUST certification validates our continued commitment to compliance with the Health Insurance Portability andAccountability Act of 1996, as amended, and the regulations that have been issued under it, such as the Health Information Technology for Economic andClinical Health Act, or HITECH Act, or HITECH, and OMNIBUS regulations, which we collectively refer to as HIPAA, and to various states’ security andprivacy laws regarding the creation, access, storage or exchange of personal health and financial information. Our HITRUST certification status also signifiesthat we exhibit and are able to maintain high security standards for the management and protection of electronic PHI.Proprietary Software SuitesRevenue Cycle Management. Our integrated suite of RCM technology provides a layer of analytics, rules processing and workflow capabilities thatinterface with provider systems to optimize process efficiency and effectiveness. These technologies power the detection of defects on patient accounts andenable staff workflow at point of service areas, customer sites and our shared service centers.•"AHtoAccess" powers workflow in customer central business offices and at our scaled shared service centers for pre-registration, financial clearance, andfinancial counseling. The platform processes patient accounts through proprietary rules engines tuned to identify defects in demographic data,authorization processes, insurance benefits and eligibility and medical necessity. Our rules engines in AHtoAccess are also used to calculate patientbalance estimations and prior balance accounts receivables. For the uninsured, the platform8helps staff triage patients to find coverage for their visit. Our technology enables staff to work on an exception basis eliminating the need for manualintervention on accounts with no exceptions identified.•"AHtoLink" delivers all of the insight and defect detection capabilities of our proprietary rules engines in real-time to point of service emergencydepartment and registration areas within the hospitals and clinics. When defects or inconsistent data are detected in the data entry or registrationprocess, users receive targeted messages alerting them to resolve the issue while the patient is still in front of them.•"AHtoContact," our patient contact application, provides the workflow and data for patient contact center representatives. It enables effective financialdiscussions with patients on outstanding balances. The platform is integrated in to our call center, call-routing, auto-dialer capabilities and facilitatesimproved outcomes through propriety process and technology approaches.•"AHtoContract," our proprietary contract modeling platform, is used to accurately calculate the maximum allowed reimbursement for each claim basedupon models of the hospital’s contract with each payer. This platform is used to provide insight into the health of payer contracts and to power portionsof the workflow tools described above.•"AHtoAnalytics", our web-based reporting and analytics platform, produces over 300 proprietary reports derived from the financial, process andproductivity data that we accumulate as a result of our services, which enable us to monitor and identify areas for improvement in the efficacy of ourrevenue cycle management services.•"AHtoDecision", for which implementations began in January 2016, classifies defects in a proprietary nomenclature and distributes data to back endteams for follow up and resolution according to shared standard operating processes. Defects will be identified and noted on accounts as they occur.The platform, along with our "Yield-Based Follow Up" application, is designed to power customer patient financial services departments and ourshared services.These propriety technology applications run on an integrated platform built on a modern event driven architecture and rules engines that allow real-time integration of systems and operational workflows.Physician Advisory Services. Our proprietary PAS tools are designed to assist our customers in the initiation of a service request by our physicianadvisory team. Our platform allows for the electronic submission, tracking, reviewing and auditing of patient cases referred to us. The PAS portal environmentis established as a secure site that enables us to receive patient records from case managers and route them to our physicians for review. This workflow issupported by an analytics engine within the web portal that provides our customers the ability to improve their compliance and workflow with our real timereporting, dashboards and worklists.Value-Based Reimbursement. Our proprietary technology within our value-based reimbursement, or VBR, capability includes a secure web-basedworkflow application that is designed to enable patient engagement staff, revenue cycle analysts, and physician/hospital care teams to monitor and managegaps identified by our proprietary rules engines. Our Quality, Revenue, and Measurement Coding rules engines represent a foundational framework whichleverages a central data warehouse of aggregated data from disparate sources. Gaps stemming from these rules engines are presented in a prioritized and user-friendly manner through workflow applications that drive operational follow up and management. Our web-based application is divided across PatientOutreach, Point of Care and Reconciliation interfaces to allow for targeted resolution within operational support models across the revenue cycle. PatientOutreach leverages an auto dialer and prioritized work list to enable both proactive and reactive engagement with patients who are unscheduled, scheduled,or discharged. The Point of Care interface and report capabilities will provide actionable insights to help physicians achieve outcomes defined in value-based contracts. The Reconcile & Analyze tool allows for reporting, analysis and resolution of revenue gaps across the revenue cycle continuum. All threeinterfaces are supported by dashboards and analytics which enable integrated reporting and root cause analysis.9CompetitionThe market for our solutions is highly competitive and we expect competition to intensify in the future. We believe that competition for the services weprovide is based primarily on the following factors: •knowledge and understanding of the complex healthcare payment and reimbursement system in the United States;•a track record of delivering revenue improvements and efficiency gains for hospitals and healthcare systems;•predictable and measurable results;•the ability to deliver a solution that is fully-integrated along each step of a hospital’s revenue cycle operations;•cost-effectiveness, including the breakdown between up-front costs and pay-for-performance incentive compensation;•reliability, simplicity and flexibility of our technology platform;•understanding of the healthcare industry’s regulatory environment; and•sufficient and scalable infrastructure and financial stability.We also believe that the following aspects of our business model differentiate us from our competitors:•we focus on performance-based compensation as a way to share in the economic value that we help create for our customers;•we focus on optimizing our customers’ entire, end-to-end revenue cycle process, which we believe is more advantageous than models that merelyfocus on certain aspects or individual sub-processes within the revenue cycle;•our offering integrates talented personnel with our proven business methods augmented by our proprietary technology; and•we have extensive knowledge and service offerings that are specialized to help faith-based and other non-profit organizations deliver on their coremission of providing healthcare to their patients.We believe that we compete effectively based upon all of these criteria, although our ability to acquire new customers has been and may continue to beadversely effected by unfavorable publicity arising from the lawsuit with the Minnesota Attorney General that was settled in July 2012 and our restatement ofour previously issued consolidated financial statements, or the Restatement.While we do not believe any single competitor delivers services in the same integrated manner as our revenue cycle management offering provides, weface competition from various sources. The internal RCM staffs of hospitals, which historically have performed the functions addressed by our services,compete with us. Hospitals that previously have made investments in internally developed solutions sometimes choose to continue to rely on their owninternal RCM staff.We also compete with several categories of external market participants, most of which focus on specific components of hospital revenue cycle.External market participants include: 10•software vendors and other technology-supported RCM business process outsourcing companies;•traditional consultants; and•information technology outsourcers.These types of external participants also compete with us in the field of physician advisory services. In addition, the commercial payer community canprovide information or services that are intended to assist providers in transitioning to a value-based reimbursement environment, and thus we indirectlycompete with those commercial payers.Although we believe that there are barriers to replicating our end-to-end RCM solution, we expect competition to intensify in the future. Othercompanies may develop superior or more economical service offerings that healthcare providers could find more attractive than our offerings. Moreover, theregulatory landscape may shift in a direction that is more strategically advantageous to existing and future competitors.Government RegulationThe customers we serve are subject to a complex array of federal and state laws and regulations. These laws and regulations may change rapidly andunpredictably, and it is frequently unclear how they apply to our business. We devote significant efforts, through training of personnel and monitoring, toestablish and maintain compliance with all regulatory requirements that we believe are applicable to our business and the services we offer.Government Regulation of Health InformationPrivacy and Security Regulations. HIPAA contains substantial restrictions and requirements with respect to the use and disclosure of an individual'sPHI. HIPAA prohibits a covered entity from using or disclosing an individual’s PHI unless the use or disclosure is authorized by the individual or isspecifically required or permitted under HIPAA. Under HIPAA, covered entities must establish administrative, physical and technical safeguards to protectthe confidentiality, integrity and availability of electronic PHI maintained or transmitted by them or by others on their behalf.HIPAA applies to covered entities such as healthcare providers that engage in HIPAA-defined standard electronic transactions, health plans andhealthcare clearinghouses. In February 2009, HIPAA was amended by the HITECH Act to impose certain of the HIPAA privacy and security requirementsdirectly upon "business associates" that perform functions on behalf of, or provide services to, certain covered entities. Most of our customers are coveredentities and we are a business associate to many such customers under HIPAA as a result of our contractual obligations to perform certain functions on behalfof, and provide certain services to, those customers. As a business associate, we sometimes also act as a clearinghouse in performing certain functions for ourcustomers. In order to provide customers with services that involve the use or disclosure of PHI, HIPAA requires our customers to enter into business associateagreements with us.Such agreements must, among other things, provide adequate written assurances: •as to how we will use and disclose the PHI;•that we will implement reasonable administrative, physical and technical safeguards to protect such information from misuse;•that we will enter into similar agreements with our agents and subcontractors that have access to the information;•that we will report security incidents and other inappropriate uses or disclosures of the information; and11•that we will assist the customer with certain of its duties under HIPAA.Transaction Requirements. In addition to privacy and security requirements, HIPAA also requires that certain electronic transactions related tohealthcare billing be conducted using prescribed electronic formats. For example, claims for reimbursement that are transmitted electronically to payers mustcomply with specific formatting standards, and these standards apply whether the payer is a government or a private entity. We are contractually required tostructure and provide our services in a way that supports our customers’ HIPAA compliance obligations. On October 1, 2015, the International Classificationof Diseases 9, or ICD-9, which was used to report medical diagnoses and in-patient procedures was replaced by International Classification of Diseases 10, orICD-10. ICD-10 affects coding for all covered entities, is significantly more complex than ICD-9, and has required system and business changes throughoutthe healthcare industry. We are working collaboratively with our customers to implement the new code sets.Data Security and Breaches. In recent years, there have been well-publicized data breach incidents involving the improper dissemination of personalhealth and other information of individuals, both within and outside of the healthcare industry. Many states have responded to these incidents by enactinglaws requiring holders of personal information to maintain safeguards and to take certain actions in response to data breach incidents, such as providingprompt notification of the breach to affected individuals and government authorities. In many cases, these laws are limited to electronic data, but states areincreasingly enacting or considering stricter and broader requirements. Under the HITECH Act and its implementing regulations, business associates are alsorequired to notify covered entities, which in turn are required to notify affected individuals and government authorities of data security breaches involvingunsecured PHI. In addition, the U.S. Federal Trade Commission, or FTC, has prosecuted some data breach cases as unfair and deceptive acts or practices underthe Federal Trade Commission Act, or FTC Act. We have implemented and maintain physical, technical and administrative safeguards intended to protect allpersonal data, and have processes in place to assist us in complying with applicable laws and regulations regarding the protection of this data and properlyresponding to any security incidents.State Laws. In addition to HIPAA, most states have enacted patient confidentiality laws that protect against the unauthorized disclosure of confidentialmedical information, and many states have adopted or are considering further legislation in this area, including privacy safeguards, security standards anddata security breach notification requirements. Such state laws, if more stringent than HIPAA requirements, are not preempted by the federal requirements,and we must comply with them even though they may be subject to different interpretations by various courts and other governmental authorities.Other Requirements. In addition to HIPAA, numerous other state and federal laws govern the collection, dissemination, use, access to andconfidentiality of individually identifiable health and other information and healthcare provider information. The FTC has issued guidance for, and severalstates have issued or are considering new regulations to require, holders of certain types of personally identifiable information to implement formal policiesand programs to prevent, detect and mitigate the risk of identity theft and other unauthorized access to or use of such information. Further, federal and statelegislation has been proposed, and through rule making or executive action, several states have taken action, to restrict or discourage the disclosure ofmedical or other personally identifiable information to individuals or entities located outside of the United States.Government Regulation of ReimbursementOur customers are subject to regulation by a number of governmental agencies, including those that administer the Medicare and Medicaid programs.Accordingly, our customers are sensitive to legislative and regulatory changes in, and limitations on, the government healthcare programs and changes inreimbursement policies, processes and payment rates. During recent years, there have been numerous federal legislative and administrative actions that haveaffected government programs, including adjustments that have reduced or increased payments to physicians and other healthcare providers and adjustmentsthat have affected the complexity of our work. For example, the Patient Protection and Affordable Care Act of 2010, or ACA, may reduce reimbursement forsome healthcare providers while increasing reimbursement for others including primary care physicians. In addition, the ACA mandates the implementationof various programs and value and quality-based reimbursement incentives that may12impact the amount of reimbursement for our customers. For example, the adjustment related to the Medicare Value-Based Purchasing Program will increasefrom 1.5% in 2015 to 2.0% in 2017 and the adjustment related to the Hospital Readmission Reduction Program increased from 1.0% in 2013 to 3.0% in 2015and applies to an increased number of conditions. It is possible that the federal or state governments will implement additional reductions, increases orchanges in reimbursement in the future under government programs that adversely affect our customer base or increase the cost of providing our services. Anysuch changes could adversely affect our own financial condition by reducing the reimbursement rates of our customers.Fraud and Abuse LawsA number of federal and state laws, generally referred to as fraud and abuse laws, apply to healthcare providers, physicians and others that make, offer,seek or receive referrals or payments for products or services that may be paid for through any federal or state healthcare program and in some instances anyprivate program. Given the breadth of these laws and regulations, they may affect our business, either directly or because they apply to our customers. Theselaws and regulations include:Anti-Kickback Laws. There are numerous federal and state laws that govern patient referrals, physician financial relationships, and inducements tohealthcare providers and patients. The federal healthcare anti-kickback law prohibits any person or entity from offering, paying, soliciting or receivinganything of value, directly or indirectly, for the referral of patients covered by Medicare, Medicaid and certain other federal healthcare programs or theleasing, purchasing, ordering or arranging for or recommending the lease, purchase or order of any item, good, facility or service covered by these programs.Courts have construed this anti-kickback law to mean that a financial arrangement may violate this law if any one of the purposes of an arrangement is toinduce referrals of federal healthcare programs, patients or business, regardless of whether there are other legitimate purposes for the arrangement. There areseveral limited exclusions known as safe harbors that may protect certain arrangements from enforcement penalties although these safe harbors tend to bequite narrow. Penalties for federal anti-kickback violations can be severe, and include imprisonment, criminal fines, civil money penalties with tripledamages and exclusion from participation in federal healthcare programs. Anti-kickback law violations also may give rise to a civil False Claims Act, or FCA,action, as described below. Many states have adopted similar prohibitions against kickbacks and other practices that are intended to induce referrals, andsome of these state laws are applicable to all patients regardless of whether the patient is covered under a governmental health program or private health plan.False or Fraudulent Claim Laws. There are numerous federal and state laws that forbid submission of false information or the failure to discloseinformation in connection with the submission and payment of provider claims for reimbursement. In some cases, these laws also forbid abuse of existingsystems for such submission and payment, for example, by systematic over treatment or duplicate billing of the same services to collect increased or duplicatepayments.In particular, the federal FCA prohibits a person from knowingly presenting or causing to be presented a civil false or fraudulent claim for payment orapproval by an officer, employee or agent of the United States. The FCA also prohibits a person from knowingly making, using, or causing to be made or useda false record or statement material to such a claim. The FCA was amended on May 20, 2009 by the Fraud Enforcement and Recovery Act of 2009, or FERA.Following the FERA amendments, the FCA’s "reverse false claim" provision also creates liability for persons who knowingly conceal an overpayment ofgovernment money or knowingly and improperly retain an overpayment of government funds. In addition, ACA requires providers to report and returnoverpayments and to explain the reason for the overpayment in writing within 60 days of the date on which the overpayment is identified, and the failure todo so is punishable under the FCA. Violations of the FCA may result in treble damages, significant monetary penalties, and other collateral consequencesincluding, potentially, exclusion from participation in federally funded healthcare programs. The scope and implications of the FCA amendments have yet tobe fully determined or adjudicated and as a result it is difficult to predict how future enforcement initiatives may impact our business.In addition, under the Civil Monetary Penalty Act of 1981, the Department of Health and Human Services Office of Inspector General has the authorityto impose administrative penalties and assessments against any person,13including an organization or other entity, who knowingly presents, or causes to be presented, to a state or federal government employee or agent certain falseor otherwise improper claims.Stark Law and Similar State Laws. The Ethics in Patient Referrals Act, known as the Stark Law, prohibits certain types of referral arrangementsbetween physicians and healthcare entities and thus potentially applies to our customers. Specifically, under the Stark Law, absent an applicable exception, aphysician may not make a referral to an entity for the furnishing of designated health service, or DHS, for which payment may be made by the Medicareprogram if the physician or any immediate family member has a financial relationship with that entity. Further, an entity that furnishes DHS pursuant to aprohibited referral may not present or cause to be presented a claim or bill for such services to the Medicare program or to any other individual or entity.Violations of the statute can result in civil monetary penalties and/or exclusion from federal healthcare programs. Stark Law violations also may give rise to acivil FCA action. Any such violations by, and penalties and exclusions imposed upon, our customers could adversely affect their financial condition and, inturn, could adversely affect our own financial condition.Laws in many states similarly forbid billing based on referrals between individuals and/or entities that have various financial, ownership or otherbusiness relationships. These laws vary widely from state to state.Laws Limiting Assignment of Reimbursement ClaimsVarious federal and state laws, including Medicare and Medicaid, forbid or limit assignments of claims for reimbursement from government fundedprograms. Some of these laws limit the manner in which business service companies may handle payments for such claims and prevent such companies fromcharging their provider customers on the basis of a percentage of collections or charges. We do not believe that the services we provide our customers resultin an assignment of claims for the Medicare or Medicaid reimbursements for purposes of federal healthcare programs. Any determination to the contrary,however, could adversely affect our ability to be paid for the services we provide to our customers, require us to restructure the manner in which we are paid,or have further regulatory consequences.Emergency Medical Treatment and Active Labor ActThe federal Emergency Medical Treatment and Active Labor Act, or EMTALA, was adopted by the U.S. Congress in response to reports of a widespreadhospital emergency room practice of "patient dumping." At the time of EMTALA’s enactment, patient dumping was considered to have occurred when ahospital capable of providing the needed care sent a patient to another facility or simply turned the patient away based on such patient’s inability to pay forhis or her care. EMTALA imposes requirements as to the care that must be provided to anyone who seeks care at facilities providing emergency medicalservices. In addition, CMS of the U.S. Department of Health and Human Services has issued final regulations clarifying those areas within a hospital systemthat must provide emergency treatment, procedures to meet on-call requirements, as well as other requirements under EMTALA. Sanctions for failing to fulfillthese requirements include exclusion from participation in the Medicare and Medicaid programs and civil monetary penalties. In addition, the law createsprivate civil remedies that enable an individual who suffers personal harm as a direct result of a violation of the law to sue the offending hospital for damagesand equitable relief. A hospital that suffers a financial loss as a direct result of another participating hospital’s violation of the law also has a similar right.EMTALA generally applies to our customers, and we assist our customers with the intake of their patients. Although we believe that our customers’medical screening, stabilization and transfer practices are in compliance with the law and applicable regulations, we cannot be certain that governmentalofficials responsible for enforcing the law or others will not assert that we or our customers are in violation of these laws nor what obligations may be imposedby regulations to be issued in the future.Regulation of Debt Collection ActivitiesThe federal Fair Debt Collection Practices Act, or FDCPA, regulates persons who regularly collect or attempt to collect, directly or indirectly, consumerdebts owed or asserted to be owed to another person. Certain of our14accounts receivable activities may be deemed to be subject to the FDCPA. The FDCPA establishes specific guidelines and procedures that debt collectorsmust follow in communicating with consumer debtors, including the time, place and manner of such communications. Further, it prohibits harassment orabuse by debt collectors, including the threat of violence or criminal prosecution, obscene language or repeated telephone calls made with the intent to abuseor harass. The FDCPA also places restrictions on communications with individuals other than consumer debtors in connection with the collection of anyconsumer debt and sets forth specific procedures to be followed when communicating with such third parties for purposes of obtaining location informationabout the consumer. In addition, the FDCPA contains various notice and disclosure requirements and prohibits unfair or misleading representations by debtcollectors. Finally, the FDCPA imposes certain limitations on lawsuits to collect debts against consumers.Debt collection activities are also regulated at the state level. Most states have laws regulating debt collection activities in ways that are similar to, andin some cases more stringent than, the FDCPA. In addition, some states require companies engaged in the collection of consumer debt to be licensed. In allstates where we operate, we believe that we currently hold all required state licenses or are exempt from licensing.We are also subject to the Telephone Consumer Protection Act, or TCPA. In the process of communicating with our customers’ patients, we use avariety of communications methods. The TCPA places certain restrictions on companies that place telephone calls to consumers.The FTC has the authority to investigate consumer complaints relating to the FDCPA and the TCPA, and to initiate or recommend enforcement actions,including actions to seek monetary penalties. State officials typically have authority to enforce corresponding state laws. In addition, affected consumers maybring suits, including class action suits, to seek monetary remedies (including statutory damages) for violations of the federal and state provisions discussedabove.Regulation of Credit Card ActivitiesWe process, on behalf of our customers, credit card payments from their patients. Various federal and state laws impose privacy and information securitylaws and regulations with respect to the use of credit cards. If we fail to comply with these laws and regulations or experience a credit card security breach, ourreputation could be damaged, possibly resulting in lost future business, and we could be subjected to additional legal or financial risk as a result of non-compliance.Foreign RegulationsOur operations in India are subject to additional regulations that govern the creation, continuation and winding up of companies, as well as therelationships between the shareholders, the company, the public and the government.Intellectual PropertyWe rely upon a combination of patent, trademark, copyright and trade secret laws and contractual terms and conditions to protect our intellectualproperty rights, and have sought patent protection for aspects of our key innovations.We have been issued three U.S. patents, which expire in 2028, 2030 and 2031, and have filed seven additional U.S. patent applications aimed atprotecting the four domains of our AHtoAccess software suite: patient access, improving maximum potential reimbursement, follow-up and measurement. See"Business – Technology – Proprietary Software Suites" for more information. Legal standards relating to the validity, enforceability and scope of protectionof patents can be uncertain. We do not know whether any of our pending patent applications will result in the issuance of patents or whether the examinationprocess will require us to narrow our claims. Our patent applications may not result in the grant of patents with the scope of the claims that we seek, if at all, orthe scope of the granted claims may not be sufficiently broad to protect our products and technology. Our three granted patents or15any patents that may be granted in the future from pending or future applications may be opposed, contested, circumvented, designed around by a third partyor found to be invalid or unenforceable. Third parties may develop technologies that are similar or superior to our proprietary technologies, duplicate orotherwise obtain and use our proprietary technologies or design around patents owned or licensed by us. If our technology is found to infringe any patent orother intellectual property right held by a third party, we could be prevented from providing our service offerings and/or subjected to significant damageawards.We also rely, in some circumstances, on trade secrets to protect our technology. We control access to and the use of our application capabilities througha combination of internal and external controls, including contractual protections with employees, customers, contractors and business partners. We licensesome of our software through agreements that impose specific restrictions on our customers’ ability to use the software, such as prohibiting reverseengineering and limiting the use of copies. We also require employees and contractors to sign non-disclosure agreements and invention assignmentagreements to give us ownership of intellectual property developed in the course of working for us.Consistent with common industry practices, we sometimes utilize open source software or third party software products to meet our clients' needs.Financial Information About Geographic AreasAll of our customers are entities organized and located within the United States. We do not derive any customer revenue from countries outside theUnited States.EmployeesAs of February 10, 2016, we had approximately 3,152 full-time employees, as well as approximately 106 part-time employees. Of these employees,approximately 1,382 full-time and all part-time employees were located in the U.S., and approximately 1,770 full-time employees were located in India. Ouremployees are not represented by a labor union and we consider our current employee relations to be good.As a services business, our employees’ skills and experience are significant assets. We expend significant effort searching for individuals with extensiveexperience in healthcare or revenue process management issues in complex industries. Our less experienced employees attend training sessions. In addition,all of our employees are required to undergo mandatory compliance training, including HIPAA compliance training.Corporate InformationWe are incorporated in Delaware and were named Healthcare Services, Inc. from July 2003 until August 2009 when we changed our name to AccretiveHealth, Inc. Our principal executive offices are located at 401 North Michigan Avenue, Suite 2700, Chicago, Illinois 60611, and our telephone number is(312) 324-7820.Information AvailabilityOur Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports are availablefree of charge on our website at www.accretivehealth.com under the "Investor Relations" page as soon as reasonably practicable after such material iselectronically filed with, or furnished to, the Securities and Exchange Commission, or the SEC. The content on any website referred to in this Annual Reporton Form 10-K is not incorporated by reference into this report, unless expressly noted otherwise.16Item 1A.Risk FactorsRisks Relating to our Business and IndustryWe may not be able to achieve or maintain profitability.We incurred net losses in 2015, 2014, 2012, 2011 and 2010. We expect to report additional quarterly and annual losses in future periods, in accordancewith United States generally accepted accounting principles, or GAAP. We incurred significant costs in 2015, 2014, 2013 and 2012 including, among otherthings, costs related to exploration of strategic alternatives, legal defense, crisis management, stranded personnel and/or restructuring related to previouslysettled lawsuits filed against us as well as the Restatement, and are likely to continue to incur additional costs in connection with certain of these matters in2016. Further, in connection with the A&R MPSA, we expect to incur additional costs for investments in technology, facilities and talent to support theanticipated growth of our business. We intend to continue to increase our operating expenses associated with sales and marketing in future years in an effortto expand our business. If our revenue does not increase to offset these increases in costs, our operating results would be adversely affected. You should notconsider our historical operating results as indicative of future operating results, and we cannot assure you that we will be able to achieve or maintainprofitability in the future. Each of the risks described in this "Risk Factors" section, as well as other factors, may adversely affect our future operating results.Litigation has materially adversely affected our business, financial condition, operating results and cash flows and caused unfavorable publicity andis likely to continue to do so.We are currently and have in the past been involved in lawsuits, claims, audits and investigations, including lawsuits and investigations related to theRestatement and our business operations and practices. These lawsuits, claims, audits and investigations, which are described in "Part I – Item 3 – LegalProceedings", have resulted in, and may lead to additional, unfavorable publicity for us and may continue to materially adversely affect, our business,financial condition, operating results and cash flows in various ways, including having a disruptive effect upon the operation of our business and consumingthe time and attention of our senior management.In addition, we have incurred substantial expenses in connection with these litigation matters, including substantial fees for attorneys. Although wemaintain insurance that may provide coverage for some or all of these expenses, and we have given notice to our insurers of the claims, our insurers haveresponded by reserving their rights under the policies, including the rights to deny coverage under various policy exclusions. There is risk that the insurerswill rescind the policies, that some or all of the claims will not be covered by such policies, or that, even if covered, our ultimate liability will exceed theavailable insurance.We are unable to predict the outcome of pending legal actions. The ultimate resolutions of our pending litigation could have a material adverse effecton our financial results, financial condition or liquidity, and on the trading price of our common stock.In addition, we may become subject to future lawsuits, claims, audits and investigations that could result in the incurrence of substantial additionalexpense, subject us to significant liability, result in significant settlement payments or further divert management’s attention from our business, and therebymaterially adversely affect our business, financial condition, operating results and cash flows.If we are unable to retain our existing customers or acquire new customers, our financial condition will suffer.Our success depends in part upon the retention of our customers and our ability to acquire new customers. We derive our net services revenue primarilyfrom managed services agreements pursuant to which we receive performance-based fees. Customers can elect not to renew their managed services agreementswith us upon expiration. If a managed services agreement is not renewed for any reason, we would not derive the financial17benefits that we would expect to derive by serving that customer beyond the initial term of our managed services agreement. If a managed services agreementis terminated for any reason, including for example, if we are found to be in violation of certain federal or state laws or excluded from participating in federaland state healthcare programs such as Medicare and Medicaid, we will not receive the payments we would have otherwise anticipated receiving over the lifeof the agreement.Some of our managed services agreements require us to adhere to extensive, complex data security, network access and other institutional proceduresand requirements of our customers, and we cannot guaranty that some of our customers will not allege that we have not complied with all such proceduresand requirements. If we breach a managed services agreement or, for certain of our managed services agreements, fail to perform in accordance withcontractual service levels, we may be liable to the customer for damages, and either we or the customer may generally terminate an agreement for a materialuncured breach by the other. Any of these events could adversely affect our business, financial condition, operating results and cash flows. A healthcareorganization with multiple affiliates not affiliated with Ascension that contract with us individually under a master services agreement can also terminatetheir agreements with us if we become the subject of a formal investigation by a federal or state government authority or an administrative proceeding,criminal action or civil enforcement action is filed against us, in each case alleging we engaged in illegal conduct and such conduct is related to theprovision of services to such customer or other services of the same type for other customers, and such investigation, proceeding or action, in such customer’sreasonable opinion, is likely to result in material reputational damage to such customer. Affiliates of such customer may also terminate their agreements withus for convenience, subject to paying us a termination fee if such termination occurs within the first 30 months of contracting with us. In addition, financialissues or other changes in customer circumstances, such as a customer change in control (including as a result of increasing consolidation within thehealthcare provider industry), may cause us or the customer to seek to modify or terminate a managed services agreement. Increasing consolidation within thehealthcare provider industry may also make it more difficult for us to acquire new customers, as consolidated healthcare systems may be more likely to haveincumbent revenue cycle management providers or significant internal revenue cycle capabilities. For example, certain of our smaller customers have beenacquired by larger healthcare systems and ceased to be customers.Additionally, from time to time we have reached settlement agreements with customers which provided for the early terminations of those customers'agreements. For example, in 2015, four customers terminated their revenue cycle services agreements with us. The loss of customer agreements has adverselyaffected our operating results in 2015, 2014 and 2013, and will negatively impact our revenues and/or operating results through 2018 when the initial termunder the last of these agreements would have reached its normal expiration.The markets for our RCM service offering may develop more slowly than we expect and some potential customers for our services have been and mayin the future be deterred by the Restatement, and other legal proceedings, and because they previously have made or in the future will make investments ininternally developed solutions and choose to continue to rely on their own internal resources, which could adversely affect our revenue and our ability toachieve or maintain our profitability.Our success depends, in part, on the willingness of hospitals, physicians and other healthcare providers to implement integrated solutions for the areasin which we provide services. Some hospitals may be reluctant or unwilling to implement our solutions for a number of reasons, including failure to perceivethe need for improved revenue cycle operations or lack of knowledge about the potential benefits our solutions provide. In addition, some potentialcustomers for our services may be deterred by the Restatement and legal proceedings that we have been involved with or may be involved with in the future.Even if potential customers recognize the need to improve revenue cycle operations, they may not select solutions such as ours because theypreviously have made or in the future will make investments in internally developed solutions and choose to continue to rely on their own internal resources.As a result, the markets for integrated, end-to-end revenue cycle management services may develop more slowly than we expect, which could adversely affectour revenue and operating results.18Our business operations currently include the collection, on behalf of our customers, of medical co-pays and other payments that are due to ourcustomers from their patients. This business practice has been perceived negatively by the public and this negative perception has adversely affected (andmay continue to adversely affect) our business, results of operations and financial condition.We currently collect, on behalf of our customers, medical co-pays and other non-defaulted payments that are due to our customers from their patients,pursuant to managed services agreements with our customers. Collection of these payments from patients may become a more significant part of our RCMservices as industry trends continue to increase patient responsibility as a percentage of total compensation to healthcare providers. This business practice,which has received widespread, unfavorable publicity as a result of lawsuits previously initiated against us, has been negatively perceived by the public andhas led us to change aspects of our business practices, made it more difficult to retain existing customers and attract new customers, extended the time it takesto enter into service agreements with new customers, and resulted in a material adverse effect on our business, results of operations and financial condition,and it may continue to do so.We operate in a highly competitive industry, and our current or future competitors may be able to compete more effectively than we do, which couldhave a material adverse effect on our business, revenue, growth rates and market share.The market for our solutions is highly competitive and we expect competition to intensify in the future. The rapid changes in the U.S. healthcare marketdue to financial pressures to reduce the growth in healthcare costs and from regulatory and legislative initiatives such as the ACA are increasing the level ofcompetition. We face competition from a steady stream of new entrants, including the internal RCM staff of hospitals, as described above, and externalparticipants. External participants that are our competitors in the revenue cycle market include software vendors and other technology-supported RCMbusiness process outsourcing companies; traditional consultants; and information technology outsourcers. These types of external participants also competewith us in the field of population health solutions and physician advisory services (which services and capabilities have been or are being integrated into ourRCM service offering). Our competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies,standards, regulations or customer requirements. We may not be able to compete successfully with these companies, and these or other competitors mayintroduce technologies or services that render our technologies or services obsolete or less marketable. Even if our technologies and services are moreeffective than the offerings of our competitors, current or potential customers might prefer competitive technologies or services to our technologies andservices. Increased competition is likely to result in pricing pressures, which could adversely affect our margins, growth rate or market share.We face a selling cycle of variable length to secure new RCM agreements, making it difficult to predict the timing of specific new customerrelationships.We face a selling cycle of variable length, typically spanning six to 18 months or longer, to secure a new managed services agreement. Even if wesucceed in developing a relationship with a potential new customer, we may not be successful in entering into a managed services agreement with thatcustomer. In addition, we cannot accurately predict the timing of entering into managed services agreements with new customers due to the complexprocurement decision processes of most healthcare providers, which often involves high-level management or board committee approvals. Consequently, wehave only a limited ability to predict the timing of specific new customer relationships. Moreover, we believe that the unfavorable publicity we received as aresult of lawsuits previously initiated against us, the Restatement, and other related legal proceedings have reduced our attractiveness to some potentialhealthcare providers and consequently, have resulted in the lengthening of the selling cycle with potential new customers.19Delayed or unsuccessful implementation of our technologies or services with our customers or implementation costs that exceed our expectationsmay harm our financial results.To implement our solutions, we work with our customer’s existing vendors, management and staff and layer our proprietary technology applications ontop of the customer’s existing patient accounting and clinical systems. Each customer’s situation is different, and unanticipated difficulties and delays mayarise such as delays in, or the inability to, obtain approvals or access rights from our customers’ vendors. If the implementation process is not executedsuccessfully or is delayed, our relationship with the customer may be adversely affected and our results of operations could suffer. Implementation of oursolutions also requires us to integrate our own employees into the customer’s operations. The customer’s circumstances may require us to devote a largernumber of our employees than anticipated, which could increase our costs and harm our financial results.Our quarterly results of operations and cash flows fluctuate as a result of many factors, some of which may be outside of our control.Our revenues fluctuate and will continue to fluctuate widely from quarter to quarter based on revenue recognition criteria under GAAP.In addition, the timing of any new customer additions is not likely to be uniform throughout the year, which can also cause fluctuations in our quarterlyresults. Operating costs are typically higher in quarters in which we add new customers because we incur expenses to implement our operating model at thosecustomers. Further, fees billable to customers under many of our managed services agreements experience fluctuations as they are tied contractually to thelevel of our customers’ cash receipts. Fees have a significant effect on our cash flows, and changes in the amount of fees can cause significant fluctuations inour quarter-to-quarter operating cash flows. Our cash flows can also be impacted by the timing of operating costs.If we lose key personnel or if we are unable to attract, hire, integrate and retain our key personnel and other necessary employees, our business couldbe harmed.Our future success depends in part on our ability to attract, hire, integrate and retain key personnel. Our future success also depends in part on thecontinued contributions of our executive officers and other key personnel, each of whom may be difficult to replace. The loss of services of any of ourexecutive officers or key personnel, or the inability to continue to attract qualified personnel could have a material adverse effect on our business,particularly as a result of our recent restructuring activities. Competition for the caliber and number of employees we require is intense. We may facedifficulty identifying and hiring qualified personnel at compensation levels consistent with our existing compensation and salary structure. In addition, weinvest significant time and expense in training each of our employees, which increases their value to competitors who may seek to recruit them. If we fail toretain our employees, we could incur significant expenses in hiring, integrating and training their replacements, and the quality of our services and ourability to serve our customers could diminish, resulting in a material adverse effect on our business.The imposition of legal responsibility for obligations related to our employees or our customers’ employees could adversely affect our business andsubject us to liability.Under our agreements with customers, we work with our customers’ employees engaged in the activities included in the scope of our services. Ourmanaged services agreements establish the division of responsibilities between us and our customers for various personnel management matters, includingcompliance with and liability under various employment laws and regulations. We could, nevertheless, be found to have liability with our customers foractions against or by employees of our customers, including under various employment laws and regulations, such as those relating to discrimination,retaliation, wage and hour matters, occupational safety and health, family and medical leave, notice of facility closings and layoffs and labor relations, aswell as similar liability with respect to our own employees, and any such liability could result in a material adverse effect on our business.20If we fail to manage our operations effectively, our business would be harmed.We have not always been fully successful in managing the expansion of our operations which has led, at times to some customer dissatisfaction andweaknesses in our operating, internal and financial controls. To manage potential future growth, we will need to hire, integrate and retain highly skilled andmotivated employees, and will need to work effectively with a growing number of customer employees engaged in revenue cycle operations. We will alsoneed to continue to improve our financial, internal and management controls, reporting systems and procedures. If we do not effectively manage ouroperations, we may not be able to execute on our business plan, respond to competitive pressures, take advantage of market opportunities, satisfy customerrequirements or maintain high-quality service offerings.Disruptions in service or damage to our shared services centers and third-party operated data centers could adversely affect our business.Our shared services centers and third-party operated data centers are essential to our business. Our operations depend on our ability to operate ourshared services centers, and to maintain and protect our applications, which are located in data centers that are operated for us by third parties. We cannotcontrol or assure the continued or uninterrupted availability of these third-party data centers. In addition, our information technologies and systems, as wellas our data centers and shared services centers, are vulnerable to damage or interruption from various causes, including (1) acts of God and other naturaldisasters, war and acts of terrorism and (2) power losses, computer systems failures, internet and telecommunications or data network failures, operator error,losses of and corruption of data and similar events. We have a business continuity plan and maintain insurance against fires, floods, other natural disastersand general business interruptions to mitigate the adverse effects of a disruption, relocation or change in operating environment at one of our data centers orshared services centers, but the situations we plan for and the amount of insurance coverage we maintain may not be adequate in every particular case. Inaddition, the occurrence of any of these events could result in interruptions, delays or cessations in service to our customers, or in interruptions, delays orcessations in the direct connections we establish between our customers and payers. Any of these events could impair or inhibit our ability to provide ourservices, reduce the attractiveness of our services to current or potential customers and adversely affect our financial condition and results of operations.In addition, despite the implementation of security measures, our infrastructure, data centers, shared services centers or systems that we interface with,including the internet and related systems, may be vulnerable to physical break-ins, hackers, improper employee or contractor access, computer viruses,programming errors, denial-of-service attacks or other attacks by third parties seeking to disrupt operations or misappropriate information or similar physicalor electronic breaches of security. Any of these can cause system failure, including network, software or hardware failure, which can result in servicedisruptions. As a result, we may be required to expend significant capital and other resources to protect against security breaches and hackers or to alleviateproblems caused by such breaches.If our security measures are breached or fail and unauthorized access is obtained to a customer’s data, our service may be perceived as not beingsecure, the attractiveness of our services to current or potential customers may be reduced, and we may incur significant liabilities.Our services involve the storage and transmission of customers’ proprietary information and protected health, financial, payment and other personalinformation of patients. We rely on proprietary and commercially available systems, software, tools and monitoring, as well as other processes, to providesecurity for processing, transmission and storage of such information, and because of the sensitivity of this information, the effectiveness of such securityefforts is very important. The systems currently used for transmission and approval of credit card transactions, and the technology utilized in credit cardsthemselves, all of which can put credit card data at risk, are determined and controlled by the payment card industry, not by us. If our security measures arebreached or fail as a result of third-party action, employee error, malfeasance or otherwise, someone may be able to obtain unauthorized access to customer orpatient data. Improper activities by third parties, advances in computer and software capabilities and encryption technology, new tools and discoveries andother events or developments may facilitate or result in a compromise or breach of our computer systems. Techniques used to obtain unauthorized access orto sabotage21systems change frequently and generally are not recognized until launched against a target, and we may be unable to anticipate these techniques or toimplement adequate preventive measures. Our security measures may not be effective in preventing these types of activities, and the security measures of ourthird-party data centers and service providers may not be adequate. If a breach of our security occurs, we could face damages for contract breach, penalties forviolation of applicable laws or regulations, possible lawsuits by individuals affected by the breach and significant remediation costs and efforts to preventfuture occurrences. In addition, whether there is an actual or a perceived breach of our security, the market perception of the effectiveness of our securitymeasures could be harmed and we could lose current or potential customers.We may be liable to our customers or third parties if we make errors in providing our services, and our anticipated net services revenue may be lowerif we provide poor service.The services we offer are complex, and we make errors from time to time. Errors can result from the interface of our proprietary technology applicationsand a customer’s existing technologies or we may make human errors in any aspect of our service offerings. The costs incurred in correcting any materialerrors may be substantial and could adversely affect our operating results. Our customers, or third parties such as our customers’ patients, may assert claimsagainst us alleging that they suffered damages due to our errors, and such claims could subject us to significant legal defense costs in excess of our existinginsurance coverage and adverse publicity regardless of the merits or eventual outcome of such claims. In addition, if we provide poor service to a customerand the customer therefore realizes less improvement in revenue yield, the incentive fee payments to us from that customer will be lower than anticipated.We offer our services in many jurisdictions and, therefore, may be subject to federal, state and local taxes that could harm our business or that wemay have inadvertently failed to pay.We may lose sales or incur significant costs should various tax jurisdictions be successful in imposing taxes on a broader range of services. Impositionof such taxes on our services could result in substantial unplanned costs, would effectively increase the cost of such services to our customers and mayadversely affect our ability to retain existing customers or to gain new customers in the areas in which such taxes are imposed.Our growing operations in India expose us to risks that could have a material adverse effect on our costs of operations.We employ a significant number of persons in India and expect to continue to add personnel in India. While there are cost and service advantages tooperating in India, significant growth in the technology sector in India has increased competition to attract and retain skilled employees and has led to acommensurate increase in compensation expense. In the future, we may not be able to hire and retain such personnel at compensation levels consistent withour existing compensation and salary structure in India. In addition, our reliance on a workforce in India exposes us to disruptions in the business, politicaland economic environment in that region. Maintenance of a stable political environment is important to our operations, and terrorist attacks and acts ofviolence or war may directly affect our physical facilities and workforce or contribute to general instability. Our operations in India require us to comply withlocal laws and regulatory requirements, which are complex and of which we may not always be aware, and expose us to foreign currency exchange rate risk.Our Indian operations may also subject us to trade restrictions, reduced or inadequate protection for intellectual property rights, security breaches and otherfactors that may adversely affect our business. Negative developments in any of these areas could increase our costs of operations or otherwise harm ourbusiness.Negative public perception in the United States regarding offshore outsourcing and proposed legislation may increase the cost of delivering ourservices.Offshore outsourcing is a politically sensitive topic in the United States. For example, various organizations and public figures in the United Stateshave expressed concern about a perceived association between offshore outsourcing providers and the loss of jobs in the United States. In addition, there hasbeen publicity about the negative experience of certain companies that use offshore outsourcing, particularly in India. Current or prospective22customers may elect to perform such services themselves or may be discouraged from transferring these services from onshore to offshore providers to avoidnegative perceptions that may be associated with using an offshore provider. Any slowdown or reversal of existing industry trends towards offshoreoutsourcing would increase the cost of delivering our services if we had to relocate aspects of our services from India to the United States where operatingcosts are higher.Legislation in the United States may be enacted that is intended to discourage or restrict offshore outsourcing. In the United States, federal and statelegislation has been proposed, and in several states enacted, to restrict or discourage U.S. companies from outsourcing their services to companies outside theUnited States. Further, through rule making or executive action, some states have imposed limitations on offshore outsourcing of administrative services forthe Medicaid program. It is possible that additional legislation could be adopted or regulatory guidance issued that would restrict U.S. private sectorcompanies that have federal or state government contracts, or that receive government funding or reimbursement, such as Medicare or Medicaid payments,from outsourcing their services to offshore service providers. Any changes to existing laws or the enactment of new legislation restricting offshoreoutsourcing in the United States may adversely affect our ability to do business, particularly if these changes are widespread, and could have a materialadverse effect on our business, results of operations, financial condition and cash flows.We have identified material weaknesses in our internal control over financial reporting which, if not corrected, could affect the reliability of ourconsolidated financial statements and have other adverse consequences.Section 404 of the Sarbanes-Oxley Act and the related SEC rules require management of certain public companies to assess the effectiveness of theirinternal control over financial reporting annually and to include in Annual Reports on Form 10-K a management report on that assessment, together with anattestation report by an independent registered public accounting firm. Under Section 404 and the SEC rules, a company cannot conclude that its internalcontrol over financial reporting is effective if there exist any material weaknesses in its financial controls. A material weakness is a deficiency, orcombination of control deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of ourannual or interim financial statements will not be prevented or detected on a timely basis.We have identified material weaknesses in our internal control over financial reporting as of December 31, 2015. These material weaknesses aredescribed in "Part II - Item 9A - Controls and Procedures" of this Annual Report on Form 10-K. We have taken and will continue to take actions to remediatethe material weaknesses and improve the effectiveness of our internal control over financial reporting. We cannot, however, assure you that we will be able tocorrect these material weaknesses in a timely manner. Any failure in the effectiveness of internal control over financial reporting, particularly if it results inmisstatements in our financial statements, could cause us to fail to meet our reporting obligations and could adversely affect investor perceptions of ourcompany. In addition, we have been required to expend significant time and resources in connection with internal control remediation, and the attention ofour management team has been diverted by such efforts.As a result of our Restatement, we face limitations in registering securities for a public offering or acquisitions, which could adversely affect ourbusiness.As a result of the Restatement and our delayed filings, we are ineligible to use "short-form" registration statements that would allow us to incorporate byreference our SEC reports into our registration statements, or to use "shelf" registration statements until we have filed all of our periodic reports in a timelymanner for a period of 12 months. This could increase the costs of selling securities publicly and could significantly delay such sales and adversely affect ourbusiness.23Our ability to use our net operating loss carryforwards may be limited.As of December 31, 2015, we had approximately $123.0 million of federal net operating loss carryforwards for U.S. income tax purposes that begin toexpire in 2033. Section 382 of the Internal Revenue Code imposes limitations on a corporation’s ability to use its net operating loss carryforwards if itexperiences an "ownership change." Similar rules and limitations may apply for state income tax purposes. In the event an "ownership change" were to occurin the future, our ability to utilize our net operating losses could be limited. If our net operating loss carryforwards are limited, and we have taxable incomewhich exceeds the available net operating loss carryforwards for that period, we would incur an income tax liability even though net operating losscarryforwards may be available in future years prior to their expiration.Risks Related to Ascension and the TransactionsHospital systems affiliated with Ascension currently account for a significant portion of our net services revenue as well as our gross cash generatedfrom contracting activities, and we have several other customers that have each accounted for 10% or more of our gross cash generated from contractingactivities in past periods. The termination or expiration of our A&R MPSA with Ascension, or any significant loss of business from our large customers,would have a material adverse effect on our business, results of operations and financial condition.Hospital systems affiliated with Ascension have accounted for a significant portion of our net services revenue each year since our formation. In 2015,2014 and 2013, net services revenue from hospitals affiliated with Ascension represented 45%, 12% and 73% of our total net services revenue, respectively,in such periods. Additionally, in 2015, 2014 and 2013, gross cash generated from customer contracting activities, as defined in "Part II - Item 6 - SelectedConsolidated Financial Data", with hospital systems affiliated with Ascension represented 59%, 53% and 42%, respectively, of our total gross cash generatedfrom contracting activities in such periods. St. John Health (an affiliate of Ascension) individually accounted for 0%,12% and 28% of our total net servicesrevenue and 14%, 12% and 7% of our gross cash generated from contracting activities in 2015, 2014 and 2013, respectively. Additionally, Columbia St.Mary’s (an affiliate of Ascension) individually accounted for 45% and 0% of our total net services revenue and 11% and 10% of our gross cash generatedfrom contracting activities in 2015 and 2014, respectively. Additionally, in 2014, Sacred Heart (also affiliate of Ascension) individually accounted for 12%of our total net services revenue and 1% of our gross cash generated from contracting activities.In light of the fact that we only recognize revenues for our RCM services upon the expiration or termination of the underlying RCM customer contract,or upon other defined events in accordance with our revenue recognition policies, we believe that gross cash generated from contracting activities is a moremeaningful measure of our significant customers in any given period than their respective contributions to consolidated revenue during such period. Ourrevenue recognition policies can result in cash flow accumulations from RCM activities over three to five years prior to a revenue recognition event, andconsolidated net revenues that are inconsistent with the cash flows from the same underlying operations. We do not believe that the loss of any of our othercustomers that accounted for greater than ten percent of our consolidated revenues in 2015, 2014 and 2013 would have a material adverse effect on ouroperations or financial results. Any of our other customers, including hospital systems affiliated with Ascension, can elect not to renew their managedservices agreements with us upon expiration. We intend to seek renewal of all managed service agreements with our customers, but cannot assure you thatany of them will be renewed or that the terms upon which they may be renewed will be as favorable to us as the terms of the initial managed servicesagreements. The termination of the A&R MPSA, the loss of any of our other large customers or their failure to renew their managed services agreements withus upon expiration, or a reduction in the fees for our services for these customers could have a material adverse effect on our business, results of operationsand financial condition.24Our agreements with Ascension and certain other customers require us to offer to such customer service fees that are at least as low as the fees wecharge any other customer receiving comparable services at comparable or lower volumes.Our A&R MPSA with Ascension requires us to offer to Ascension's affiliated hospital systems fees for our services that are at least as low as the fees wecharge any other customer receiving comparable services at lower volumes. If we were to charge lower service fees to any other customer receivingcomparable services at lower volumes, we would be obligated to charge such lower fees to the hospital systems affiliated with Ascension effective as of thedate such lower charges were first implemented for such other customer. Additionally, our RCM agreement with another customer requires us to provide thatcustomer with a gain sharing rate that is as low as the rate provided to any new customer, unless the fee arrangement with the new customer results in a greaterratio of annual aggregate fees compared to such new customer's in-scope net patient revenue than the average ratio of annual aggregate fees compared to in-scope net patient revenue for our current customer. If we offer customers lower rates than as discussed above, it could have a material adverse effect on ourresults of operations and financial condition.We may be unsuccessful in integrating transitioned Ascension employees.Under the terms of the A&R MPSA, we expect to transition a significant number of Ascension revenue cycle employees to our employment. We mayexperience difficulties in integrating these employees. Such difficulties may include the diversion of management’s attention from other business concerns. Ifwe experience difficulties in integrating these employees, our business, results of operations and financial condition could be adversely affected.The shares of Series A Preferred Stock are senior obligations, rank prior to our common stock with respect to dividends, distributions and paymentsupon liquidation and have other terms, such as a put right and a mandatory conversion date, that could negatively impact the value of shares of ourcommon stock.We have issued $200 million of Series A Preferred Stock to the Investor. The rights of the holders of our Series A Preferred Stock with respect todividends, distributions and payments upon liquidation rank senior to similar obligations to our common stock holders. Upon our liquidation or upon certainchanges of control, the holders of our Series A Preferred Stock are entitled to receive, prior and in preference to any distribution to the holders of any otherclass of our equity securities, an amount equal to the greater of the outstanding principal plus all accrued and unpaid dividends on such Series A PreferredStock (which cumulative dividends accrue at the rate of 8.0% per annum and compound quarterly) and the amount such holders would have received if suchSeries A Preferred Stock had been converted into common stock.The terms of the Series A Preferred Stock provide rights to their holders that could negatively impact our Company. Shares of our Series A PreferredStock may be converted at any time at the option of the holder at an effective initial conversion price of $2.50 per share (which conversion price is subject toadjustment upon the occurrence of certain events).Further, so long as Investor owns at least 25% of our common stock on an as-converted basis, no dividends on our common stock (or any other equitysecurities junior in right to the Series A Preferred Stock) may be paid without the consent of the Investor. To the extent any dividend, distributions or otherpayments are made on our common stock, the holders of the Series A Preferred Stock shall have the right to participate on an as converted basis in any suchdividends, distributions or other payments. The existence of such a senior security could have an adverse effect on the value of our common stock.The Investor, an affiliate of TowerBrook and Ascension, is a significant shareholder in us and may have conflicts of interest with us or you in thefuture.In connection with the Transactions, we entered into a purchase agreement with the Investor and Ascension, pursuant to which we issued (i) 200,000shares of our Series A Preferred Stock for an aggregate price of $200 million and (ii) a warrant to acquire up to 60 million shares of our common stock. As aresult of this ownership, so long as certain ownership thresholds are met, the Investor, among other things, has the right to nominate a majority25of the members of our board of directors, or Board, and has a consent right over certain corporate actions, including the declaration of any dividend, anyamendment of the A&R MPSA, the incurrence of indebtedness in excess of $25.0 million, the acquisition of any assets or properties or the making of anycapital expenditures in excess of $10.0 million, the approval of our annual budget and the hiring or termination of our chief executive officer. In addition, asof the closing of the Transactions, the issued and outstanding Series A Preferred Stock would represent approximately 44% of the current voting power at ameeting of our stockholders.The interests of the Investor and its affiliates may differ from our other stockholders in material respects. For example, the Investor may have an interestin pursuing acquisitions, divestitures, financings (including financings that are secured and senior to the Series A Preferred Stock) or other transactions that,in their judgment, could enhance their equity investments, even though such transactions might involve risks to you. Additionally, Ascension is an affiliateof Investor and as our largest customer their interests may differ from yours. The Investor or its affiliates or advisors are also in the business of making oradvising on investments in companies, and may from time to time in the future, acquire interests in, or provide advice to, businesses that directly or indirectlycompete with certain portions of our business or are suppliers or customers of ours. They may pursue acquisition opportunities that may be complementary toour business and, as a result, those acquisition opportunities may not be available to us. You should consider that the interests of these holders may differfrom yours in material respects.Regulatory RisksThe healthcare industry is heavily regulated. Our failure to comply with regulatory requirements could create liability for us, result in adversepublicity and adversely affect our business.The healthcare industry is heavily regulated and is subject to changing political, legislative, regulatory and other influences. Many healthcare laws arecomplex, and their application to specific services and relationships may not be clear. In particular, many existing healthcare laws and regulations, whenenacted, did not anticipate the services that we provide. There can be no assurance that our operations will not be challenged or adversely affected byenforcement initiatives. Enforcement activity is growing and is an identified priority of federal and state governments. Our failure to accurately anticipate theapplication of these laws and regulations to our business, or any other failure to comply with regulatory requirements, could create liability for us, result inadverse publicity and adversely affect our business. Federal and state legislatures and agencies frequently consider proposals to revise laws that impact thehealthcare industry or to revise or create additional statutory and regulatory requirements. Such proposals, if implemented, could adversely affect ouroperations, the attractiveness of our services to existing customers and our ability to market new services, or could create unexpected liabilities for us. We areunable to predict what changes to laws or regulations might be made in the future or how those changes could affect our business or our operating costs.Developments in the healthcare industry, including national healthcare reform, could adversely affect our business.The healthcare industry has changed significantly in recent years and we expect that significant changes will continue to occur. The timing and impactof developments in the healthcare industry are difficult to predict. We cannot be sure that the markets for our services will continue to exist at current levelsor that we will have adequate technical, financial and marketing resources to react to changes in those markets. Many of the provisions of the ACA, whichwas enacted in 2010, first became effective in 2014. Therefore, it is not yet possible for us to accurately predict if, or how, these changes will impact ourability to develop increases in revenue yield for our customers, encourage more companies to enter our market, provide advantages to our competitors andresult in the development of solutions that compete with ours. Moreover, healthcare reform remains a major policy issue at the federal level, and amendmentsto or the repeal of existing legislation and additional healthcare legislation in the future could have adverse consequences for us or the customers we serve.Other material changes, such as the required transition to ICD-10 in October 2015, have required and will continue to require significant system and businesschanges throughout the healthcare industry, and may be disruptive to our customers and our business. Such disruption could result in, among other things,the imposition of significant new challenges to our ability to achieve performance targets specified under our customer contracts, as well as a need for us toredeploy resources or to26obtain new resources in an effort to meet such challenges, all of which could adversely affect our business or our results of operations. Additionally, severalreductions or changes to Medicare reimbursement have been enacted recently or will be implemented (such as the federal government sequestrationreductions), which reductions and changes could reduce the amounts received by our customers and may have an adverse indirect effect on our business.In addition, the Medicare Two-Midnight Rule, generally permits hospitals to classify Medicare patients as inpatients for billing purposes only if aphysician documents a reasonable expectation that the patient will require inpatient hospital care for a continuous duration that covers two midnights. InOctober 2015, CMS updated and reiterated the Two-Midnight Rule in a final rule that was effective January 1, 2016. CMS also changed the short-stayinpatient medical review process so the Beneficiary and Family Centered Care Quality Improvement Organizations, rather than Medicare AdministrativeContractors and Recovery Audit Contractors, conduct the initial medical reviews. Prior changes to the enforcement of the Two-Midnight Rule had reducedthe demand for our PAS offerings substantially, and it is uncertain how the final rule and new medical review process will impact the demand going forward.Further, with CMS’ one time offer to pay out 68% on certain categories of pending appeals by a provider in exchange for the provider withdrawing its appeal,demand for PAS appeals services may continue to decline significantly.Healthcare reform also is causing the transition of some payment methods and provider reimbursement from volume-based reimbursement to value-based reimbursement models, which can include risk-sharing, accountable care organizations, capitation, bundled payment and other innovative approaches.While such new reimbursement models may provide us with opportunities to provide new or additional services to our customers (e.g., our value basedreimbursement capabilities within our RCM services offering) and to participate in incentive based payment arrangements for our services, there can be noassurance that such new models and approaches will prove to be profitable to our customers or to us. Further, such new models and approaches may requireinvestment by us to develop technology or expertise to offer necessary and appropriate services or support to our customers, and the amount of suchinvestment and the timing for return of such investment are not fully known at this time due to the uncertainties of healthcare reform and payment andreimbursement model transitions that are occurring. Certain new care delivery and reimbursement models are being offered as pilot programs or as limited ortransitional programs, and there is no assurance that such programs will continue or be renewed. Any of these models and approaches, and changes generallyin the healthcare industry, can impact the relationships between our customers and payers, from which our customers derive revenue and with which revenueour customers pay for our services. Adoption of such new models and approaches may require compliance with a range of federal and state laws relating tofraud and abuse, insurance, reinsurance and managed care regulation, billing and collection, corporate practice of medicine restrictions and licensing, amongothers. Many states in which these new value-based structures are being developed lack regulatory guidance or a well-developed body of law for these newmodels and approaches, or may not have updated their laws or enacted legislation yet to reflect the new healthcare reform models. As a result, although wehave structured, and will attempt to structure and conduct, our operations in accordance with our interpretation of current laws and regulations, new laws,regulations or guidance could have a material adverse effect on our current and future operations and could subject us to the risk of restructuring orterminating our customer agreements and arrangements, as well as the risk of regulatory enforcement, penalties and sanctions, if state enforcement agenciesdisagree with our interpretation of state laws.If we violate HIPAA, the HITECH Act or state health information privacy laws, we may incur significant liabilities, and any such violations couldmake it more difficult to retain existing customers or attract new customers, extend the time it takes to enter into service agreements with new customers,and result in a material adverse effect on our business, results of operations and financial condition.HIPAA contains substantial restrictions and requirements with respect to the use and disclosure of individuals’ PHI. Under HIPAA, covered entities,including health plans, healthcare providers, and healthcare clearinghouses that conduct HIPAA-defined standard electronic transactions, are restricted inhow they use and disclose PHI and must establish administrative, physical and technical safeguards to protect the confidentiality, integrity and availabilityof electronic PHI maintained or transmitted by them or by others on their behalf. Most of our customers are covered entities and we are a business associate tomany of those customers under HIPAA as a result of our27contractual obligations to perform certain functions on behalf of, and to provide certain services to, those customers. As a business associate, we sometimesalso act as a clearinghouse in performing certain functions for our customers. In addition, although we believe that we are not a healthcare provider, if wewere found to be a healthcare provider, we could have liability under the provisions of HIPAA that apply to providers as well as under state healthinformation privacy and licensing laws. Our use and disclosure of PHI is restricted by HIPAA and the business associate agreements we are required to enterinto with our covered entity customers. In 2009, HIPAA was amended by the HITECH Act to impose certain of the HIPAA privacy and security requirementsdirectly upon business associates of covered entities and increase significantly the monetary penalties for violations of HIPAA. The HITECH Act alsorequires business associates to notify covered entities, who in turn must notify affected individuals and government authorities, of data security breachesinvolving unsecured PHI. Since the passage of the HITECH Act, enforcement of HIPAA violations has increased, as indicated by the announcement of anumber of significant settlement agreements and/or sanctions by federal authorities, the pursuit of HIPAA violations by state attorneys general, and the roll-out of a new federal audit program for covered entities (which will in the future be extended to business associates).In addition to HIPAA, most states have enacted patient confidentiality laws that protect against the unauthorized disclosure of confidential medicalinformation, and many states have adopted or are considering further legislation in this area, including privacy safeguards, security standards and datasecurity breach notification requirements. Such state laws, if more stringent than HIPAA, are not preempted by the federal requirements, and we must complywith them even though such state laws may be subject to different interpretations by various courts and other governmental authorities.We have implemented and maintain physical, technical and administrative safeguards intended to protect all personal data and have processes in placeto assist us in complying with applicable laws and regulations regarding the protection of this data and properly responding to any security incidents orbreaches. We voluntarily sought, and received, HITRUST certification to help ensure compliance. A knowing breach of HIPAA’s requirements could exposeus to criminal liability. A breach of our safeguards and processes that is not due to reasonable cause or involves willful neglect could expose us to significantcivil penalties and the possibility of civil litigation under HIPAA and applicable state law. In 2011, a laptop computer used by one of our employees thatcontained PHI for patients of two customers was stolen. The laptop was password-protected but was not encrypted, in violation of company policy. Wenotified both customers of the 2011 theft, which customers in turn notified the affected individuals as well as the appropriate regulators. The MinnesotaAttorney General subsequently initiated a lawsuit against us, which we settled in 2012, for, among other things, alleged violations of federal and Minnesotastate health privacy laws and regulations arising from the laptop theft. Laptop computers used by our employees that contained PHI have also been stolen onother occasions. We do not believe that any patient data has been compromised as a result of any of these thefts. Nonetheless, these incidents have made itmore difficult to retain existing customers and attract new customers. They have also extended the time it takes to enter into service agreements with newcustomers, and could result in a material adverse effect on our business, results of operations and financial condition.If we fail to comply with federal and state laws governing submission of false or fraudulent claims to government healthcare programs and financialrelationships among healthcare providers, we may be subject to civil and criminal penalties or loss of eligibility to participate in government healthcareprograms.A number of federal and state laws, including anti-kickback restrictions and laws prohibiting the submission of false or fraudulent claims, apply tohealthcare providers, physicians and others that make, offer, seek or receive payments or split fees for referrals of products or services that may be paid forthrough any federal or state healthcare program and, in some instances, any private program. These laws are complex and their application to our specificservices and relationships may not be clear and may be applied to our business in ways that we do not anticipate. Federal and state regulatory and lawenforcement authorities have recently increased enforcement activities with respect to Medicare and Medicaid fraud and abuse regulations and otherhealthcare reimbursement laws and rules. From time to time, participants in the healthcare industry receive inquiries or subpoenas to produce documents inconnection with government investigations. We could be required to expend significant time and resources to comply with these requests, and the attentionof our management team could be diverted by these28efforts. Furthermore, if we are found to be in violation of any federal or state fraud and abuse laws, we could be subject to civil and criminal penalties, forcedto restructure our business and excluded from participating in federal and state healthcare programs such as Medicare and Medicaid which would result insignificant harm to our business and financial condition.The federal healthcare anti-kickback law prohibits any person or entity from offering, paying, soliciting or receiving anything of value, directly orindirectly, for the referral of patients covered by Medicare, Medicaid and other federal healthcare programs or the leasing, purchasing, ordering or arrangingfor or recommending the lease, purchase or order of any item, good, facility or service covered by these programs. Many states have adopted similarprohibitions against kickbacks and other practices that are intended to induce referrals, and some of these state laws are applicable to all patients regardless ofwhether the patient is covered under a governmental health program or private health plan. New payment structures, such as accountable care organizationsand other arrangements involving combinations of hospitals, physicians and other providers who share payment savings, potentially implicate anti-kickbackand other fraud and abuse laws. We seek to structure our business relationships and activities to avoid any activity that could be construed to implicate thefederal healthcare anti-kickback law and similar laws. We cannot assure you, however, that our arrangements and activities will be deemed outside the scopeof these laws or that increased enforcement activities will not directly or indirectly have a material adverse effect on our business, financial condition orresults of operations. Any determination by a federal or state agency or court that we have violated any of these laws could subject us to civil or criminalpenalties, could require us to change or terminate some portions of our operations or business, could disqualify us from providing services to healthcareproviders doing business with government programs, could give our customers the right to terminate our managed services agreements with them and, thus,could have a material adverse effect on our business and results of operations. Moreover, any violations by, and resulting penalties or exclusions imposedupon, our customers could adversely affect their financial condition and, in turn, have a material adverse effect on our business and results of operations.There are also numerous federal and state laws that forbid submission of false information or the failure to disclose information in connection with thesubmission and payment of healthcare provider claims for reimbursement. In particular, the federal FCA, prohibits a person from knowingly presenting orcausing to be presented a false or fraudulent claim for payment or approval by an officer, employee or agent of the United States. In addition, the FCAprohibits a person from knowingly making, using, or causing to be made or used a false record or statement material to such a claim. The FCA may beenforced by the government or by private whistleblowers under the "qui tam" provisions of the statute. Whistleblowers are entitled to a share of any recoveryin a FCA case. Changes to the FCA enacted as part of the ACA make it easier for whistleblowers to bring FCA claims. Violations of the FCA may result intreble damages, significant monetary penalties, and other collateral consequences including, potentially, exclusion from participation in federally fundedhealthcare programs. The scope and implications of the amendments to the FCA pursuant to the FERA have yet to be fully determined or adjudicated and as aresult it is difficult to predict how future enforcement initiatives may affect our business.These laws and regulations may change rapidly, and it is frequently unclear how they apply to our business. Errors created by our proprietaryapplications or services that relate to entry, formatting, preparation or transmission of claim or cost report information may be determined or alleged to causethe submission of false claims or otherwise be in violation of these laws and regulations. Any failure of our proprietary applications or services to complywith these laws and regulations could result in substantial civil or criminal liability and could, among other things, adversely affect demand for our services,invalidate all or portions of some of our managed services agreements with our customers, require us to change or terminate some portions of our business,require us to refund portions of our base fee revenues and incentive payment revenues, cause us to be disqualified from serving customers doing businesswith government payers, and give our customers the right to terminate our managed services agreements with them, any one of which could have a materialadverse effect on our business.29We cannot be certain that governmental officials responsible for enforcing EMTALA, or other parties, will not assert that our customers are inviolation of EMTALA, and defending and settling allegations of EMTALA violations could have a material adverse effect on our business even if we areultimately not found to have contributed to such violations.EMTALA requires Medicare-participating hospitals that have emergency departments to provide a medical screening examination and stabilizingtreatment to all individuals who come to the hospital seeking treatment of an emergency medical condition, regardless of the patient’s ability to pay for thecare. Sanctions for failing to fulfill these requirements include exclusion from participation in the Medicare and Medicaid programs and civil monetarypenalties. In addition, the law creates private civil remedies that enable an individual who suffers personal harm as a direct result of a violation of the law tosue the offending hospital for damages and equitable relief.Since we are not a healthcare provider, EMTALA is not applicable to us, but we cannot be certain that governmental officials responsible for enforcingEMTALA, or other parties, will not assert that our customers are in violation of EMTALA. If our customers are found to have violated EMTALA, they mayassert claims that our management practices contributed to the violation. Defending and settling allegations of EMTALA violations could have a materialadverse effect on our business even if we are ultimately not found guilty of a violation.Our failure to comply with debt collection and other consumer protection laws and regulations could subject us to fines and other liabilities, whichcould harm our reputation and business, and could make it more difficult to retain existing customers or attract new customers, extend the time it takes toenter into service agreements with new customers, and result in a material adverse effect on our business, results of operations and financial condition.The FDCPA regulates persons who regularly collect or attempt to collect, directly or indirectly, consumer debts in default that are owed or asserted tobe owed to another person. However, our business practices that involve collecting, or assisting our customers in collecting, non-defaulted amounts owed bypatients for current and prior services activities may be determined to be subject to the FDCPA. Many states impose additional requirements on debtcollection communications, and some of those requirements may be more stringent than the federal requirements. Moreover, regulations governing debtcollection are subject to changing interpretations that may be inconsistent among different jurisdictions. Further, we are subject to the TCPA, which imposescertain restrictions on companies that place telephone calls to consumers.We could incur costs or could be subject to fines or other penalties under the TCPA, the FDCPA and the FTC Act if we are determined to have violatedthe provisions of those regulations during the course of conducting our operations. We, or our customers, could be required to report such breaches toaffected consumers or regulatory authorities, leading to disclosures that could damage our reputation or harm our business, financial position and operatingresults. As a result of the theft of a laptop in 2011 giving rise to a lawsuit against us by the Minnesota Attorney General and a related FTC inquiry of our datasecurity practices, in December 2013, we entered into a consent order with the FTC pursuant to which no fine or penalty was paid but in which we agreed,among other things, to maintain a comprehensive information security program reasonably designed to protect the security, confidentiality, and integrity ofpersonal information collected from or about consumers. Future allegations of this type could require us to change aspects of our business practices, make itmore difficult to retain existing customers or attract new customers, extend the time it takes to enter into service agreements with new customers, and result ina material adverse effect on our business, results of operations and financial condition.Potential additional regulation of the disclosure of health information outside the United States may increase our costs.Federal or state governmental authorities may impose additional data security standards or additional privacy or other restrictions on the collection,use, transmission and other disclosures of health information. Legislation has been proposed at various times at both the federal and the state levels thatwould limit, forbid or regulate the use or transmission of medical information pertaining to U.S. patients outside of the United States. Some states have alsoimposed limitations through rule making or executive action. If additional states or the federal government were to30adopt additional limitations, that may render our operations in India impracticable or substantially more expensive. Moving such operations to the UnitedStates may involve substantial delay in implementation and increased costs.Risks Related to Intellectual PropertyWe may be unable to adequately protect our intellectual property.Our success depends, in part, upon our ability to establish, protect and enforce our intellectual property and other proprietary rights. If we fail toestablish or protect our intellectual property rights, we may lose an important advantage in the market in which we compete. We rely upon a combination ofpatent, trademark, copyright and trade secret law and contractual terms and conditions to protect our intellectual property rights, all of which provide onlylimited protection. We cannot assure you that our intellectual property rights are sufficient to protect our competitive advantages. Although we have filedseven U.S. patent applications, we cannot assure you that any patents that will be issued from these applications will provide us with the protection that weseek or that any future patents issued to us will not be challenged, invalidated or circumvented. We have also been issued three U.S. patents, but we cannotassure you that they will provide us with the protection that we seek or that they will not be challenged, invalidated or circumvented. Legal standardsrelating to the validity, enforceability and scope of protection of patents are uncertain. Any patents that may be issued in the future from pending or futurepatent applications or our three issued patents may not provide sufficiently broad protection or they may not prove to be enforceable in actions againstalleged infringers. Also, we cannot assure you that any trademark registrations will be issued for pending or future applications or that any of our trademarkswill be enforceable or provide adequate protection of our proprietary rights.We also rely in some circumstances on trade secrets to protect our technology. Trade secrets may lose their value if not properly protected. We endeavorto enter into non-disclosure agreements with our employees, customers, contractors and business partners to limit access to and disclosure of our proprietaryinformation. The steps we have taken, however, may not prevent unauthorized use of our technology, and adequate remedies may not be available in theevent of unauthorized use or disclosure of our trade secrets and proprietary technology. Moreover, others may reverse engineer or independently developtechnologies that are competitive to ours or infringe our intellectual property.Accordingly, despite our efforts, we may be unable to prevent third parties from infringing or misappropriating our intellectual property and using ourtechnology for their competitive advantage. Any such infringement or misappropriation could have a material adverse effect on our business, results ofoperations and financial condition. Monitoring infringement of our intellectual property rights can be difficult and costly, and enforcement of ourintellectual property rights may require us to bring legal actions against infringers. Infringement actions are inherently uncertain and therefore may not besuccessful, even when our rights have been infringed, and even if successful may require a substantial amount of resources and divert our management’sattention.Claims by others that we infringe their intellectual property could force us to incur significant costs or revise the way we conduct our business.Our competitors protect their intellectual property rights by means such as patents, trade secrets, copyrights and trademarks. We have not conducted anindependent review of patents issued to third parties. Additionally, because patent applications in the United States and many other jurisdictions are keptconfidential for 18 months before they are published, we may be unaware of pending patent applications that relate to our proprietary technology. Any partyasserting that we infringe its proprietary rights would force us to defend ourselves, and possibly our customers, against the alleged infringement. These claimsand any resulting lawsuit, if successful, could subject us to significant liability for damages and invalidation of our proprietary rights or interruption orcessation of our operations. The software and technology industries are characterized by the existence of a large number of patents, copyrights, trademarksand trade secrets and by frequent litigation based on allegations of infringement or other violations of intellectual property rights. Moreover, the risk of sucha lawsuit will likely increase as our size and scope of our services and technology platforms increase, as our geographic presence and market share expandand as the number of competitors in our market increases.31Any such claims or litigation could:•be time-consuming and expensive to defend, whether meritorious or not;•require us to stop providing the services that use the technology that infringes the other party’s intellectual property;•divert the attention of our technical and managerial resources;•require us to enter into royalty or licensing agreements with third parties, which may not be available on terms that we deem acceptable, if at all;•prevent us from operating all or a portion of our business or force us to redesign our services and technology platforms, which could be difficult andexpensive and may make the performance or value of our service offerings less attractive;•subject us to significant liability for damages or result in significant settlement payments; or•require us to indemnify our customers, as we are required by contract to indemnify some of our customers for certain claims based upon theinfringement or alleged infringement of any third party’s intellectual property rights resulting from our customers’ use of our intellectual property.Intellectual property litigation can be costly. Even if we prevail, the cost of such litigation could deplete our financial resources. Litigation is also time-consuming and could divert management’s attention and resources away from our business. Furthermore, during the course of litigation, confidentialinformation may be disclosed in the form of documents or testimony in connection with discovery requests, depositions or trial testimony. Disclosure of ourconfidential information and our involvement in intellectual property litigation could materially adversely affect our business. Some of our competitors maybe able to sustain the costs of complex intellectual property litigation more effectively than we can because they have substantially greater resources. Inaddition, any uncertainties resulting from the initiation and continuation of any litigation could significantly limit our ability to continue our operations andcould harm our relationships with current and prospective customers. Any of the foregoing could disrupt our business and have a material adverse effect onour operating results and financial condition.Risks Related to the Ownership of Shares of Our Common StockOur common stock has been delisted and is not listed on any other national securities exchange, which may negatively impact the trading price ofour common stock and the levels of liquidity available to our stockholders.Our common stock was suspended from trading on the New York Stock Exchange, or the NYSE, prior to the opening of the market on March 17, 2014(and subsequently delisted) and began trading under the symbol "ACHI" through the facilities of the OTC Markets Group, Inc. on that date.We can provide no assurance that we will be able to relist our common stock on a national securities exchange or that the stock will continue beingtraded on the over-the-counter, or OTC, marketplace. The trading of our common stock on the OTC marketplace rather than the NYSE may negatively impactthe trading price of our common stock and the levels of liquidity available to our stockholders.Securities traded in the OTC market generally have significantly less liquidity than securities traded on a national securities exchange due to factorssuch as the reduced number of investors that will consider investing in the securities, the reduced number of market makers in the securities, and the reducednumber of securities analysts that follow such securities. As a result, holders of our common stock may find it difficult to resell their shares at prices quoted inthe market or at all. Furthermore, because of the limited market and low volume of trading in our common stock that could occur, the share price of ourcommon stock could more likely be affected by broad market fluctuations, general market conditions, fluctuations in our operating results, changes in themarket’s perception of32our business, and announcements made by us, our competitors, parties with whom we have business relationships or third parties. The lack of liquidity in ourcommon stock may also make it difficult for us to issue additional securities for financing or other purposes, or to otherwise arrange for any financing we mayneed in the future.The trading price of our common stock has been volatile and may continue to be volatile.Since December 31, 2010, our common stock has traded at a price per share as high as $32.82 and as low as $1.94. The trading price of our commonstock is likely to continue to be highly volatile and could be subject to wide fluctuations in response to various factors. In addition to the risks described inthis section, factors that may cause the market price of our common stock to fluctuate include:•fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;•changes in estimates of our financial results;•failure to meet expectations of securities analysts;•the loss of service agreements with customers;•lawsuits filed against us by governmental authorities or stockholders;•unfavorable publicity concerning our operations or business practices;•our common stock’s eligibility for stock exchange listing;•investors’ general perception of us; and•changes in general economic, industry, regulatory and market conditions.In addition, if the stock market in general experiences a loss of investor confidence, the trading price of our common stock could decline for reasonsunrelated to our business, financial condition or results of operations.Anti-takeover provisions in our charter documents and Delaware law could discourage, delay or prevent a change in control of our company andmay affect the trading price of our common stock.We are a Delaware corporation and the anti-takeover provisions of the Delaware General Corporation Law may discourage, delay or prevent a change incontrol by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes aninterested stockholder, even if a change in control would be beneficial to our existing stockholders. In addition, our restated certificate of incorporation andamended and restated bylaws may discourage, delay or prevent a change in our management or control over us that stockholders may consider favorable. Ourrestated certificate of incorporation and amended and restated bylaws:•authorize the issuance of "blank check" preferred stock that could be issued by our Board to thwart a takeover attempt;•until the annual meeting of stockholders to be held in 2018, provide for a classified board of directors;•require that directors only be removed from office upon a supermajority stockholder vote;•provide that vacancies on our Board, including newly created directorships, may be filled only by a majority vote of directors then in office;33•limit who may call special meetings of stockholders; prohibit stockholder action by written consent, requiring all actions to be taken at a meeting ofthe stockholders; and•require supermajority stockholder voting to effect certain amendments to our restated certificate of incorporation and amended and restated bylaws.At our 2015 Annual Meeting of Stockholders held on August 14, 2015, our stockholders voted to approve an amendment to our current restatedcertificate of incorporation that provides for the phased-in declassification of our Board and the annual election of all directors. Our Board has madeconforming changes to our amended and restated bylaws. Our restated certificate of incorporation provides that directors may be removed with or withoutcause, with the same supermajority vote that currently applies (the affirmative vote of the holders of at least two-thirds of the shares entitled to vote at anelection of directors).We may not pay any cash dividends on our capital stock in the foreseeable future.Although we paid cash dividends on our capital stock prior to our May 2010 initial public offering, or IPO, there is no assurance that we will pay cashdividends on our common stock in the foreseeable future. Any future dividend payments will be within the discretion of our Board and will depend on,among other things, our financial condition, results of operations, capital requirements, capital expenditure requirements, contractual restrictions, provisionsof applicable law and other factors that our Board may deem relevant. We may not generate sufficient cash from operations in the future to pay dividends onour common stock.Item 1B.Unresolved Staff CommentsNone.34Item 2.PropertiesWe lease our existing facilities and do not own any real estate property.Our corporate headquarters occupy approximately 43,000 square feet in Chicago, Illinois under a lease expiring on August 31, 2020. In addition, wehave a right of first offer to lease an additional 11,100 square feet of space on another floor in the same building. We also lease office space and otherfacilities in Chicago, Illinois; Kalamazoo, Michigan; Southfield, Michigan; Birmingham, Alabama; Jupiter, Florida; Cape Girardeau, Missouri; and threefacilities near New Delhi, India. Pursuant to our managed services agreements with customers, we occupy space on-site at all hospitals where we provide ourRCM services. We generally do not pay customers for our use of space provided by them for our use in the provision of RCM services to that customer.We believe that our facilities are sufficient for our current needs. We intend to add new facilities or expand existing facilities as we add employees orexpand or change our geographic markets and office locations, and we believe that suitable additional or substitute space will be available as needed toaccommodate any such expansion of our operations. Item 3.Legal ProceedingsOther than as described below, we are presently not a party to any material litigation or regulatory proceeding and are not aware of any pending orthreatened litigation or regulatory proceeding against us which, individually or in the aggregate, could have a material adverse effect on our business,operating results, financial condition or cash flows.We, along with certain of our directors and former officers, have been named in several putative shareholder derivative lawsuits filed in the U.S. DistrictCourt for the Northern District of Illinois on May 3, 2012 and July 31, 2012 (consolidated as Maurras Trust v. Accretive Health et al.), in the Circuit Court ofCook County, Illinois on June 23, 2012 and June 27, 2012 (consolidated as In re Accretive Health, Inc. Derivative Litigation) and in the Court of Chanceryof the State of Delaware on November 5, 2012 (Doyle v. Tolan et al.). The primary allegations are that our directors and officers breached their fiduciaryduties in connection with the alleged violations of certain federal and Minnesota privacy and debt collection laws.On July 11, 2013, the Court of Chancery of the State of Delaware granted our motion to stay Doyle v. Tolan et al., in favor of the action pending in theU.S. District Court for the Northern District of Illinois. On September 24, 2013, the U.S. District Court for the Northern District of Illinois granted our motionto dismiss without prejudice, giving plaintiffs in that case leave to file an amended consolidated complaint, which plaintiffs filed on October 22, 2013,amending their complaint to also include allegations with respect to the Restatement. On February 25, 2015, we entered a settlement agreement withplaintiffs in all aforementioned suits that would resolve the derivative actions, on the basis of certain governance reforms already implemented and paymentof attorneys' fees in the amount of $0.6 million. On July 23, 2015, the U.S. District Court for the Northern District of Illinois granted final approval of thesettlement agreement. The Delaware and Cook County derivative suits are within the scope of the settlement approved by the federal district court and weredismissed on August 12, 2015 and August 17, 2015, respectively.On May 17, 2013, we, along with certain of our directors, former directors and former officers, were named as a defendant in a putative securities classaction lawsuit filed in the U.S. District Court for the Northern District of Illinois (Hughes v. Accretive Health, Inc. et al.). The primary allegations, relating toour March 8, 2013 announcement that we would be restating our prior period financial statements, are that our public statements, including filings with theSEC, were false and/or misleading with respect to our revenue recognition and earnings prospects. On November 27, 2013, plaintiffs voluntarily dismissedour directors and former directors, other than Mary Tolan. On January 31, 2014, we filed a motion to dismiss the complaint. On September 25, 2014, the Courtgranted our motion to dismiss without prejudice, however, the plaintiffs filed a second amended complaint on35October 23, 2014. On November 10, 2014, we filed a motion to dismiss the second amended complaint. While that motion was still pending, on January 8,2015, plaintiffs filed a motion to amend the second amended complaint, seeking to add allegations regarding the recently issued Restatement. On April 22,2015, the court granted plaintiffs’ motion to amend, and a third amended complaint was filed on May 13, 2015. We moved to dismiss the third amendedcomplaint on June 3, 2015. Such motion is fully briefed and awaiting decision. On December 7, 2015, the parties executed a memorandum of understandingto resolve the suit for $3.9 million and filed a notice of settlement with the district court. On March 8, 2016, the district court granted preliminary approval tothe settlement. The final fairness hearing has been set for June 28, 2016. We believe the settlement payment of $3.9 million will be covered by insurance.The SEC’s Division of Enforcement in the Chicago Regional Office commenced an investigation regarding the circumstances surrounding theRestatement following the March 8, 2013 announcement. We fully cooperated with the investigation. On December 7, 2015, we received a termination letterfrom the SEC indicating that the investigation has been completed and that the SEC Staff did not intend to recommend any enforcement action by the SEC.On February 11, 2014, we were named as a defendant in a putative class action lawsuit filed in the U.S. District Court for the Southern District ofAlabama (Church v. Accretive Health, Inc.). The primary allegation is that we attempted to collect debts without providing the notice required by the FairDebt Collections Practice Act, or the FDCPA. On November 24, 2015, the district court granted our motion for summary judgment and dismissed the casewith prejudice. Plaintiff filed a notice of appeal on December 21, 2015.On July 22, 2014, we were named as a defendant in a putative class action lawsuit filed in the U.S. District Court for the Eastern District of Michigan(Anger v. Accretive Health, Inc.). The primary allegations are that we attempted to collect debts without providing the notice required by the FDCPA andMichigan Fair Debt Collection Practices Act and failed to abide by the terms of an agreed payment plan in violation of those same statutes. On August 27,2015, the Court granted in part and denied in part our motion to dismiss. An amended complaint was filed on November 30, 2015. Discovery is underway.We believe that we have meritorious defenses and intend to vigorously defend ourselves against these claims. The outcome is not presently determinable.On February 6, 2015, we were named as a defendant in a putative class action lawsuit filed in the U.S. District Court for the Eastern District of Michigan(Cassale v. Accretive Health, Inc.). The primary allegations were that we attempted to collect debts without complying with the provisions of the FDCPA. Thecase was settled in April 2015.In April 2015, we were named among other defendants in an employment action brought by a former employee before the Maine Human RightsCommission, or the MHRC, alleging that she was improperly terminated in retaliation for uncovering alleged Medicare fraud. We filed our response with theMHRC on May 19, 2015 seeking that we be dismissed entirely from the action. On June 23, 2015, the MHRC issued its Notice of Right to Sue and decisionto terminate its process with respect to all charges asserted by the former employee. The Plaintiff has filed a parallel qui tam action in the District of Maine(Worthy v. Eastern Maine Healthcare Systems) in which she makes the same allegations. The U.S. Department of Justice declined to intervene in the federalcourt action, and the case was unsealed in April 2015. We intend to file an answer and/or move to dismiss the Third Amended Complaint on March 21, 2016.We believe that we have meritorious defenses to both the potential employment law action for which the MHRC has granted the Notice of Right to Sue letterand the federal qui tam case, and we intend to vigorously defend ourselves against these claims. The outcomes are not presently determinable.On June 17, 2015, we filed a confidential arbitration demand with the American Arbitration Association against Salem Hospital for unpaid fees dueunder the parties’ Health Services Agreement in an aggregate amount of $9.3 million. On July 31, 2015, Salem Hospital filed its answer, in which it deniedour claims and asserted counterclaims against us in the amount of $2.7 million. The outcome is not presently determinable.On November 16, 2015, we were named in a putative class action lawsuit filed in the U.S. District Court for the Eastern District of Michigan (Dye v.Accretive Health, Inc.). The primary allegations were that we attempted to36collect debts without complying with the provisions of the FDCPA. The case was voluntarily dismissed on December 4, 2015.On December 10, 2015, the plaintiff in the Dye action filed a class-action complaint in the Circuit Court for the County of Macomb, Michigan, allegingthat our attempt to collect his debts had violated the Michigan Occupational Code. We filed a motion to dismiss the complaint on February 8, 2016 and ahearing is scheduled on March 28, 2016. We believe that we have meritorious defenses and intend to vigorously defend ourselves against the claims. Theoutcome is not presently determinable.Item 4.Mine Safety DisclosuresNot applicable.37PART IIItem 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesOur common stock has traded on the OTC market under the symbol "ACHI" since March 17, 2014 and is quoted through the facilities of the OTCMarkets Group, Inc. Our common stock traded on the NYSE under the symbol "AH" from May 20, 2010 through March 14, 2014. Our common stock wassuspended from trading on the NYSE prior to the opening of the market on March 17, 2014 (and subsequently delisted) and began trading under the symbol"ACHI" through the facilities of the OTC Markets Group, Inc. on that date. Prior to May 20, 2010, there was no public market for our common stock.The following table sets forth the high and low closing sales prices per share of our common stock, as reported by the NYSE and the OTC MarketsGroup, Inc., as applicable, for the periods indicated: Price Range High Low2014 Quarter ended March 31, 2014 $9.73 $7.90Quarter ended June 30, 2014 $9.45 $7.15Quarter ended September 30, 2014 $9.27 $7.76Quarter ended December 31, 2014 $9.10 $6.862015 Quarter ended March 31, 2015 $6.55 $5.70Quarter ended June 30, 2015 $5.94 $5.29Quarter ended September 30, 2015 $5.51 $2.31Quarter ended December 31, 2015 $3.25 $1.94The closing sale price per share of our common stock, as reported by the OTC Markets Group, Inc., on March 4, 2016 was $2.68. As of March 4, 2016,there were approximately 41 stockholders of record of our common stock and approximately 2,500 beneficial holders.DividendsWe did not pay any dividends during the years ended December 31, 2015 and 2014. We currently intend to retain earnings, if any, to finance thegrowth and development of our business, and we do not expect to pay any cash dividends on our common stock in the foreseeable future. Payment of futuredividends, if any, will be at the discretion of our Board and will depend on, among other things, our financial condition, results of operations, capitalexpenditure requirements, contractual restrictions, provisions of applicable law and other factors that the Board deems relevant.Equity Compensation Plan InformationWe maintain a 2006 Second Amended and Restated Stock Option Plan, which we refer to as the 2006 Plan and a 2010 Amended and Restated StockIncentive Plan, or the 2010 Amended Plan, and together with the 2006 Plan, the Plans. Under the 2010 Amended Plan we may issue up to a maximum of29,374,756 shares, including any shares that remained available for issuance under the 2006 Plan as of the date of the IPO and any shares subject to awardsthat were outstanding under the 2006 Plan as of the date of the IPO that expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased byus 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 ofincentive stock options, non-statutory stock options, restricted stock awards, or RSAs, and other share-based awards. As of December 31, 2015, an aggregateof 16,012,417 shares were subject to outstanding options and RSAs under the Plans, 11,483,47438shares had been issued pursuant to the exercise of options issued under the Plans, and 5,148,848 shares were available for future grants of awards under the2010 Amended Plan. However, to the extent that previously granted awards under the 2006 Plan or 2010 Amended Plan expire, terminate or are otherwisesurrendered, 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 31,2015: (a) (b) (c)Plan Category Number ofSecuritiesto be Issued UponExercise ofOutstandingOptions Weighted-AverageExercise Priceof OutstandingOptions Number of Securities RemainingAvailable for Future IssuanceUnder EquityCompensation Plans(Excluding Securities reflectedin Column (a))Equity compensation plans approved by stockholders (1)(2) 8,156,465 $10.94 5,148,848Equity compensation plans not approved by stockholders (3)(4) 7,103,801 $9.42 —Total 15,260,266 $10.23 5,148,848 (1)Includes all outstanding stock options awarded under our 2006 Plan and 2010 Amended Plan.(2)Excludes 7,855,952 shares of restricted stock that were unvested and not forfeited as of December 31, 2015.(3)Represents stock option inducement grants made pursuant to the NYSE inducement grant rules.(4)Excludes 1,399,980 shares of restricted stock that were unvested and not forfeited as of December 31, 2015.We entered into a Stock Option Agreement with Stephen Schuckenbrock on April 3, 2013, as an inducement award pursuant to an exemption from theNYSE’s stockholder approval requirements in connection with Mr. Schuckenbrock’s appointment as our then-chief executive officer. Pursuant to thisagreement, we granted Mr. Schuckenbrock a non-statutory stock option for the purchase of up to 2,903,801 shares of our common stock with an exerciseprice of $9.56 per share, which vests in substantially equal monthly installments over 48 months. Pursuant to an amendment to that Stock Option Agreemententered into in May 2015, such vesting continues irrespective of the termination of Mr. Schuckenbrock's service as an employee and director.We entered into a Non-Statutory Stock Option Agreement and a Restricted Stock Award Agreement with Joseph Flanagan on June 3, 2013, each as aninducement award pursuant to an exemption from the NYSE’s stockholder approval requirements in connection with Mr. Flanagan’s appointment as our chiefoperating officer. Pursuant to the Non-Statutory Stock Option Agreement, we granted Mr. Flanagan a non-statutory stock option for the purchase of up to800,000 shares of our common stock with an exercise price of $11.47 per share and pursuant to the Restricted Stock Award Agreement, we granted Mr.Flanagan 400,000 shares of our common stock. These equity awards to Mr. Flanagan vest in substantially equal monthly installments over 48 months subjectto continued service with us.We entered into a Non-Statutory Stock Option Agreement and a Restricted Stock Award Agreement with Dr. Emad Rizk in July 2014, each as aninducement award pursuant to an exemption from the NYSE’s stockholder approval requirements in connection with Dr. Rizk's appointment as our ChiefExecutive Officer. Pursuant to the Non-Statutory Stock Option Agreement, we granted Dr. Rizk a non-statutory stock option for the purchase of up to2,700,000 shares of our common stock with an exercise price of $8.98 per share and pursuant to the Restricted Stock Award Agreement, we granted Dr. Rizk arestricted stock award for 1,000,000 shares of our common stock. The stock option and one-half of the restricted stock award to Dr. Rizk vest in substantiallyequal annual installments over four years following the grant date, subject to continued service with us. The remaining one-half of the restricted stock awardwill generally vest based on a stock price performance goal of two times the closing price per share of our common stock on the grant date, which much beequaled or exceeded for at least 20 consecutive trading39days based on the average closing price for such 20-consecutive trading day period.We also entered into a Non-Statutory Stock Option Agreement and a Restricted Stock Award Agreement with Peter P. Csapo on August 12, 2014, as aninducement award pursuant to an exemption from the NYSE’s stockholder approval requirements in connection with Mr. Csapo’s appointment as our ChiefFinancial Officer and Treasurer. Pursuant to the Non-Statutory Stock Option Agreement, we granted Mr. Csapo a non-statutory stock option for the purchaseof up to 300,000 shares of our common stock with an exercise price of $8.15 per share and pursuant to the Restricted Stock Award Agreement, we granted Mr.Csapo a restricted stock award for 200,000 shares of our common stock, both of which vest in substantially equal annual installments over four yearsfollowing the grant date, subject to continued service with us.We also entered into a Non-Statutory Stock Option Agreement and a Restricted Stock Award Agreement with David Mason on November 11, 2014, asan inducement award pursuant to an exemption from the NYSE’s stockholder approval requirements in connection with Mr. Mason's appointment as ourChief Strategy Officer. Pursuant to the Non-Statutory Stock Option Agreement, we granted Mr. Mason a non-statutory stock option for the purchase of up to400,000 shares of our common stock with an exercise price of $8.30 per share and pursuant to the Restricted Stock Award Agreement, we granted Mr. Masona restricted stock award for 300,000 shares of our common stock, both of which vest in substantially equal annual installments over four years following thegrant date, subject to continued service with us.Sales of Unregistered Securities and Use of ProceedsUnregistered Sales of Equity SecuritiesWe granted (i) options to purchase an aggregate of 2,231,504 shares of common stock during the year ended December 31, 2015 with exercise pricesranging from $2.39 to $6.55 per share and (ii) 8,994,729 shares of restricted stock during the year ended December 31, 2015, to employees and directorspursuant to the 2010 Amended Plan and/or in reliance upon the exemption from the registration requirements of the Securities Act of 1933, or Securities Act,provided by Section 4(a)(2) of the Securities Act as sales by an issuer not involving any public offering, as set forth in the tables below. No underwriters wereinvolved in the foregoing transactions. All of such unregistered shares of common stock are deemed restricted securities for purposes of the Securities Act. Nosuch options have been exercised.40The following table sets forth the dates on which such options were granted and the number of shares of common stock subject to such options, theexercise price and the number of employees and directors granted options on each date for the year ended December 31, 2015:Date of Grant Common Stock Subject to Options Granted Exercise Price Number of Employees and Directors Granted Options1/2/2015 79,122 $6.55 71/5/2015 902,772 $6.15 1312/3/2015 85,500 $5.84 44/1/2015 33,720 $5.71 64/2/2015 5,432 $5.59 15/21/2015 966,185 $5.41 57/1/2015 22,900 $5.45 47/2/2015 5,558 $5.40 17/23/2015 100,000 $2.39 110/1/2015 30,315 $2.50 2 2,231,504 The following table sets forth the dates on which such shares of restricted stock were granted, the number of shares of restricted stock and the number ofemployees and directors granted restricted stock on each date for the year ended December 31, 2015: Date of Grant Number of Shares of Restricted Common Stock Granted Number of Employees and Directors Granted Restricted Stock7/9/2015 1,825,946 1757/23/2015 345,063 48/17/2015 2,382,420 612/31/2015 4,441,300 6 8,994,729 Under the terms of the Purchase Agreement, we issued shares of Series A Preferred Stock and the Warrant to the Investor. This issuance and sale wasexempt from registration under the Securities Act, pursuant to Section 4(a)(2) of the Securities Act. The Investor represented to us that it is an "accreditedinvestor" as defined in Rule 501 of the Securities Act and that the Series A Preferred Stock and the Warrant were being acquired for investment purposes andnot with a view to, or for sale in connection with, any distribution thereof, and appropriate legends will be affixed to any certificates evidencing the shares ofSeries A Preferred Stock, the Warrant or any common stock issued upon conversion thereof.41Issuer Purchases of Equity SecuritiesThe following table provides information about our repurchases of common stock during the periods indicated (in thousands, except share and per sharedata):PeriodNumber ofShares Purchased (1) Average PricePaid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Dollar Value of Shares that May Yet be Purchased Under Publicly Announced Plans or Programs (2)October 1, 2015 through October 31, 2015 21,280 $2.52 — $50,000November 1, 2015 through November 30, 2015 110,117 $1.90 — $50,000December 1, 2015 through December 31, 2015 21,118 $2.98 — $50,000(1)Repurchases of our stock related to employees’ tax withholding upon vesting of RSAs. See Note 5, Share-Based Compensation, to our consolidated financial statementsincluded in this Annual Report on Form 10-K.(2)On November 13, 2013, the Board authorized, subject to the completion of the Restatement, the repurchase of up to $50.0 million of our common stock from time to timein the open market or in privately negotiated transactions, or the 2013 Repurchase Program. The timing and amount of any shares repurchased under the 2013Repurchase Program will be determined by our management based on its evaluation of market conditions and other factors. The 2013 Repurchase Program may besuspended or discontinued at any time. We currently intend to fund any repurchases from cash on hand. We did not repurchase any shares of common stock under the2013 Repurchase Program during 2015.Stock Price Performance GraphThe following graph compares the change in the cumulative total return (including the reinvestment of dividends) on our common stock to thechange in the cumulative total return on the stocks included in the NYSE Composite Index and NASDAQ Health Care Index over the period from May 20,2010, the date our shares of common stock began trading on the NYSE, through December 31, 2015. The graph assumes an investment of $100 made in ourcommon stock at a price of $12.00 per share, which was the per share price to the public in our IPO and an investment in each of the other indices on May 20,2010, the first day of trading of our shares of common stock on the NYSE. We did not pay any dividends during the period reflected in the graph.42COMPARISON OF CUMULATIVE TOTAL RETURN 5/20/201012/31/201012/31/201112/31/201212/31/201312/31/201412/31/2015Accretive Health, Inc.Return % 41.4741.42(49.61)(20.90)(25.12)(55.34) Cum $100.00141.47200.06100.8279.7559.7226.67 NYSE Composite IndexReturn % 21.58(3.56)16.2526.406.86(6.42) Cum $100.00121.58117.25136.30172.29184.11172.29 Morningstar HealthInformation Services (1)Return % 17.6711.831.6044.647.66 Cum $100.00117.67131.59133.69193.37208.19 NASDAQ Health Care IndexReturn % 11.464.4827.2457.0428.476.86 Cum $100.00111.46116.45148.17232.69298.93319.43_______________(1)Prior to December 31, 2015, Morningstar discontinued the reporting of the Morningstar Health Information Services index to external users and,therefore, we are unable to report data for such index as of December 31, 2015 without unreasonable effort. As a result, we replaced this index withthe NASDAQ Health Care Index, which we believe includes investments that are similar to the Morningstar Health Information Services index.43The comparisons shown in the graph above are based on historical data and we caution that the stock price performance shown in the graph above is notindicative of, and is not intended to forecast, the potential future performance of our common stock. The information in this "Stock Price Performance Graph"section shall not be deemed to be "soliciting material" or to be "filed" with the SEC, nor shall such information be incorporated by reference into any futurefiling under the Securities Act of 1933, or the Securities Act, or the Securities Exchange Act of 1934, or the Exchange Act, except to the extent that wespecifically incorporate it by reference into such filing.44Item 6.Selected Consolidated Financial DataThe selected consolidated financial data presented below should be read in conjunction with "Management’s Discussion and Analysis of FinancialCondition and Results of Operations," and "Consolidated Financial Statements and Supplementary Data," included elsewhere in this Form 10-K.We derived the consolidated statements of operations and comprehensive income (loss) data for the years ended December 31, 2015, 2014 and 2013,and the consolidated balance sheet data as of December 31, 2015 and 2014 from our audited consolidated financial statements, which are included in thisAnnual Report on Form 10-K. We derived the consolidated statement of operations and comprehensive income (loss) data for the years ended December 31,2012 and 2011 and the consolidated balance sheet data as of December 31, 2012 and 2011 from our audited restated consolidated financial statements,which are not included in this Annual Report on Form 10-K.Selected Financial Data Year Ended December 31, 2015 2014 2013 2012 2011 (In thousands, except per share data)Consolidated Statement of Operations Data: Net services revenue $117,239 $210,140 $504,768 $72,254 $101,966Operating expenses: Cost of services 168,977 182,144 186,752 188,666 158,715Selling, general and administrative 74,963 69,883 79,951 67,750 63,268Restatement and other 9,343 86,766 33,963 3,714 —Total operating expenses 253,283 338,793 300,666 260,130 221,983Income (loss) from operations (136,044) (128,653) 204,102 (187,876) (120,017)Net interest income (expense) 231 302 330 141 26Net income (loss) before income tax provision (135,813) (128,351) 204,432 (187,735) (119,991)Income tax provision (benefit) (51,557) (48,731) 74,349 (67,995) (48,246)Net income (loss) $(84,256) $(79,620) $130,083 $(119,740) $(71,745)Net income (loss) per common share Basic $(0.87) $(0.83) $1.36 $(1.21) $(0.74)Diluted $(0.87) $(0.83) $1.34 $(1.21) $(0.74) As of December 31, 2015 2014 2013 2012 2011 (In thousands)Consolidated Balance Sheet Data: Cash and cash equivalents $103,497 $145,167 $228,891 $176,956 $196,725Working capital (1) $24,237 $41,593 $124,045 $139,852 $161,539Total assets $460,289 $446,373 $509,991 $557,377 $476,280Non-current liabilities $440,975 $325,470 $202,799 $85,848 $65,074Total stockholders’ equity (deficit) $(213,313) $(142,246) $(85,612) $(236,200) $(101,431) (1)We define working capital as total current assets excluding the current portion of deferred tax assets pertaining to the current portion of deferred customer billings, less totalcurrent liabilities excluding the current portion of deferred customer billings. We exclude the current portion of deferred customer billings and related deferred tax assetsfrom the definition of working capital due to the nature of these balances. We adopted the provisions of Accounting Standards Update 2015-17, Income Taxes: BalanceSheet Classification of Deferred Taxes (Topic 740), or ASU 2015-17, on a prospective basis for the reporting period ended December 31, 2015. Consequently, under theguidance of ASU 2015-17, deferred tax assets were classified as non-current in the consolidated balance sheet for the reporting period ended45December 31, 2015. As permitted by ASU 2015-17, the current and non-current deferred tax assets were not retroactively adjusted for the prior reporting periods endedDecember 31, 2014 and 2013.Non-GAAP MeasuresIn order to provide a more comprehensive understanding of the information used by our management team in financial and operational decision-making, we supplement our consolidated financial statements that have been prepared in accordance with GAAP with the following non-GAAP financialmeasures: gross and net cash generated from customer contracting activities, and adjusted EBITDA. Our Board and management team use these non-GAAPmeasures as (i) one of the primary methods for planning and forecasting overall expectations and for evaluating actual results against such expectations and(ii) as a performance evaluation metric in determining achievement of certain executive incentive compensation programs, as well as for incentivecompensation plans for employees.Use of Non-GAAP Financial InformationWe typically invoice customers for base fees and incentive fees on a quarterly or monthly basis, and typically receive cash from customers on a similarbasis. For GAAP reporting purposes, we only recognize these net operating fees and incentive fees as net services revenue to the extent that all the criteria forrevenue recognition are met, which is generally upon contract renewal, termination or "other contractual agreement event", as defined in Note 2, Summary ofSignificant Accounting Policies, to the consolidated financial statements included in this Annual Report on Form 10-K. As such, net operating and incentivefees are typically recognized for GAAP purposes in periods subsequent to the periods in which the services are provided. Therefore, our net services revenueand other items in our GAAP consolidated financial statements and adjusted EBITDA will typically include the effects of billings and collections fromperiods prior to the period in which revenue is recognized. See Note 2, Summary of Significant Accounting Policies, to the consolidated financial statementsfor additional information.Selected Non-GAAP MeasuresThe following table presents selected non-GAAP measures for each of the periods indicated. See below for an explanation of how we calculate and usethese non-GAAP measures, and for a reconciliation of these non-GAAP measures to the most comparable GAAP measures. Year End December 31, 2015 2014 2013 2012 2011 (In thousands)Non-GAAP Measures: Adjusted EBITDA $(86,568) $(15,668) $268,689 $(152,509) $(89,969)Net cash generated from customer contracting activities $26,370 $7,759 $15,562 $47,605 $55,828Gross cash generated from customer contracting activities $230,177 $233,567 $251,641 $272,368 $247,763Gross and Net Cash Generated from Customer Contracting ActivitiesGross and net cash generated from customer contracting activities reflect the change in the deferred customer billings, relative to GAAP net servicesrevenue, and adjusted EBITDA (defined below), respectively. Deferred customer billings include the portion of both (i) invoiced or accrued net operating feesand (ii) cash collections of incentive fees, in each case, that have not met our revenue recognition criteria. Deferred customer billings are included in thedetail of our customer liabilities balance in the consolidated balance sheet. Deferred customer billings are reduced by the amounts of revenue recognizedwhen a revenue recognition event occurs. Gross cash generated from customer contracting activities is defined as GAAP net services revenue, plus the changein deferred customer billings. Accordingly, gross cash generated from customer contracting activities is the sum of (i) invoiced or accrued net operating fees,(ii) cash collections on incentive fees and (iii) other services fees.46Net cash generated from customer contracting activities is defined as adjusted EBITDA, plus the change in deferred customer billings.These non-GAAP measures are used throughout this Form 10-K including "Management’s Discussion and Analysis of Financial Condition and Resultsof Operations."Gross and net cash generated from customer contracting activities include invoices issued to customers that may remain uncollected or may be subjectto credits, and cash collected may be returned to our customers in the form of concessions or other adjustments. Customer concessions and other adjustmentshave occurred in the past and we cannot determine the likelihood that they will again occur in the future.Adjusted EBITDAWe define adjusted EBITDA as net income before net interest income (expense), income tax provision, depreciation and amortization expense, share-based compensation, Restatement-related expense, reorganization-related expense, strategic alternative-related expense and certain non-recurring items. Theuse of adjusted EBITDA to measure operating and financial performance is limited by our revenue recognition criteria, pursuant to which GAAP net servicesrevenue is recognized at the end of a contract or "other contractual agreement event", as defined in Note 2, Summary of Significant Accounting Policies, tothe consolidated financial statements included in this Annual Report on Form 10-K. Adjusted EBITDA does not adequately match corresponding cash flowsresulting from customer contracting activities. Accordingly, as described above, in order to better compare our cash flows from customer contractingactivities to our operating performance, we use additional non-GAAP measures: gross and net cash generated from customer contracting activities. We useadjusted EBITDA in our reconciliation of net cash generated from customer contracting activities to our GAAP consolidated financial statements.We understand that although non-GAAP measures are frequently used by investors, securities analysts, and others in their evaluation of companies,such measures have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results of operations asreported under GAAP. Some of these limitations are:• Gross and net cash generated from customer contracting activities include invoiced or accrued net operating fees, and invoiced as well as collectedincentive fees which may be subject to adjustment or concession prior to the end of a contract or "other contractual agreement event", as defined inNote 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in this Annual Report on Form 10-K;•Gross and net cash generated from customer contracting activities include progress billings on incentive fees that have been collected for a numberof our RCM contracts. These progress billings have, from time-to-time been subject to adjustments, and the fees included in these non-GAAPmeasures may be subject to adjustments in the future;•Net cash generated from customer contracting activities and adjusted EBITDA do not reflect changes in, or cash requirements for, our workingcapital needs;•Net cash generated from customer contracting activities and adjusted EBITDA do not reflect share-based compensation expense;•Net cash generated from customer contracting activities and adjusted EBITDA do not reflect income tax expenses or cash requirements to pay taxes;•Although depreciation and amortization charges are non-cash charges, the assets being depreciated and amortized will often have to be replaced inthe future, and net cash generated from customer contracting activities and adjusted EBITDA do not reflect cash requirements for such replacementsor other purchase commitments, including lease commitments; and47•Other companies in our industry may calculate gross or net cash generated from customer contracting activities or adjusted EBITDA differently thanwe do, limiting its usefulness as a comparative measure.Reconciliation of GAAP and Non-GAAP Measures: The following table presents a reconciliation of adjusted EBITDA and net cash generated fromcustomer contracting activities to net income (loss), and gross cash generated from customer contracting activities to net services revenue the mostcomparable GAAP measures, for each of the periods indicated. Year End December 31, 2015 2014 2013 2012 2011 ( in thousands)Net income (loss) $(84,256) $(79,620) $130,083 $(119,740) $(71,745)Net interest (income) expense (231) (302) (330) (141) (26)Income tax provision (benefit) (51,557) (48,731) 74,349 (67,995) (48,246)Depreciation and amortization expense 8,462 6,047 6,823 6,355 4,862Share-based compensation expense (1) 31,671 20,172 23,801 25,298 25,186Restatement and other (2) 9,343 86,766 33,963 3,714 —Adjusted EBITDA (86,568) (15,668) 268,689 (152,509) (89,969)Change in deferred customer billings (3) 112,938 23,427 (253,127) 200,114 145,797Net cash generated from customer contracting activities 26,370 7,759 15,562 47,605 $55,828Net services revenue (GAAP basis) $117,239 $210,140 $504,768 $72,254 101,966Change in deferred customer billings (3) 112,938 23,427 (253,127) 200,114 145,797Gross cash generated from customer contractingactivities $230,177 $233,567 $251,641 $272,368 $247,763(1)Share-based compensation expense represents the expense associated with stock options and restricted shares granted, as reflected in our Consolidated Statements ofOperations. See Note 5, Share-Based Compensation, to the consolidated financial statements included in this Annual Report on Form 10-K for the detail of the amounts ofshare-based compensation expense.(2)For the years ended December 31, 2015, 2014 and 2013, we incurred $2.5, $57.3 and $23.1 million in Restatement-related costs, respectively. Such costs were incurred tocomplete our Annual Report on Form 10-K and restate historical consolidated financial statements. In addition, we incurred $3.2, $22.1 and $5.2 million for the yearsended December 31, 2015, 2014 and 2013, respectively, in reorganization-related costs as part of the effort to reduce our workforce in certain corporate, administrative andmanagement functions. Such costs include severance payments, healthcare benefits, facilities costs and outplacement job training. Lastly, for the years ended December 31,2015 and 2014, we incurred $3.6 and 7.4 million, respectively, in other non-recurring costs. Such costs included $3.8 million in costs related to the exploration of potentialstrategic alternatives, offset by a decrease of $0.2 million in employment tax expense relating to prior years incurred during the year ended December 31, 2015 and included$6.5 million in costs associated with our transformation office, or Transformation Office, which was created to provide continuity and cross functional accountabilityassociated with the continued execution of our turnaround plan during the period subsequent to Stephen Schuckenbrock's resignation as our Chief Executive Officer andprior to the appointment of Dr. Emad Rizk as our Chief Executive Officer, and $0.9 million in additional employment tax expense relating to prior years incurred during theyear ended December 31, 2014.(3)Deferred customer billings include the portion of both (i) invoiced or accrued net operating fees and (ii) cash collections on incentive fees, in each case, that have not metour revenue recognition criteria. Deferred customer billings are included in the detail of our customer liabilities balance in the consolidated balance sheets. Deferredcustomer billings are reduced by revenue recognized when revenue recognition occurs. Change in deferred customer billings represents the net change in the cumulative netoperating fees and incentive fees that have not met revenue recognition criteria.48Item 7.Management’s Discussion and Analysis of Financial Condition and Results of OperationsManagement’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, should be read in conjunction with ourconsolidated financial statements and the related notes and other financial information included elsewhere in this Annual Report on Form 10-K. Some ofthe information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect toour plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. Please review "RiskFactors" of this Annual Report on Form 10-K for a discussion of important factors that could cause actual results to differ materially from the resultsdescribed in or implied by the forward-looking statements contained in the following discussion and analysis.OverviewWe are a leading provider of services that help healthcare providers generate sustainable improvements in their operating margins and cash flows whilealso improving patient, physician and staff satisfaction for our customers. Our goal is to help our healthcare provider customers deliver high-quality care andserve their communities, and do so in a financially sustainable way. We help our customers more efficiently manage their revenue cycle process and strive tohelp prepare them for the evolving dynamics of the healthcare industry, particularly the challenges and opportunities presented by the shift to value-basedreimbursement which is designed to reward the value, rather than the volume, of healthcare services provided.While we cannot control the changes in the regulatory environment imposed on our customers, we believe that our role becomes increasingly moreimportant to our customers as macroeconomic, regulatory and healthcare industry conditions continue to impose financial pressure on healthcare providers tomanage their operations effectively and efficiently.RCM continues to be our primary service offering. Our RCM offering helps our customers more efficiently manage their revenue cycle process. Thisencompasses patient registration, insurance and benefit verification, medical treatment documentation and coding, bill preparation and collections. We focuson optimizing our customers’ entire, end-to-end revenue cycle process, which we believe is more advantageous than alternative approaches that merely focuson certain aspects or sub-processes within the revenue cycle. Our PAS offering complements our RCM offering by strengthening our customer’s compliancewith certain third-party payer requirements and limiting denials of claims. For example, our PAS offering helps customers determine whether to classify ahospital visit as an in-patient or an out-patient observation case for billing purposes. We believe that the population health capabilities we are integratinginto our RCM offering will enhance our value-based reimbursement capabilities to help providers enter into risk-bearing arrangements with payers.We operate our business as a single segment configured with our significant operations and offerings organized around the business of providing end-to-end RCM services to U.S.-based hospitals and other healthcare providers.Summary of OperationsDuring 2015, we continued to focus our efforts on several key strategic and operational imperatives aimed at delivering on our critical customerobligations and continued to expand the depth and breadth of our services. In response to a letter received in July 2015 from Ascension, our largest customerand the nation's largest Catholic and non-profit health system, our Board commenced a strategic review process to enhance shareholder value. The strategicreview process concluded in December 2015, with the announcement of a long-term strategic partnership with Ascension to renew, revise and expand ourexisting services agreement for a 10-year term effective February 16, 2016.In addition, we continued to pursue the following initiatives intended to create value for our customers:49•Increasing investment in IT: Developing and licensing new proprietary technology and investing in capabilities that enable more seamlessintegration with our customers’ existing technology.•Strengthening front-line teams: Improving the capabilities and quality of our workforce in the field through better training and improvements in ourhiring and retention processes.•Simplifying our measurement model: Developing and implementing a less complex measurement model to improve customer satisfaction.•Expanding our shared service center capabilities and infrastructure: Increasing opportunities for our customers to realize operating efficiencies andachieve margin improvements by utilizing our shared service centers.We believe these initiatives will position us to help our healthcare provider customers deliver high-quality care and serve their communities, and do soin a financially sustainable way. As a result of these initiatives and our expanded relationship with Ascension, we expect to be able to grow gross cashgenerated from contracting activities in the RCM business in 2016 and beyond.Net Services RevenueRevenues from our RCM agreements consist primarily of net operating fees and incentive fees that are primarily performance-based and/or contingentfees. The vast majority of our operations relate to our RCM offering, however, the criteria for recognition of revenue for RCM services results in substantialvariability in the net services revenue recognized between periods.Other services revenue is primarily derived from our PAS offering.The following table summarizes the composition of our net services revenue for the years ended December 31, 2015, 2014 and 2013: Year ended December 31, 2015 2014 2013RCM services: net operating fees $66,234 56.5% $77,456 36.9% $224,937 44.6%RCM services: incentive fees 20,311 17.3% 99,934 47.6% 210,303 41.7%RCM services: other 16,381 14.0% 8,103 3.8% 3,859 0.7%Other services fees 14,313 12.2% 24,647 11.7% 65,669 13.0%Total net services revenue $117,239 100.0% $210,140 100.0% $504,768 100.0%Cost of ServicesOur cost of services includes:•Infused management and technology expenses. We incur costs related to our management and staff employees who are devoted to customeroperations. These expenses consist primarily of the wages, bonuses, benefits, share-based compensation, travel and other costs associated withdeploying our employees to customer sites to guide and manage our customers’ revenue cycle or population health management operations. Theemployees we deploy to customer sites typically have significant experience in revenue cycle operations, care coordination, technology, qualitycontrol or other management disciplines. Included in these expenses is an allocation of the costs associated with maintaining, improving anddeploying our integrated proprietary technology suite.50•Shared services center costs. We incur expenses related to salaries and benefits of employees in our shared services centers, as well as non-payrollcosts associated with operating our shared services centers.•Other expenses. We incur expenses related to our employees who manage PAS and other services. These expenses consist primarily of wages,bonuses, benefits, share-based compensation and other costs.Selling, General and Administrative ExpensesSelling, general and administrative expenses consist primarily of expenses for executives, sales, corporate IT, legal, regulatory compliance, finance andhuman resources personnel, professional service fees related to external legal, tax, audit and advisory services, insurance premiums, facility charges and othercorporate expenses.Restatement and Other CostsRestatement and other costs include Restatement and reorganization-related expenses, costs related to the exploration of strategic alternatives andcertain other non-recurring costs. Restatement-related costs were incurred starting in early 2013, following our determination to restate financial results. Wealso reduced our workforce in certain corporate, administrative, operations and management functions as part of a reorganization effort beginning in June2013 and continuing into 2015. Reorganization costs consist of severance payments, healthcare benefits and outplacement job training. In 2015, wecontinued to incur costs related to remediation of internal control weaknesses and higher than normal audit fees. In 2015, we incurred costs relating to reviewof strategic alternatives to drive long term growth. We also incurred non-recurring costs due to additional employment tax expense in 2014 relating to prioryears regarding reclassification of contractors to employee status. In addition, we also incurred other non-recurring costs in 2014 related to ourTransformation Office.Interest IncomeInterest income is derived from the return achieved from our cash and cash equivalents.Income TaxesIncome tax expense consists of federal and state income taxes in the United States and other local taxes in India.Application of Critical Accounting Policies and Use of EstimatesOur consolidated financial statements reflect the assets, liabilities and results of operations of Accretive Health, Inc. and our wholly-owned subsidiaries.All material intercompany transactions and balances have been eliminated in consolidation. Our consolidated financial statements have been prepared inaccordance with GAAP.The preparation of financial statements in conformity with GAAP requires us to make estimates and judgments that affect the amounts reported in ourconsolidated financial statements and the accompanying notes. We regularly evaluate the accounting policies and estimates we use. In general, we baseestimates on historical experience and on assumptions that we believe to be reasonable given our operating environment. Estimates are based on our bestknowledge of current events and the actions we may undertake in the future. Although we believe all adjustments considered necessary for fair presentationhave been included, our actual results may differ materially from our estimates.We believe that the accounting policies described below involve our more significant judgments, assumptions and estimates, and therefore, could havethe greatest potential impact on our consolidated financial statements. In addition, we believe that a discussion of these policies is necessary to understandand evaluate the consolidated financial statements contained in this Annual Report on Form 10-K. For further information on our critical and othersignificant accounting policies, see Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in this AnnualReport on Form 10-K.51Revenue RecognitionRevenue is generally recognized when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) services have beenrendered, (iii) a fee is fixed or determinable and (iv) collectability is reasonably assured. Our primary source of revenue is RCM service fees. We also generaterevenue from other fixed fee consulting or transactional fee engagements. Net services revenue, as reported in the consolidated statement of operations andcomprehensive income (loss), consist of: (a) RCM service fees and (b) professional service fees earned on a fixed fee, transactional fee or time and materialsbasis. RCM service fees are primarily contingent, but along with fixed fees are generally viewed as one deliverable. To the extent that certain RCM servicefees are fixed and not subject to refund, adjustment or concession, these fees are generally recognized into revenue on a straight-line basis over the term of thecontract.RCM service fees that are contingent in nature are recognized as revenue once all the criteria for revenue recognition are met, which is generally at theend of a contract or other contractual agreement events. Revenue is recognized for RCM service fees upon the contract reaching the end of its stated term(such that the contract relationship will not continue in its current form) to the extent that cash has been received for invoiced fees and there are no disputesat the conclusion of the term of the contract.If fees or services are disputed by a customer at the end of a contract, a settlement agreement entered into with the customer triggers revenuerecognition. An "other contractual agreement event" occurs when a renewal or amendment to an existing contract is executed in which the parties reachagreement on prior fees. We recognize revenue up to the amount covered by such agreements.RCM service fees generally consist of two types of contingent fees: (i) net operating fees and (ii) incentive fees.Net Operating FeesWe generate net operating fees to the extent we are able to assist customers in reducing the cost of their revenue cycle operations. Our delivery modelleverages the customers’ RCM personnel. Our net operating fees consist of (i) gross base fees invoiced to customers; less (ii) corresponding costs ofcustomers’ revenue cycle operations which we to pay pursuant to our RCM agreements, including salaries and benefits for the customers' RCM personnel,and related third-party vendor costs; less (iii) any cost savings we share with customers.Net operating fees are recorded in deferred customer billings until we recognize revenue on a customer contract at the end of a contract or uponreaching an "other contractual agreement event." The amount of unpaid costs of customers’ revenue cycle operations and shared cost savings are reported asaccrued service costs within customer liabilities on our consolidated balance sheet.Incentive FeesWe also generate revenue in the form of performance-based fees when we improve our customers’ revenue yield. These performance metrics vary bycustomer contract. However, certain contracts contain a contract-to-date performance metric that is not resolved until the end of the term of the contract. Insome cases, when a customer agreement is extended under an evergreen provision or other amendment, fees may not be considered finalized until the end ofthe customer relationship. Incentive fees associated with performance metrics which are not resolved until the end of the term of the contract or an "othercontractual agreement event" are recorded in deferred customer billings until we recognize revenue. Incentive fees are considered contingent fees.Estimates of Cost of Customers’ Revenue Cycle OperationsCost of customers’ revenue cycle operations consist of invoiced costs from customers and estimated costs not yet invoiced. These costs consist ofpayroll and third-party non-payroll costs. Customers’ payroll costs are reasonably estimable; however, we are significantly dependent upon informationgenerated from our customers’52records to determine the amount of third-party non-payroll costs. Furthermore, because our customers report information on a cash basis, rather than on anaccrual basis, we estimate the amount of non-payroll costs incurred but not invoiced in order to properly calculate the deferred customer billings balance ofthe end of each reporting period. Such estimated costs are based on contractually allowable expenses, historical reimbursed costs and estimated lag in thetiming of receipt of information for third-party non-payroll costs. The timing difference includes the lag between the services rendered by third-party vendorsand their billings to our customers. The accruals for such costs are included in accrued service costs and are part of the net operating fees included in deferredcustomer billings within the customer liabilities balance in the consolidated balance sheet. These estimates are based on the best available information andare subject to future adjustments based on additional information received from our customers. Due to the variable nature of these estimates, the adjustmentscan have a significant impact on the deferred customer billings balance for any reporting period in the future.Income TaxesWe account for income taxes under the asset and liability method. We record deferred tax assets and liabilities for future income tax consequences thatare attributable to differences between the carrying amount of assets and liabilities for financial statement purposes and the income tax bases of such assetsand liabilities. We base the measurement of deferred tax assets and liabilities on enacted tax rates that we expect will apply to taxable income in the year weexpect to settle or recover those temporary differences. We recognize the effect on deferred income tax assets and liabilities of any change in income tax ratesin the period that includes the enactment date.The carrying values of deferred income tax assets and liabilities reflect the application of our income tax accounting policies, and are based onmanagement’s assumptions and estimates about future operating results and levels of taxable income, and judgments regarding the interpretation of theprovisions of current accounting principles. We provide a valuation allowance for deferred tax assets if, based upon the weight of all available evidence, bothpositive and negative, it is more likely than not that some or all of the deferred tax assets will not be realized. We have established a partial valuationallowance with respect to certain separate state income net operating loss carryforward deferred tax assets. As of December 31, 2015, we have recorded a netdeferred tax asset of approximately $1.5 million for costs related to the exploration of potential strategic alternatives. Some or all of this deferred tax assetmay not be realized upon the execution of the Transactions.The estimated effective tax rate for the year is applied to our quarterly operating results. In the event that there is a significant unusual or discrete itemrecognized, or expected to be recognized, in our quarterly operating results, the tax attributable to that item is calculated separately and recorded at the sametime as the unusual or discrete item, such as the resolution of prior-year tax matters.We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the position will be sustained on examination bytaxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position aremeasured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.Interest and penalties related to income taxes are recognized in our tax provision in the consolidated statement of operations and comprehensiveincome (loss). See Note 8, Income Taxes, to our consolidated financial statements incorporated into this Annual Report on Form 10-K for additionalinformation on income taxes.Share-Based Compensation ExpenseWe determine the expense for all employee share-based compensation awards by estimating their fair value and recognizing that value as an expense,on a ratable basis, in our consolidated financial statements over the requisite service period in which our employees earn the awards. The fair value ofperformance and service condition stock options is calculated using the Black-Scholes option pricing model and, for market condition stock options, the fairvalue is estimated using Monte Carlo simulations.53To determine the fair value of a share-based award using the Black-Scholes option pricing model, we make assumptions regarding the risk-free interestrate, expected future volatility, expected life of the award, and expected forfeitures of the awards. These inputs are subjective and generally requiresignificant analysis and judgment to develop. We aggregate all employees into one pool for valuation purposes. The risk-free rate is based on the U.S.treasury yield curve in effect at the time of grant. We estimate the expected volatility of our share price by reviewing the historical volatility levels of ourcommon stock in conjunction with that of public companies that operate in similar industries or are similar in terms of stage of development or size and thenprojecting this information toward its future expected volatility. We exercise judgment in selecting these companies, as well as in evaluating the availablehistorical and implied volatility for these companies. We calculate the expected term in years for each stock option using a simplified method based on theaverage of each option’s vesting term and original contractual term. We apply an estimated forfeiture rate derived from our historical data and our estimatesof the likely future actions of option holders when recognizing the share-based compensation expense of the options.To determine the fair value of a share-based award using Monte Carlo simulations, we make assumptions regarding the risk-free interest rate, expectedfuture volatility, expected dividend yield and performance period. The risk-free rate is based on the U.S. treasury yield curve in effect at the time of grant. Weestimate the expected volatility of the share price by reviewing the historical volatility levels of our common stock in conjunction with that of publiccompanies that operate in similar industries or are similar in terms of stage of development or size and then projecting this information toward our futureexpected volatility. Dividend yield is determined based on our future plans to pay dividends. We calculate the performance period based on the specificmarket condition to be achieved and derived from historical data and estimates of future performance.We recognize compensation expense, net of forfeitures, using a straight-line method over the applicable vesting period. Each appropriate quarter, theshare-based compensation expense is adjusted to reflect all options that vested or were forfeited during the period.We account for stock options issued to non-employees based on their estimated fair value determined using the Black-Scholes option pricing model.However, the fair value of the equity awards granted to non-employees is remeasured on each balance sheet date until the awards vest, and the relatedexpense is adjusted based on the resulting change in value, if any. The non-employee share-based compensation expense is recognized over the performanceperiod, which is the vesting period. Upon vesting, the performance of the non-employee is deemed complete and the vested awards are not subsequentlyremeasured.The fair value of modifications to share-based awards is generally estimated using the Black-Scholes option pricing model. If a share-basedcompensation award is modified after the grant date, incremental compensation expense is recognized in an amount equal to the excess of the fair value ofthe modified award over the fair value of the original award immediately before the modification. Incremental compensation expense for vested awards isrecognized immediately. For unvested awards, the sum of the incremental compensation expense and the remaining unrecognized compensation expense forthe original award on the modification date is recognized over the modified service period.New Accounting StandardsFor additional information regarding new accounting guidance, see Note 2, Summary of Significant Accounting Policies, to our consolidated financialstatements included in this Annual Report on Form 10-K, which provides a summary of our significant accounting policies and recently adopted accountingstandards and disclosures.54Results of OperationsYear Ended December 31, 2015 Compared to Year Ended December 31, 2014The following table provides consolidated operating results and other operating data for the periods indicated: Year Ended December 31, 2015 vs. 2014Change 2015 2014 Amount % (In thousands)Consolidated Statement of Operations Data: RCM services: net operating fees $66,234 $77,456 $(11,222) (14.5)%RCM services: incentive fees 20,311 99,934 (79,623) (79.7)%RCM services: other 16,381 8,103 8,278 n.m.Other services fees 14,313 24,647 (10,334) (41.9)%Total net services revenue 117,239 210,140 (92,901) (44.2)%Operating expenses: Cost of services 168,977 182,144 (13,167) (7.2)%Selling, general and administrative 74,963 69,883 5,080 7.3 %Restatement and other 9,343 86,766 (77,423) (89.2)%Total operating expenses 253,283 338,793 (85,510) (25.2)%Income (loss) from operations (136,044) (128,653) (7,391) 5.7 %Net interest income 231 302 (71) (23.5)%Net income (loss) before income tax provision (135,813) (128,351) (7,462) 5.8 %Income tax provision (benefit) (51,557) (48,731) (2,826) 5.8 %Net income (loss) (84,256) (79,620) (4,636) 5.8 %Net interest income (231) (302) 71 (23.5)%Income tax provision (benefit) (51,557) (48,731) (2,826) 5.8 %Depreciation and amortization expense 8,462 6,047 2,415 39.9 %Share-based compensation expense 31,671 20,172 11,499 57.0 %Restatement and other 9,343 86,766 (77,423) (89.2)%Adjusted EBITDA (86,568) (15,668) (70,900) n.m.Change in deferred customer billings 112,938 23,427 89,511 n.m.Net cash generated from customer contracting activities $26,370 $7,759 $18,611 n.m.Net services revenue $117,239 $210,140 $(92,901) (44.2)%Change in deferred customer billings 112,938 23,427 89,511 n.m.Gross cash generated from customer contracting activities $230,177 $233,567 $(3,390) (1.5)%Components of Gross Cash Generated from Customer Contracting Activities: RCM services: net operating fee $123,185 $121,730 $1,455 1.2 %RCM services: incentive fee 67,656 77,239 (9,583) (12.4)%RCM services: other 25,023 9,952 15,071 n.m.Total RCM services fees 215,864 208,921 6,943 3.3 %Other services fees 14,313 24,646 (10,333) (41.9)%Gross cash generated from customer contracting activities $230,177 $233,567 $(3,390) (1.5)%n.m.—Not meaningful55Net Services RevenueNet services revenue decreased by $92.9 million, or 44.2%, from $210.1 million for the year ended December 31, 2014 to $117.2 million for the yearended December 31, 2015. The decrease was primarily driven by fewer RCM contractual agreement events in the year ended December 31, 2015. RCMservices other revenue increased by $8.3 million in 2015 compared to 2014, primarily due to significant progress toward completion of a client accountsreceivable collection project started in 2015.In addition, other service fees decreased by $10.3 million in 2015 as compared to 2014, primarily driven by a decrease in PAS revenue ofapproximately $8.0 million. The decrease was the result of the two-midnight rule, a regulatory change in the healthcare industry related to billingclassifications for certain hospital patients.Gross Cash Generated from Customer Contracting Activities (Non-GAAP)Gross cash generated from customer contracting activities decreased by $3.4 million, or 1.5%, from $233.6 million for the year ended December 31,2014, to $230.2 million for the year ended December 31, 2015. The decrease was primarily the result of an $8.0 million decrease in PAS revenue, offset inpart by an increase in gross cash generated from RCM services. RCM services other revenue increased in 2015 compared to 2014, primarily due to significantprogress toward completion of a client accounts receivable collection project which started in 2015.Gross cash generated from customer contracting activities is a non-GAAP measure. Please see "Selected Consolidated Financial Data - Selected Non-GAAP Measures" for an explanation of how we calculate and use gross cash generated from customer contracting activities and for its reconciliation to netservices revenue, the most comparable GAAP measure.Cost of ServicesCost of services decreased by $13.2 million, or 7.2%, from $182.1 million for the year ended December 31, 2014, to $169.0 million for the year endedDecember 31, 2015. The decrease in cost of services was primarily a result of decreased costs in our PAS business and a decrease in incentive compensationcosts, offset by an increase in depreciation and amortization expense of $3.2 million due to investments in our shared services centers and infrastructurerelated to RCM.Selling, General and Administrative ExpensesSelling, general and administrative expenses increased by $5.1 million, or 7.3%, from $69.9 million for the year ended December 31, 2014 to $75.0million for the year ended December 31, 2015. The increase was primarily due to an increase of $11.1 million in stock based compensation expense, drivenby a larger number of RSAs granted in 2015 and a cash bonus of $1.8 million paid to 2014 Bonus Plan RSA Grantees. In addition, modification of share-based awards granted to our former chief executive officer during the second quarter of 2015 resulted in a $3.1 million increase in share-based compensation.This increase was offset by a decrease in other selling, general and administrative expenses as a result of the continuation of cost reduction initiatives startedin the prior year and a decrease in incentive compensation costs.56Net Cash Generated from Customer Contracting Activities (Non-GAAP)Net cash generated from customer contracting activities increased by $18.6 million from $7.8 million for the year ended December 31, 2014 to $26.4million for the year ended December 31, 2015. This increase was primarily due to lower cash-based cost of services and selling, general and administrativeexpenses offset by a decrease in gross cash generated of $3.4 million as described above. Net cash generated from customer contracting activities is a non-GAAP measure. Please see "Selected Consolidated Financial Data - Selected Non-GAAP Measures" for an explanation of how we calculate and use net cashgenerated from customer contracting activities and for its reconciliation to net income (loss), the most comparable GAAP measure.Restatement and Other CostsRestatement and other costs decreased by $77.4 million, from $86.8 million for the year ended December 31, 2014, to $9.3 million for the year endedDecember 31, 2015. The decrease was primarily driven by a reduction in Restatement-related costs of $54.8 million, reorganization-related costs of $18.9million, and $6.5 million in costs related to our Transformation Office in 2014. This decrease was offset by $3.8 million in costs related to the review ofstrategic alternatives. Such costs are considered unusual in nature by the Company and are reported separately under the caption "Restatement and other" inthe accompanying consolidated statement of operations and comprehensive income (loss).Income TaxesTax benefit increased by $2.8 million to $51.6 million for the year ended December 31, 2015 from $48.7 million for the year ended December 31,2014. Our effective tax rate was approximately 38.0% for both the years ended December 31, 2015 and 2014. Our tax rate is affected by discrete items thatmay occur in any given year, but not consistent from year to year.57Year Ended December 31, 2014 Compared to Year Ended December 31, 2013The following table sets forth consolidated operating results and other operating data for the periods indicated: Year Ended December 31, 2014 vs. 2013Change 2014 2013 Amount % (In thousands)Consolidated Statement of Operations Data: RCM services: net operating fees $77,456 $224,937 $(147,481) (65.6)%RCM services: incentive fees 99,934 210,303 (110,369) (52.5)%RCM services: other 8,103 3,859 4,244 n.m.Other services fees 24,647 65,669 (41,022) (62.5)%Total net services revenue 210,140 504,768 (294,628) (58.4)%Operating expenses: Cost of services 182,144 186,752 (4,608) (2.5)%Selling, general and administrative 69,883 79,951 (10,068) (12.6)%Restatement and other 86,766 33,963 52,803 n.m.Total operating expenses 338,793 300,666 38,127 12.7 %Income (loss) from operations (128,653) 204,102 (332,755) n.m.Net interest income 302 330 (28) (8.5)%Net income (loss) before income tax provision (128,351) 204,432 (332,783) n.m.Income tax provision (benefit) (48,731) 74,349 (123,080) n.m.Net income (loss) (79,620) 130,083 (209,703) n.m.Net interest income (302) (330) 28 (8.5)%Income tax provision (benefit) (48,731) 74,349 (123,080) n.m.Depreciation and amortization expense 6,047 6,823 (776) (11.4)%Share-based compensation expense 20,172 23,801 (3,629) (15.2)%Restatement and other 86,766 33,963 52,803 n.mAdjusted EBITDA (15,668) 268,689 (284,357) n.m.Change in deferred customer billings 23,427 (253,127) 276,554 n.m.Net cash generated from customer contracting activities $7,759 $15,562 $(7,803) (50.1)%Net services revenue $210,140 $504,768 $(294,628) (58.4)%Change in deferred customer billings 23,427 (253,127) 276,554 n.m.Gross cash generated from customer contracting activities $233,567 $251,641 $(18,074) (7.2)%Components of Gross Cash Generated from Customer Contracting Activities: RCM services: net operating fee $121,730 $106,453 $15,277 14.4 %RCM services: incentive fee 77,239 75,660 1,579 2.1 %RCM services: other 9,952 3,859 6,093 n.m.Total RCM services fees 208,921 185,972 22,949 12.3 %Other services fees 24,646 65,669 (41,023) (62.5)%Gross cash generated from customer contracting activities $233,567 $251,641 $(18,074) (7.2)%n.m.—Not meaningfulNet Services RevenueNet services revenue decreased by $294.6 million, or 58.4%, from $504.8 million for the year ended December 31, 2013 to $210.1 million for the yearended December 31, 2014. The decrease was primarily driven by RCM contractual agreement events in the year ended December 31, 2013, which resulted inrevenue recognition of $435.2 million. This decrease was partially offset by other contractual agreement events amounting to $177.4 million in revenuerecognition for the year ended December 31, 2014.58In addition, other service fees decreased by $36.8 million in 2014 as compared to 2013, primarily driven by a decrease in PAS revenue ofapproximately $32.6 million. The decrease is the result of the aforementioned two-midnight rule. PAS revenue and profitability continued to be negativelyimpacted in 2015 by the two-midnight rule.Gross Cash Generated from Customer Contracting Activities (Non-GAAP)Gross cash generated from customer contracting activities decreased by $18.1 million, or 7.2%, from $251.6 million for the year ended December 31,2013, to $233.6 million for the year ended December 31, 2014. The decrease was primarily the result of a $32.6 million decrease in PAS revenue.Additionally, 2013 also included $8.2 million in other service fees from the settlement of a former population health contract. This decrease was offset by anincrease in gross cash generated with customers affiliated with Ascension, as approximately $20.1 million in credits were issued to such customers during2013 in accordance with the terms of the new agreements entered into during the year.Gross cash generated from customer contracting activities is a non-GAAP measure. Please see "Selected Consolidated Financial Data - Selected Non-GAAP Measures" for an explanation of how we calculate and use gross cash generated from customer contracting activities and for its reconciliation to netservices revenue, the most comparable GAAP measure.Cost of ServicesTotal cost of services decreased by $4.6 million, or 2.5%, from $186.8 million for the year ended December 31, 2013, to $182.1 million for the yearended December 31, 2014. The decrease in cost of services was primarily a result of decreased costs in our PAS business, offset by an increased investment inIT and the shared service centers' capabilities and infrastructure related to RCM.Selling, General and Administrative ExpensesSelling, general and administrative expenses decreased by $10.1 million, or 12.6%, from $80.0 million for the year ended December 31, 2013 to $69.9million for the year ended December 31, 2014. The $10.1 million decrease was primarily due to cost reduction initiatives started in the prior year.Net Cash Generated from Customer Contracting Activities (Non-GAAP)Net cash generated from customer contracting activities decreased by $7.8 million from $15.6 million for the year ended December 31, 2013 to $7.8million for the year ended December 31, 2014. This decrease was primarily due to lower gross cash generated of $18.1 million, offset by a decrease of $10.1million in selling, general and administrative expenses as described above. Net cash generated from customer contracting activities is a non-GAAP measure.Please see "Selected Consolidated Financial Data - Selected Non-GAAP Measures" for an explanation of how we calculate and use net cash generated fromcustomer contracting activities and for its reconciliation to net income (loss), the most comparable GAAP measure.Restatement and Other CostsRestatement and other costs increased $52.8 million from $34.0 million for the year ended December 31, 2013 to $86.8 million for the year endedDecember 31, 2014. The increase was primarily driven by an increase in Restatement-related costs of $34.2 million, reorganization-related costs of $16.9million and $6.5 million in costs incurred through our Transformation Office. This increase was offset by a decrease of $4.8 million of litigation-related andother costs. These costs are considered unusual in nature by management and are reported separately under the caption "Restatement and other" in theaccompanying consolidated statement of operations and comprehensive income (loss).59Income TaxesTax expense decreased by $123.0 million, from $74.3 million in tax expense for the year ended December 31, 2013 to a tax benefit of $48.7 millionfor the year ended December 31, 2014. Our effective tax rate for the years ended December 31, 2014 and 2013 were approximately 38.0% and 36.4%,respectively. Our tax rate is affected by recurring items, permanent differences and state income taxes. It is also affected by discrete items that may occur inany given year, but are not consistent from year to year.Liquidity and Capital ResourcesCash flows from operating, investing and financing activities, as reflected in our Consolidated Statements of Cash Flows, are summarized in thefollowing table: Year Ended December 31, 2015 2014 2013 (In thousands)Net cash provided by (used in) operating activities $(23,812) $(77,236) $54,423Net cash used in investing activities (22,298) (6,034) (1,877)Net cash provided by (used in) financing activities 4,940 (194) (100)Effect of exchange rate changes on cash (500) (260) (511)Net increase (decrease) in cash and cash equivalents $(41,670) $(83,724) $51,935As of December 31, 2015, 2014 and 2013, we had cash and cash equivalents of $103.5 million, $145.2 million and $228.9 million, respectively. Thesebalances consist primarily of highly liquid money market funds. Our cash and cash equivalents, at any time, include amounts paid to us in advance bycustomers for the purpose of reimbursing their revenue cycle operations costs. See Note 2, Summary of Significant Accounting Policies, to our consolidatedfinancial statements included in this Annual Report on Form 10-K for additional information. We expect that the combination of our current liquidity andexpected additional cash generated from operations will be sufficient to satisfy our anticipated cash requirement through at least the next twelve months.Year Ended December 31, 2015 Compared to Year Ended December 31, 2014Operating ActivitiesCash from operating activities improved by $53.4 million, from cash use of $77.2 million for the year ended December 31, 2014, to cash use of $23.8million for the year ended December 31, 2015. The improvement was primarily attributable to a decrease in Restatement expenditures of $54.8 million from$57.3 million, for the year ended December 31, 2014 to $2.5 million for the year ended December 31, 2015.Investing ActivitiesCash used in investing activities increased by $16.3 million from $6.0 million for the year ended December 31, 2014, to $22.3 million for the yearended December 31, 2015. This increase was due to the purchase of computer hardware and software and for additional leasehold improvements related to theopening of a new shared services center and purchase of short-term investments.Financing ActivitiesCash used in financing activities increased by $5.1 million for the year ended December 31, 2015 primarily due to the expiration and non-renewal ofour line of credit on February 15, 2015. The $5.0 million demand deposit that secured our line of credit was reclassified from restricted cash into cash andcash equivalents at March 31, 2015 as a result of the expiration.60Year Ended December 31, 2014 Compared to Year Ended December 31, 2013Operating ActivitiesCash from operating activities decreased by $131.7 million from cash provided of $54.4 million for the year ended December 31, 2013 to cash used of$77.2 million for the year ended December 31, 2014. The decrease was primarily attributable to timing of customer reimbursements and the transition of aportion of our RCM agreements to eliminate our gross base fees together with our financial obligation to pay our customers' revenue cycle operationsexpenses. The additional decrease is also due to an increase in Restatement and other expenditures of $52.8 million from $34.0 million for the year endedDecember 31, 2013 to $86.3 million for the year ended December 31, 2014.Investing ActivitiesCash used in investing activities increased by $4.1 million from $1.9 million for the year ended December 31, 2013 to $6.0 million for the year endedDecember 31, 2014. This increase was due to an increase in investment in IT and the shared service centers' capabilities and infrastructure.Financing ActivitiesCash used in financing activities increased by $0.1 million from $0.1 million for the year ended December 31, 2013 to $0.2 million for the year endedDecember 31, 2014. The decrease is a result of an increase in treasury stock purchases of $0.2 million from $0.2 million the year ended December 31, 2013 to$0.4 million for the year ended December 31, 2014, offset by an increase in excess tax benefit from share-based awards of $0.1 million.Revolving Credit FacilityIn September 2011, we reduced our outstanding line of credit with the Bank of Montreal from $15.0 million to $3.0 million. Our line of credit expiredon February 15, 2015 and was not renewed. The $3.0 million line of credit could only be utilized in the form of letters of credit and was secured by a $5.0million demand deposit with the Bank of Montreal. The line of credit had an initial term of three years and was renewable annually thereafter. As ofDecember 31, 2014 and 2013, we had outstanding letters of credit of approximately $0.7 million and $0.9 million, respectively, which reduced the availableline of credit to $2.3 million and $2.1 million, respectively.Future Capital NeedsIn connection with our strategic initiatives, we plan to continue to enhance customer service by increasing our investment in technology to enable oursystems to more effectively integrate with our customers’ existing technologies. We plan to continue to deploy resources to strengthen our informationtechnology infrastructure in order to drive additional value for our customers. We also continue to invest in our shared services capabilities. We also plan onexpanding our capabilities in India which will require investments. We may also selectively pursue acquisitions and/or strategic relationships that willenable us to broaden or further enhance our offerings.Additionally, new business development remains a priority as we plan to continue to boost our sales and marketing efforts. We plan to continue to addexperienced personnel to our sales organization, develop more disciplined sales processes, and create an integrated marketing capability.61Contractual ObligationsLeasesThe following table presents our obligations and commitments to make future minimum rental payments under all non-cancelable operating leaseshaving remaining terms in excess of one year as of December 31, 2015 (in thousands): 2016 2017 2018 2019 2020 Thereafter TotalFuture minimum rental payments $5,267 $6,559 $6,275 $5,620 $5,395 $13,178 $42,294We rent office space and equipment under a series of operating leases, primarily for our Chicago corporate office, shared services centers and Indiaoperations. Our leases contain various rent holidays and rent escalation clauses and entitlements for tenant improvement allowances. Lease payments areamortized to expense on a straight-line basis over the lease term.Uncertain Tax PositionsWe have a $1.2 million liability for uncertain tax positions as of December 31, 2015. These have been excluded from the "Contractual Obligations"table as we cannot reasonably estimate the period of cash settlement for the tax positions presented in our financial statements as a reduction of our deferredtax asset.Off-Balance Sheet ArrangementsOther than operating leases for office space and the revolving credit facility as noted above, there were no off-balance sheet transactions, arrangementsor other relationships with other persons in 2015, 2014 or 2013 that would have affected our liquidity or the availability of, or requirements for, capitalresources.62Item 7A.Qualitative and Quantitative Disclosures about Market RiskInterest Rate Sensitivity. Our interest income is primarily generated from interest earned on operating cash accounts. Our exposure to market risksrelated to interest expense as of December 31, 2015 was limited to interest earned on our restricted cash equivalents. We do not enter into interest rate swaps,caps or collars or other hedging instruments. As a result, we believe that the risk of a significant impact on our operating income from interest ratefluctuations is not substantial.Foreign Currency Exchange Risk. Our results of operations and cash flows are subject to fluctuations due to changes in the Indian rupee because aportion of our operating expenses are incurred by our subsidiary in India and are denominated in Indian rupees. However, we do not generate any revenuesoutside of the United States. For the years ended December 31, 2015, 2014 and 2013, 7%, 5% and 4%, respectively, of our expenses were denominated inIndian rupees. As a result, we believe that the risk of a significant impact on our operating income from foreign currency fluctuations is not substantial.Item 8.Consolidated Financial Statements and Supplementary DataThe financial statements required by this Item are located beginning on page F-1 of this report.Item 9.Changes in and Disagreements with Accountants on Accounting and Financial DisclosureNone63Item 9A.Controls and ProceduresThis Item 9A includes information concerning the controls and controls evaluation referred to in the certifications of our Chief Executive Officer andChief Financial Officer required by Rule 13a-14 of the Exchange Act included in this Annual Report as Exhibits 31.1 and 31.2.OverviewAs previously disclosed under "Item 9A - Controls and Procedures" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, orthe 2014 10-K, we concluded that our internal control over financial reporting was not effective as a result of the material weaknesses identified in the 201410-K.One of our goals during the first half of 2015 was to complete, and file, our delinquent financial reports. This goal was accomplished on June 23, 2015as we filed our 2014 10-K, and two weeks later, on July 7, 2015, we filed our Form 10-Q for the three month period ended March 31, 2015, and becamecurrent with our SEC financial statement filing requirements. During the first half of 2015, we spent considerable time, and deployed considerable resources,in redesigning our internal controls over financial reporting. Significant effort was expended in the second half of 2015 implementing and executing the newcontrols. In light of the above timeline, we are unable to demonstrate the sustainability of the controls we have implemented and are therefore unable toconclude that we have remediated our material weaknesses; however, we continue to invest significant time and resources and take actions to remediatematerial weaknesses in our internal control over financial reporting.While our remediation efforts continue, we have relied on and will continue to rely on extensive, temporary manual procedures and other measures asneeded to assist us with meeting the objectives otherwise fulfilled by an effective internal control environment. These procedures include, but are not limitedto:•Execution of a more thorough and repeatable financial statement close process, thereby allowing us to conduct additional analysis and substantiveprocedures, including preparation of account reconciliations and making additional adjustments as necessary to verify the accuracy andcompleteness of our financial reporting; and•Hiring additional resources and retaining outside consultants with relevant accounting experience, skills and knowledge, working under oursupervision and direction to assist with our remediation efforts.Notwithstanding the existence of the material weaknesses as described below, we believe that the consolidated financial statements in this AnnualReport fairly present, in all material respects, our financial position, results of operations and cash flows as of the dates, and for the periods, presented, inconformity with United States generally accepted accounting principles (GAAP).Management’s Report on Internal Control Over Financial ReportingManagement, under the supervision of our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequateinternal control over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act). Internal control over financial reporting is designed toprovide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes inaccordance with GAAP, and includes those policies and procedures that:•pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets;•provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our managementand directors; and64•provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have amaterial effect on our financial statements.Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financialreporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented ordetected on a timely basis.Our management conducted a process to assess the effectiveness of our internal control over financial reporting as of December 31, 2015, based on thecriteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission, orCOSO.During the assessment process, we identified material weaknesses in our control environment related to our inability to demonstrate the maturity,repeatability and sustainability of internal controls over financial reporting.As a result of the material weaknesses described above, management has concluded that, as of December 31, 2015, our internal control over financialreporting was not effective. The "Report of Independent Registered Public Accounting Firm" relating to internal control over financial reporting as ofDecember 31, 2015, is presented on page 68.Evaluation of Disclosure Controls and ProceduresDisclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) are designed to ensure that information requiredto be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specifiedin SEC rules and forms and that such information is accumulated and communicated to management including its principal executive officer and principalfinancial officer to allow timely decisions regarding required disclosures.In connection with the preparation of this report, our management, under the supervision and with the participation of the Chief Executive Officer andChief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2015. Based on our identification ofmaterial weaknesses in internal control over financial reporting described above (which we view as an integral part of our disclosure controls), our ChiefExecutive Officer and Chief Financial Officer concluded that, as of December 31, 2015, our disclosure controls and procedures were not effective.Remediation of Material Weakness in Internal Control Over Financial ReportingOur management is committed to the planning and implementation of remediation efforts to address all material weaknesses as well as other identifiedareas of risk. These remediation efforts, summarized below, which are implemented, in the process of being implemented or are planned for implementation,are intended to address the identified material weaknesses and to enhance our overall financial control environment.During 2014 and 2015, numerous changes were made throughout our organization and significant actions have been undertaken to reinforce thesignificance of a strong control environment, including training and other steps designed to strengthen and enhance our control culture.To remediate the control environment deficiencies identified herein, our leadership team, including the Chief Executive Officer, and the Chief FinancialOfficer, has reaffirmed and reemphasized the importance of internal control, control consciousness and a strong control environment. In addition, we havedeveloped and implemented a remediation plan to address the material weakness.65Our plan included the following actions:•adopted new accounting policies for revenue recognition and software capitalization;•implemented periodic reviews with the relevant internal process owners of tangible and intangible asset acquisitions and dispositions to ensureproper accounting;•established a contract governance committee to oversee all contracting activity;•completed the implementation of a more robust contract governance structure to assure appropriate administration, compliance and accountingtreatment for new or amended contract terms;•established a contracting boundaries protocol to clarify the delegation of contracting authority to personnel involved in establishing customercontract terms;•appointed experienced professionals to key leadership positions;•established a new reporting structure with more clearly defined accountabilities;•hired additional accounting personnel with appropriate backgrounds and skill sets, including professionals with certified public accountantqualifications, master’s degrees and public accounting experience and creating new positions for a Director of Revenue and a Director of Taxes;•implemented a new internal reporting model and performance metrics based on cash flow performance;•centralized certain accounting functions and revised organizational structures to enhance accurate reporting and ensure appropriate accountability;•established a formal delegation of authority from the Board of Directors to management with further delegation to accountable personnel;•expanded the use of our financial reporting systems to facilitate more robust analysis of operating performance, budgeting and forecasting; and•strengthened our current disclosure committee with formalized processes to enhance the transparency of our external financial reporting.Our management believes that meaningful progress has been made against remaining remediation efforts; although timetables vary, managementregards successful completion as an important priority. Remaining remediation activities include:•finalizing our transition to the 2013 COSO framework;•strengthening information technology general controls;•implementing and executing a year round internal controls testing and monitoring program; and•enhancing our Sarbanes-Oxley compliance procedures.When implemented, operational and demonstrated to be repeatable and sustainable, our management believes the measures described above willremediate the control deficiencies we have identified and strengthen our internal control over financial reporting. We are committed to improving ourinternal control processes and intend to continue to review and improve our financial reporting controls and procedures. As we continue to evaluate and66work to improve our internal control over financial reporting, we may take additional measures to address control deficiencies or determine to modify, or inappropriate circumstances not to complete, certain of the remediation measures described above.Changes in Internal Control Over Financial ReportingOther than matters discussed in this Item 9A, there have been no changes in our internal control over financial reporting since our last Annual Reportfiled on Form 10-K for the year ended December 31, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control overfinancial reporting.67Report of Independent Registered Public Accounting FirmThe Board of Directors and Stockholdersof Accretive Health, Inc.We have audited Accretive Health, Inc.’s internal control over financial reporting as of December 31, 2015, based on criteria established in InternalControl-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 framework) (the COSO criteria).Accretive Health, Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of theeffectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting.Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in allmaterial respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weaknessexists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures aswe considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’sinternal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of thecompany are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assuranceregarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on thefinancial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degreeof compliance with the policies or procedures may deteriorate.A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonablepossibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Thefollowing material weaknesses have been identified and included in management’s assessment. Management has identified material weaknesses in its controlenvironment related to its inability to demonstrate the maturity, repeatability and sustainability of internal controls over financial reporting. We also haveaudited in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of AccretiveHealth, Inc. as of December 31, 2015 and 2014, and the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity(deficit), and cash flows for each of the three years in the period ended December 31, 2015. These material weaknesses were considered in determining thenature, timing and extent of audit tests applied in our audits of the Company’s financial statements for the year ended December 31, 2015, and this reportdoes not affect our report dated March 10, 2016, which expressed an unqualified opinion on those financial statements.68In our opinion, because of the effect of the material weaknesses described above on the achievement of the objectives of the control criteria AccretiveHealth, Inc. has not maintained effective internal control over financial reporting as of December 31, 2015, based on the COSO criteria./s/ Ernst & Young LLPChicago, IllinoisMarch 10, 2016Item 9B.Other InformationNone69PART IIIItem 10.Directors, Executive Officers and Corporate GovernanceThe information required by this item with respect to our directors and executive officers will be contained in our 2016 Proxy Statement under thecaption "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 Section 16(a) beneficial ownership reporting compliance will be contained in our 2016 ProxyStatement under the caption "Section 16(a) Beneficial Ownership Reporting Compliance" 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 2016 Proxy Statement under the caption"Corporate Governance" and is incorporated in this report by reference.Code of EthicsWe have adopted a code of business conduct and ethics that applies to our directors and officers (including our principal executive officer, principalfinancial officer, principal accounting officer or controller, or persons performing similar functions) as well as our employees. Copies of our code of businessconduct and ethics are available without charge upon written request directed to Corporate Secretary, Accretive Health, Inc., 401 N. Michigan Avenue, Suite2700, Chicago, Illinois, 60611.Item 11.Executive CompensationInformation 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 regardingexecutive compensation will be included in our 2016 Proxy Statement, and is herein incorporated by reference.Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersThe information required by this item with regard to security ownership of certain beneficial owners and management will be contained in our 2016Proxy Statement under the caption "Information About Our Directors, Officers and 5% Stockholders - Security Ownership of Certain Beneficial Owners andManagement" and is incorporated in this report by reference.The information required by this item with regard to securities authorized for issuance under equity compensation plans will be contained in our2016 Proxy Statement under the caption "Executive Compensation - Securities Authorized for Issuance under our Equity Compensation Plans" and isincorporated in this report by reference.Item 13.Certain Relationships and Related Transactions, and Director IndependenceThe information required by this item will be contained in our 2016 Proxy Statement under the captions "Related-Party Transactions" and "CorporateGovernance" and is incorporated in this report by reference.70Item 14.Principal Accountant Fees and ServicesThe information required by this item will be contained in our 2016 Proxy Statement under the caption "Ratification of the Selection of IndependentRegistered Public Accounting Firm" and is incorporated in this report by reference.71PART IVItem 15.Exhibits and Financial Statement Schedulesa) 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 notrequired or because the required information is in the Consolidated Financial Statements and notes thereto.(3) Exhibits: The list of Exhibits filed as part of this Annual Report on Form 10-K is set forth on the Exhibit Index immediately preceding suchExhibits and is incorporated herein by this reference.72SIGNATURESPursuant 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 itsbehalf by the undersigned, thereunto duly authorized. ACCRETIVE HEALTH, INC. By:/s/ Emad Rizk Emad Rizk President and Chief Executive Officer By:/s/ Peter P. Csapo Peter P. Csapo Chief Financial Officer and TreasurerDate: March 10, 2016Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant inthe capacities and on the dates indicated.Signature Title Date /s/ Emad RizkEmad Rizk Director, President and Chief Executive Officer(Principal Executive Officer) March 10, 2016 /s/ Peter P. CsapoPeter P. Csapo Chief Financial Officer and Treasurer(Principal Financial Officer) March 10, 2016 /s/ Richard EvansRichard Evans Principal Accounting Officer March 10, 2016 /s/ Steven J. ShulmanSteven J. Shulman Chairman of the Board March 10, 2016 /s/ Alex J. MandlAlex J. Mandl Director March 10, 2016 /s/ Charles J. DitkoffCharles J. Ditkoff Director March 10, 2016 /s/ Joseph R. ImpiccicheJoseph R. Impicciche Director March 10, 2016 /s/ John B. Henneman, IIIJohn B. Henneman, III Director March 10, 201673 Signature Title Date /s/ Neal MoszkowskiNeal Moszkowski Director March 10, 2016 /s/ Ian SacksIan Sacks Director March 10, 2016 /s/ Anthony J. SperanzoAnthony J. Speranzo Director March 10, 201674Accretive Health, Inc.Index to Consolidated Financial Statements PageAudited Consolidated Financial Statements Report of Independent Registered Public Accounting Firm F-2Consolidated Balance Sheets F-3Consolidated Statements of Operations and Comprehensive Income (Loss) F-4Consolidated Statements of Stockholders’ Equity (Deficit) F-5Consolidated Statements of Cash Flows F-6Notes to Consolidated Financial Statements F-7F-1Report of Independent Registered Public Accounting FirmTo the Board of Directors and Stockholdersof Accretive Health, Inc.We have audited the accompanying consolidated balance sheets of Accretive Health, Inc. as of December 31, 2015 and 2014, and the relatedconsolidated statements of operations and comprehensive income (loss), stockholders’ equity (deficit), and cash flows for each of the three years in the periodended December 31, 2015. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express anopinion on these financial statements based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe thatour audits provide a reasonable basis for our opinion.In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Accretive Health,Inc. at December 31, 2015 and 2014, and the consolidated results of its operations and its cash flows for each of the three years in the period endedDecember 31, 2015, 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), Accretive Health, Inc.’sinternal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control-Integrated Framework issued by theCommittee of Sponsoring Organizations of the Treadway Commission (1992 framework) and our report dated March 10, 2016, expressed an adverse opinionthereon./s/ Ernst & Young, LLPChicago, IllinoisMarch 10, 2016F-2Accretive Health, Inc.Consolidated Balance Sheets(In thousands, except per share data) December 31, 2015 2014Assets Current assets: Cash and cash equivalents $103,497 $145,167Short-term investments 1,023 —Restricted cash — 5,000Accounts receivable, net 10,194 4,438Prepaid income taxes 1,102 6,138Current deferred tax assets — 62,322Other current assets 10,924 7,389Total current assets 126,740 230,454Property, equipment and software, net 27,217 14,594Non-current deferred tax asset 300,825 201,163Restricted cash equivalents 1,500 —Goodwill and other assets, net 4,007 162Total assets $460,289 $446,373Liabilities and stockholders’ equity (deficit) Current liabilities: Accounts payable 5,306 12,488Current portion of customer liabilities 202,516 219,998Accrued compensation and benefits 9,062 14,983Other accrued expenses 15,743 15,680Total current liabilities 232,627 263,149Non-current portion of customer liabilities 432,477 317,065Other non-current liabilities 8,498 8,405Total liabilities $673,602 $588,619Stockholders’ equity (deficit): Common stock, $0.01 par value, 500,000,000 shares authorized, 113,259,408 shares issued and 107,715,436shares outstanding at December 31, 2015; 102,890,241 shares issued and 98,112,019 shares outstanding atDecember 31, 2014 1,133 1,029Additional paid-in capital 322,492 307,075Accumulated deficit (481,773) (397,517)Accumulated other comprehensive loss (2,488) (1,763)Treasury stock (52,677) (51,070)Total stockholders’ equity (deficit) (213,313) (142,246)Total liabilities and stockholders’ equity (deficit) $460,289 $446,373See accompanying notes to consolidated financial statements.F-3Accretive Health, Inc.Consolidated Statements of Operations and Comprehensive Income (Loss)(In thousands, except per share data) Year Ended December 31, 2015 2014 2013Net services revenue $117,239 $210,140 $504,768Operating expenses: Cost of services 168,977 182,144 186,752Selling, general and administrative 74,963 69,883 79,951Restatement and other 9,343 86,766 33,963Total operating expenses 253,283 338,793 300,666Income (loss) from operations (136,044) (128,653) 204,102Net interest income 231 302 330Income (loss) before income tax provision (135,813) (128,351) 204,432Income tax provision (benefit) (51,557) (48,731) 74,349Net income (loss) $(84,256) $(79,620) $130,083Net income (loss) per common share: Basic $(0.87) $(0.83) $1.36Diluted $(0.87) $(0.83) $1.34Weighted average shares used in calculating net income (loss) per common share: Basic 96,806,885 95,760,762 95,687,940Diluted 96,806,885 95,760,762 96,845,664Consolidated statements of comprehensive income (loss) Net income (loss) (84,256) (79,620) 130,083Other comprehensive loss: Foreign currency translation adjustments (725) (304) (703)Comprehensive income (loss) $(84,981) $(79,924) $129,380See accompanying notes to consolidated financial statements.F-4Accretive Health, Inc.Consolidated Statements of Stockholders’ Equity (Deficit)(In thousands, except per share data) Common Stock Treasury Stock AdditionalPaid-InCapital AccumulatedDeficit Accumulatedothercomprehensive(loss) Total Shares Amount Shares Amount Balance at January 1, 2013 100,007,538 $1,000 (4,337,487) $(50,539) $262,075 $(447,980) $(756) $(236,200)Share-based compensation expense — — — — 25,025 — — 25,025Deferred tax asset write off net ofexcess tax benefit of $15 — — — — (3,702) — — (3,702)Issuance of common stock related toshare-based compensation plans 517,703 5 — — 41 — — 46Treasury stock purchases — — (176,843) (161) — — — (161)Foreign currency translationadjustments — — — — — — (703) (703)Net income — — — — — 130,083 — 130,083Balance at December 31, 2013 100,525,241 $1,005 (4,514,330) $(50,700) $283,439 $(317,897) $(1,459) $(85,612)Share-based compensation expense — — — — 27,181 — — 27,181Deferred tax asset write off includingwindfall of $15 — — — — (3,521) — — (3,521)Issuance of common stock related toshare-based compensation plans 2,365,000 24 — — (24) — — —Treasury stock purchases — — (263,892) (370) — — — (370)Foreign currency translationadjustments — — — — — — (304) (304)Net income (loss) — — — — — (79,620) — (79,620)Balance at December 31, 2014 102,890,241 $1,029 (4,778,222) $(51,070) $307,075 $(397,517) $(1,763) $(142,246)Share-based compensation expense — — — — 29,236 — — 29,236Deferred tax asset write off includingshortfall of $1,990 — — — — (15,262) — — (15,262)Issuance of common stock related toshare-based compensation plans 8,994,729 90 — — (90) — — —Exercise of vested stock options 1,374,438 14 1,533 1,547Treasury stock purchases — — (765,750) (1,607) — — — (1,607)Foreign currency translationadjustments — — — — — — (725) (725)Net income (loss) — — — — — (84,256) — (84,256)Balance at December 31, 2015 113,259,408 $1,133 (5,543,972) $(52,677) $322,492 $(481,773) $(2,488) $(213,313)See accompanying notes to consolidated financial statements.F-5Accretive Health, Inc.Consolidated Statements of Cash Flows(In thousands) Year Ended December 31, 2015 2014 2013Operating activities Net income (loss) $(84,256) $(79,620) $130,083Adjustments to reconcile net income (loss) to net cash provided by (used in) operations: Depreciation and amortization 8,462 6,047 6,823Share-based compensation 29,236 27,181 25,025Loss on disposal — 1,604 —Provision (recovery) for doubtful receivables (46) (430) 634Deferred income taxes (52,690) (49,227) 79,356Excess tax benefit from share-based awards — (176) (15)Changes in operating assets and liabilities: Accounts receivable (5,709) 20,548 658 Restricted cash equivalents (1,500) — —Prepaid income taxes 5,058 3,794 (4,836)Other assets (7,465) (47) 14,434Accounts payable (7,162) 8,251 3,378Accrued compensation and benefits (5,918) 3,174 3,813Other liabilities 248 (3,312) (2,955)Customer liabilities 97,930 (15,023) (201,975)Net cash provided by (used in) operating activities (23,812) (77,236) 54,423Investing activities Purchase of short-term investments (1,023) — —Purchases of property, equipment, and software (21,275) (6,034) (1,877)Net cash used in investing activities (22,298) (6,034) (1,877)Financing activities Excess tax benefit from share-based awards — 176 15Exercise of vested stock options 1,547 — 46Purchase of treasury stock (1,607) (370) (161)Restricted cash release from letter of credit 5,000 — —Net cash provided by (used in) financing activities 4,940 (194) (100)Effect of exchange rate changes in cash (500) (260) (511)Net increase (decrease) in cash and cash equivalents (41,670) (83,724) 51,935Cash and cash equivalents, at beginning of year 145,167 228,891 176,956Cash and cash equivalents, at end of year $103,497 $145,167 $228,891Supplemental disclosures of cash flow information Income taxes paid $(1,088) $(801) $(1,742)Income taxes refunded $1,441 $3,014 $754See accompanying notes to consolidated financial statements.F-6Accretive Health, Inc.Notes to Consolidated Financial StatementsNote 1. Description of BusinessAccretive Health, Inc. (the "Company") is a leading provider of services that help healthcare providers generate sustainable improvements in theiroperating margins and cash flows while also improving patient, physician and staff satisfaction for its customers. The Company achieves these results for itscustomers through an integrated approach encompassing its end-to-end revenue cycle management service and physician advisory service offerings. TheCompany does so by deploying a unique operating model that leverages its extensive healthcare site experience, innovative technology and processexcellence. The Company also offers modular services, allowing clients to engage the Company for only specific components of its end-to-end revenue cyclemanagement service offering.The Company’s primary service offering consists of revenue cycle management ("RCM"), which helps healthcare providers to more efficiently managetheir revenue cycles. This encompasses patient registration, insurance and benefit verification, medical treatment documentation and coding, bill preparationand collections from patients and third-party payers. The Company’s physician advisory services offering assists hospitals in complying with third-partypayers’ requirements regarding whether to classify a hospital visit as an in-patient or an out-patient observation case for billing purposes and consists of bothconcurrent review and retrospective chart audits. The Company also provides customers with retrospective appeal management service support for bothgovernmental and commercial payers.Note 2. Summary of Significant Accounting PoliciesBasis of PresentationThe consolidated financial statements include the assets, liabilities and results of operations of the Company and its wholly owned subsidiaries. Allmaterial intercompany transactions and balances have been eliminated in consolidation. The preparation of financial statements in conformity with theUnited States generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reportedin these consolidated financial statements and accompanying notes. Actual results can differ from those estimates.SegmentsReporting segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by thechief operating decision maker, or decision-making group, relating to resource allocation and performance assessments. All of the Company’s operations areorganized around the single business of providing end-to-end management services of revenue cycle operations for U.S-based hospitals and other medicalproviders. The Company views its operations and manages its business as one operating and reporting segment.Revenue RecognitionRevenue is generally recognized when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) services have beenrendered, (iii) the fee is fixed or determinable and (iv) collectability is reasonably assured.F-7Accretive Health, Inc.Notes to Consolidated Financial StatementsNote 2. Summary of Significant Accounting Policies (continued)Net service fees, as reported in the consolidated statement of operations and comprehensive income (loss), consist of: (a) RCM service fees and(b) professional service fees earned on a fixed fee, transactional fee or time and materials basis. The Company’s primary source of revenue is RCM servicefees. RCM service fees are primarily contingent, but along with fixed fees are generally viewed as one deliverable. To the extent that certain RCM servicefees are fixed and not subject to refund, adjustment or concession, such fees are recognized as revenue on a straight-line basis over the term of the contract.On a limited basis, the Company enters into contracts with multiple accounting elements which may include a combination of fixed fee or transactionalfee elements. The selling price of each element is determined by using management's best estimate of selling price. Revenues are recognized in accordancewith the accounting policies for the separate elements.RCM service fees that are contingent in nature are recognized as revenue once all the criteria for revenue recognition are met, which is generally at theend of a contract or other contractual agreement event. Revenue is recognized for RCM service fees upon the contract reaching the end of its stated term(such that the contractual relationship will not continue in its current form) to the extent that: (i) cash has been received for invoiced fees and (ii) there are nodisputes at the conclusion of the term of the contract.If fees or services are disputed by a customer at the end of a contract, a settlement agreement entered into with the customer triggers revenuerecognition. An "other contractual agreement event" occurs when a renewal or amendment to an existing contract is executed in which the parties reachagreement on prior fees. Revenue is recognized up to the amount covered by such agreements.RCM service fees consist of the following contingent fees: (i) Net Operating Fees and (ii) Incentive Fees.Net Operating FeesThe Company generates net operating fees to the extent the Company is able to assist customers in reducing the cost of their revenue cycle operations.The Company's delivery model leverages the customers' RCM personnel. The Company’s net operating fees consist of:i) gross base fees invoiced to customers; lessii) corresponding costs of customers’ revenue cycle operations which the Company pays pursuant to its RCM agreements, including salaries andbenefits for the customers' RCM personnel, and related third-party vendor costs; lessiii) any cost savings the Company shares with customers.Net operating fees are recorded as deferred customer billings until the Company recognizes revenue for a customer contract at the end of a contract orreaches an "other contractual agreement event". The amount of unpaid costs of customers’ revenue cycle operations and shared cost savings are reported asaccrued service costs within customer liabilities in the consolidated balance sheets.Incentive FeesThe Company generates revenue in the form of performance-based fees when the Company improves the customers’ revenue yield. These performancemetrics vary by customer contract. However, certain contracts contain a contract-to-date performance metric that is not resolved until the end of the term ofthe contract. Incentive fees are reported as deferred customer billings only upon cash receipt and until the Company recognizes revenue for a customer at theend of a contract or other contractual agreement event. In some cases, when a customer agreement is extended under an evergreen provision or otheramendment, fees may not be considered finalized until the end of theF-8Accretive Health, Inc.Notes to Consolidated Financial StatementsNote 2. Summary of Significant Accounting Policies (continued)customer relationship. Incentive fees associated with performance metrics which are not resolved until the end of the term of the contract or an "othercontractual agreement event" are recorded in deferred customer billings until the Company recognizes revenue. Incentive fees are considered contingent fees.Customer LiabilitiesBase fees and fixed fees are billed on a monthly or quarterly basis and incentive fees are billed to customers on a quarterly basis. Generally, base fees arebilled in advance of each service period. Customer liabilities include (i) accrued service costs (amounts due and accrued for cost reimbursements net ofamounts receivable for base fees from the corresponding customer), (ii) deferred customer billings (net operating fees invoiced or accrued and incentive feescollected that have not met all revenue recognition criteria), (iii) customer deposits (consisting primarily of net operating fees under the Company’s RCMcontracts that are paid prior to the service period and amounts due as a refund to our customers on incentive fees) and (iv) deferred revenue (fixed feesamortized to revenue over the service period or fixed or determinable fees that have not met all other revenue recognition criteria). Deferred customer billingsare classified as current based on the customer contract end dates or other termination events that fall within twelve months of the balance sheet dates.Accrued service cost, customer deposits and deferred revenue are classified as current or non-current based on the anticipated period in which the liabilitiesare expected to be settled or the revenue is expected to be recognized. December 31, 2015 2014Deferred customer billings, current $130,124 $132,063Accrued service costs, current 70,656 68,077Customer deposits, current 1,641 19,675Deferred revenue, current 95 183Current portion of customer liabilities 202,516 219,998Deferred customer billings, non-current 431,944 317,065Customer deposits, non-current 533 —Non current portion of customer liabilities 432,477 317,065Total customer liabilities $634,993 $537,063Consulting Fees, Transaction Fees and Contingent Service FeesThe Company also generates revenue from fixed-fee arrangements, transactional service contracts and contingent-fee service contracts. Provided allother criteria of revenue recognition are met under Accounting Standards Codification ("ASC") 605, Revenue Recognition, revenue under these arrangementsis recognized as services are performed, deliverables are provided and related contingencies are removed. All related direct costs are recorded as period costswhen incurred. Such consulting fees, transactional fees and contingent service fees are generated from services such as physician advisory services,population health solutions and other related consulting services.Cost of ServicesCosts associated with generating the Company’s net services revenue, including the cost of operating its shared services centers, are expensed asincurred. Cost of services consist of (i) infused management and technology costs, (ii) shared services costs and (iii) other costs to perform physician advisoryservices and population health solutions. Infused management and technology costs consist primarily of wages, bonuses, benefits, share-basedF-9Accretive Health, Inc.Notes to Consolidated Financial StatementsNote 2. Summary of Significant Accounting Policies (continued)compensation, travel and other costs associated with deploying the Company’s employees at 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 deployingour integrated proprietary technology suite. Shared services costs relate to the Company’s shared services centers in the U.S. and India that perform patientscheduling and pre-registration, medical transcription, cash posting, reconciliation of payments to billing records, patient follow-up and Medicaid eligibilitydetermination for our customers. The Company incurs expenses related to salaries and benefits for employees in its shared services centers and non-payrollcosts associated with operating its shared services centers. Other expenses consist of costs related to managing physician advisory services, population healthsolutions and other services. These expenses consist primarily of wages, bonuses, benefits, share-based compensation and facilities costs.Comprehensive Income (Loss)Comprehensive income (loss) is the net income (loss) of the Company combined with other changes in stockholders’ equity (deficit) not involvingownership interest changes. For the Company, such changes are foreign currency translation adjustments.Cash and Cash EquivalentsThe Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.Short-term InvestmentsAt December 31, 2015, the Company's Indian subsidiaries had invested in $1.0 million of time deposits with an original maturity greater than threemonths. Our time deposits are classified as "held-to-maturity" as the Company has both the intent and ability to hold to maturity. The current value is notmaterially different than the fair value.Restricted Cash EquivalentsIn 2015, restricted cash equivalents represent the amount of certificate of deposits ("CDs"), with a maturity of three months or less, that the Company isunable to access for operational purposes as the CDs collateralize the Company's corporate travel program. At December 31, 2015, the Company had $1.5million in restricted cash equivalents. The Company did not have any restricted cash equivalents at December 31, 2014.Accounts Receivable and Allowance for Doubtful AccountsAccounts receivable is comprised of unpaid balances pertaining to non-RCM service fees and net receivable balances for RCM customers afterconsidering cost reimbursements owed to such customers, including related accrued balances.The Company maintains an estimated allowance for doubtful accounts 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 beenoutstanding, input from key customer resources assigned to each customer and the status of any ongoing operations with each applicable customer.F-10Accretive Health, Inc.Notes to Consolidated Financial StatementsNote 2. Summary of Significant Accounting Policies (continued)Movements in the allowance for doubtful accounts are as follows (in thousands): December 31, 2015 2014 2013Beginning balance $314 $740 $183Provision (recovery) (46) (430) 634Write-offs (169) 4 (77)Ending balance $99 $314 $740Property, Equipment and SoftwareProperty and equipment are stated at cost, and related depreciation and amortization are calculated on the straight-line method over the estimateduseful lives of the assets.For many internally developed software projects, the Company adheres to a development methodology where the process moves quickly betweenplanning, design, development and testing, and then moves back to planning before the testing is complete. Consequently, there are short developmentcycles and rapid production changes for such software projects. As a result, the qualifying activities to capitalize development costs have a short timeframeand therefore, the Company expenses its internal development labor costs as incurred for such projects. For projects that do not meet the criteria describedabove, the Company capitalizes qualifying internal costs in accordance with GAAP. The Company capitalizes qualifying third-party costs and hardware andsoftware costs related to the Company’s software development activities in accordance with GAAP. The Company amortizes the capitalized softwaredevelopment 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: Computers and other equipment 3 yearsLeasehold improvements Shorter of 10 years or lease termOffice furniture 5 yearsSoftware 3 to 5 yearsGoodwillGoodwill represents the excess purchase price over the net assets of a business the Company acquired in May 2006. Goodwill is not subject toamortization but is subject to impairment testing at least annually. During the year ended December 31, 2015, the remaining goodwill was reduced by taxbenefits of $0.2 million. The Company has no goodwill as of December 31, 2015. At December 31, 2014, the Company has $0.2 million of goodwill that isincluded in "Goodwill and other assets, net" in the accompanying consolidated balance sheet.Impairment of Long-Lived AssetsProperty, equipment, software and other acquired intangible assets are reviewed for impairment whenever events or changes in circumstances indicatethat 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 thelong-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment charge is recognized to the extent that the carryingvalue exceeds the fair value. There was no impairment of property, equipment, software or other acquired intangible assets for the years ended December 31,2015, 2014 and 2013.F-11Accretive Health, Inc.Notes to Consolidated Financial StatementsNote 2. Summary of Significant Accounting Policies (continued)Income TaxesIncome taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequencesattributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating lossand 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 thosetemporary 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 incomein the period that includes the enactment date. The Company records a valuation allowance for deferred tax assets if, based upon the weight of all availableevidence, 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 uponexamination by the tax authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements fromsuch a position are measured based on the largest amount of benefit that has a greater than 50% percent likelihood of being realized upon ultimatesettlement. Interest and penalties relating to income taxes are recognized in our income tax provision in the statements of consolidated operations.Fair Value of Financial InstrumentsThe Company records its financial assets and liabilities at fair value. The accounting standard for fair value (i) defines fair value as the price that wouldbe 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 tovalue assets and liabilities, (iv) requires consideration of nonperformance risk and (v) expands disclosures about the methods used to measure fair value. Theaccounting standard establishes a three-level hierarchy of measurements based upon the reliability of observable and unobservable inputs used to arrive atfair value. Observable inputs are independent market data, while unobservable inputs reflect the Company’s assumptions about valuation. The three levels ofthe 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 forsimilar assets or liabilities in active markets and 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 such as cash and cash equivalents, restricted cash,restricted cash equivalents, accounts receivable, amounts due from related party, short-term investments and certain other current assets, as well as financialliabilities such as accounts payable, accrued service costs, accrued compensation and benefits and certain other accrued expenses, approximate their fairvalues, due to the short-term nature of these instruments. The Company’s financial assets which are required to be measured at fair value on a recurring basisconsist of cash equivalents, which are highly liquid money market funds and accordingly are classified as Level 1 assets in the fair value hierarchy. TheCompany’s CDs are valued at face value, plus accrued interest, which approximates fair value, and are reported as Level 2 assets in the fair value hierarchy.The Company does not have any financial liabilities that are required to be measured at fair value on a recurring basis.F-12Accretive Health, Inc.Notes to Consolidated Financial StatementsNote 2. Summary of Significant Accounting Policies (continued)Legal and Other ContingenciesIn the normal course of business, the Company is subject to regulatory investigations or legal proceedings, as well as demands, claims and threatenedlitigation. The Company records an estimated loss for any claim, lawsuit, investigation or proceeding when it is probable that a liability has been incurredand the amount of the loss can be reasonably estimated. Significant judgment is required in both the determination of the probability and whether the losscan be reasonably estimated. Actual expenses could differ from such estimates.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, aretranslated to U.S. dollars at exchange rates in effect at the balance sheet date. Income and expense accounts are translated at average exchange rates duringthe year which approximates the rates in effect at the transaction dates. The resulting translation adjustments are recorded as a separate component ofaccumulated other comprehensive income (loss).The Company’s foreign currency transaction gains and losses are included in selling, general and administrative in the accompanying consolidatedstatements of operations and comprehensive income (loss).Share-Based Compensation ExpenseThe Company determines the expense for all employee share-based compensation awards by estimating their fair value and recognizing such value asan expense, on a ratable basis, in the consolidated financial statements over the requisite service period in which the employees earn the awards. The fairvalue of performance and service condition stock options is calculated using the Black-Scholes option pricing model and, for market condition stockoptions, the fair value is estimated using Monte Carlo simulations.To determine the fair value of a share-based award using the Black-Scholes option pricing model, the Company makes assumptions regarding the risk-free interest rate, expected future volatility, expected life of the award and expected forfeitures of the awards. These inputs are subjective and generallyrequire significant analysis and judgment to develop. The Company aggregates all employees into one pool based on the grant date for valuation purposes.The risk-free rate is based on the U.S. treasury yield curve in effect at the time of grant. The Company estimates the expected volatility of the share price byreviewing the historical volatility levels of its common stock in conjunction with that of public companies that operate in similar industries or are similar interms of stage of development or size and then projecting this information toward its future expected volatility. The Company exercises judgment inselecting these companies, as well as in evaluating the available historical and implied volatility for these companies. The Company calculates the expectedterm in years for each stock option using a simplified method based on the average of each option’s vesting term and original contractual term. The Companyapplies an estimated forfeiture rate derived from its historical data and estimates of the likely future actions of option holders when recognizing the share-based compensation expense of the options.To determine the fair value of a share-based award using Monte Carlo simulations, the Company makes assumptions regarding the risk-free interest rate,expected future volatility, expected dividend yield and performance period. The risk-free rate is based on the U.S. treasury yield curve in effect at the time ofgrant. The Company estimates the expected volatility of the share price by reviewing the historical volatility levels of its common stock in conjunction withthat of public companies that operate in similar industries or are similar in terms of stage of development or size and then projecting this information towardits future expected volatility. Dividend yield is determined based on the Company’s future plans to pay dividends. The Company had no plans to do so atDecember 31, 2015. The Company calculates the performance period based on the specific market condition to be achieved and derived from historical dataand estimates of future performance.F-13Accretive Health, Inc.Notes to Consolidated Financial StatementsNote 2. Summary of Significant Accounting Policies (continued)The Company recognizes compensation expense, net of forfeitures, using a straight-line method over the applicable service or performance period.During each quarter, the share-based compensation expense is adjusted to reflect all expense for options that vested during the period; however,compensation expense already recognized is not adjusted if market conditions are not met.The Company accounts for stock options issued to non-employees based on their estimated fair value determined using the Black-Scholes optionpricing model. The stock options issued to non-employees vest over the arrangement period. The fair value of the equity awards granted to non-employees isremeasured on each balance sheet date until the awards vest, and the related expense is adjusted based on the resulting changes in fair value, if any. The non-employee share-based compensation expense is recognized over the performance period, which is the vesting period. Upon vesting, the performance of thenon-employee is deemed complete and the vested awards are not subsequently remeasured.The fair value of modifications to share-based awards is generally estimated using the Black-Scholes option pricing model. If a share-basedcompensation award is modified after the grant date, incremental compensation expense is recognized in an amount equal to the excess of the fair value ofthe modified award over the fair value of the original award immediately before the modification. Incremental compensation expense for vested awards isrecognized immediately. For unvested awards, the sum of the incremental compensation expense and the remaining unrecognized compensation expense forthe original award on the modification date is recognized over the modified service period.Treasury StockThe Company records treasury stock at the cost to acquire such shares and includes treasury stock as a component of stockholders’ equity (deficit).Earnings (Loss) Per ShareBasic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstandingduring the period. The diluted net income (loss) per common share computation includes the effect, if any, of common shares that would be issuable upon theexercise of outstanding stock options, unvested restricted stock, reduced by the number of common shares which are assumed to be purchased by theCompany with the resulting proceeds from the exercise of stock options, at the average market price during the year, when such amounts are dilutive to thenet income (loss) per share calculation.Recently Adopted Accounting Standards and DisclosuresFrom time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") or other standard setting bodies.Unless otherwise discussed, the Company’s management believes that the impact of recently issued accounting pronouncements that are not yet effectivewill not have a material impact on the Company’s consolidated financial position or results of operations upon adoption.In November 2015, the FASB issued Accounting Standards Update 2015-17, Income Taxes: Balance Sheet Classification of Deferred Taxes (Topic 740)("ASU 2015-17"). Previously under GAAP, an entity was required to separate deferred income tax liabilities and assets into current and noncurrent amounts ina classified statement of financial position. ASU 2015-17 simplifies the presentation of deferred income taxes and requires that deferred tax liabilities andassets be classified as noncurrent in a classified statement of financial position. The amendments in this update apply to all entities that present a classifiedstatement of financial position. ASU 2015-17 is effective for fiscal years and interim periods within such years, beginning on or after December 15, 2016. TheFASB permits early adoption by all entities as of the beginning of any interim or annual reporting period. As permitted by ASU 2015-17, the Companyadopted the provisions on a prospective basis for the reporting period ended December 31,F-14Accretive Health, Inc.Notes to Consolidated Financial StatementsNote 2. Summary of Significant Accounting Policies (continued)2015. The deferred tax assets and liabilities from prior periods ended December 31, 2014 and 2013 were not retroactively adjusted.Newly Issued Accounting Standards and DisclosuresIn May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"), which supersedes the revenuerecognition requirements in ASC 605, Revenue Recognition. ASU 2014-09 is based on the principle that revenue is recognized to depict the transfer ofgoods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods orservices. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customercontracts, including significant judgments and changes in judgments. The pronouncement is effective for annual reporting periods beginning afterDecember 15, 2017, including interim periods within such reporting period and is to be applied using one of two retrospective application methods, withearly application permitted. The Company has not yet determined the potential effects of the new standard on its consolidated financial statements, if any.In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASU 2016-02"), which supersedes existing guidance on accounting forleases in Topic 840, Leases. ASU 2016-02 generally requires all leases to be recognized in the statement of financial position. The provisions of ASU 2016-02 are effective for reporting periods beginning after December 15, 2018; early adoption is permitted. The provisions of ASU 2016-02 are to be applied usinga modified retrospective approach. The Company has not yet determined the potential effects of the new standard on the consolidated financial statements, ifany.F-15Accretive Health, Inc.Notes to Consolidated Financial StatementsNote 3. Property, Equipment and SoftwareProperty, equipment and software consist of the following (in thousands): December 31, 2015 2014Computer and other equipment $21,348 $17,701Leasehold improvements 17,851 12,491Software 22,302 12,398Office furniture 4,888 3,152Property and equipment and software, gross 66,389 45,742Less accumulated depreciation and amortization (39,172) (31,148)Property and equipment and software, net $27,217 $14,594The following table summarizes the allocation of depreciation and amortization expense between cost of services and selling, general andadministrative expenses (in thousands): For the Year Ended December 31, 2015 2014 2013Cost of services $7,536 $4,603 $4,697Selling, general and administrative 926 1,444 2,126Total depreciation and amortization $8,462 $6,047 $6,823Note 4. Stockholders’ Equity (Deficit)Preferred StockThe Company has 5,000,000 shares of authorized preferred stock, each with a par value of $0.01. The preferred stock may be issued from time to time inone or more series. The board of directors of the Company ("Board") is authorized to determine the rights, preferences, privileges and restrictions of theCompany’s authorized but unissued shares of preferred stock. As of December 31, 2015, 2014 and 2013, the Company did not have any shares of preferredstock outstanding. See Note 12, Subsequent Events, for a discussion of the Series A Convertible Preferred Stock, par value $0.01 per share, issued on February16, 2016.Common StockEach outstanding share of the Company's common stock, par value $0.01 per share ("common stock"), is entitled to one vote per share on all matterssubmitted to a vote by shareholders. Subject to the rights of any preferred stock which may from time to time be outstanding, the holders of outstandingshares of common stock are entitled to receive dividends and, upon liquidation or dissolution, are entitled to receive pro rata all assets legally available fordistribution to stockholders. No dividends were declared or paid on the common stock during 2015, 2014 and 2013.Treasury StockIn September 2012, the Board authorized a share repurchase plan allowing the Company to repurchase up to $50.0 million of its outstanding shares ofcommon stock. For the year ended December 31, 2012, the Company repurchased 4,307,362 shares of its common stock under the share repurchase plan at anaverage price of $11.61 per share for a total of $50.0 million. Such amount was recorded as a reduction of stockholders’ equity (deficit). As of December 31,2012, the share repurchase plan was concluded.F-16Accretive Health, Inc.Notes to Consolidated Financial StatementsNote 4. Stockholders’ Equity (Deficit) (continued)On November 13, 2013, the Board authorized another repurchase of up to $50.0 million of the Company’s common stock in the open market or inprivately negotiated transactions following the Restatement, as defined in Note 7, Restatement and Other. The timing and amount of any shares repurchasedwill be determined by the Company based on its evaluation of market conditions and other factors. The repurchase program may be suspended ordiscontinued at any time at the sole discretion of the Board. Any repurchased shares will be available for use in connection with the Company’s stock plansand for other corporate purposes. The Company currently intends to fund the repurchases from cash on hand. No shares of common stock had beenrepurchased under this plan as of the date at which these consolidated financial statements were issued.Treasury stock also includes repurchases of Company stock related to employees’ tax withholding upon vesting of restricted shares. See Note 5, Share-Based Compensation.Note 5. Share-Based CompensationThe Company maintains two stock incentive plans: the 2006 Amended and Restated Stock Option Plan (the "2006 Plan") and the 2010 Amended andRestated Stock Incentive Plan (the "2010 Amended Plan", together with the 2006 Plan, the "Plans"). In August 2015, the Company's stockholders approvedthe Amended and Restated 2010 Stock Incentive Plan, which authorized the issuance of an additional five million shares of the Company's common stockpursuant to awards and made a number of other amendments to the 2010 Plan.Under the Plans, the Company could issue (up to a maximum of 29,374,756 shares) any shares that remained available for issuance under the 2006 Planas 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 areotherwise surrendered, canceled, forfeited or repurchased by the Company without the issuance of shares thereunder. The Company will not make any furthergrants under the 2006 Plan. The 2010 Amended Plan provides for the grant of incentive stock options, non-statutory stock options, Restricted Stock Awards,("RSAs") and other share-based awards. As of December 31, 2015, an aggregate of 16,012,417 shares were outstanding as either options or RSAs under thePlans, and 5,148,848 shares were available for future grants of awards under the 2010 Amended Plan. To the extent that previously granted awards under the2006 Plan or 2010 Amended Plan expire, terminate or are otherwise surrendered, canceled or forfeited, the number of shares available for future awards underthe 2010 Amended Plan will increase.Under the terms of the Plans, all awards will expire if they are not exercised within ten years of their grant date. Substantially all employee options andRSAs vest over four years at a rate of 25% per year on each grant date anniversary. Substantially all non-employee options vest over either one year or fouryears (at a rate of 25% per year). Options granted under the 2006 Plan could be exercised immediately upon grant, but upon exercise the shares issued weresubject to the same vesting and repurchase provisions that applied before the exercise. There were no such exercises during the years ended December 31,2015, 2014 and 2013. Options granted under the 2010 Plan and 2010 Amended Plan cannot be exercised prior to vesting.In 2014 and 2013, the Company granted service-based, non-qualified options to purchase 3,400,000 and 4,703,801 shares of common stock andawarded 1,000,000 and 400,000 shares of restricted stock, respectively, to key employees pursuant to inducement grant rules of the New York StockExchange ("NYSE"), of which 7,103,801 of the stock options were outstanding as of December 31, 2015 and 2014 and 1,399,980 and 1,749,988 of the sharesof restricted stock were outstanding as of December 31, 2015 and 2014, respectively.Also in 2014, pursuant to inducement grant rules of the NYSE, the Company granted a market-based award of 500,000 shares of restricted stock to theChief Executive Officer. This RSA vests only when the average closing price of the Company’s stock price equals or exceeds twice the amount of the grantdate stock price.F-17Accretive Health, Inc.Notes to Consolidated Financial StatementsNote 5. Share-Based Compensation (continued)The Company uses the Black-Scholes option pricing model to estimate the fair value of its service-based options as of its grant date. The Company usesthe Monte Carlo simulations to estimate the fair value of its RSAs with vesting based on market-based performance conditions as of their respective grantdates. Expected life is based on the market condition to which the vesting is tied.The following table sets forth the significant assumptions used in the Black-Scholes option pricing model and the Monte Carlo simulations and thecalculation of share-based compensation expense during 2015, 2014 and 2013: Year Ended December 31, 2015 2014 2013Expected dividend yield — — —Risk-free interest rate 1.5% to 2.0% 1.9% to 2.2% 0.9% to 2.1%Expected volatility 50% 50% 50%Expected term (in years) 6.25 6.25 to 7.50 5.82 to 8.82Forfeitures 5.68% annually 5.68% annually 5.68% annuallyTotal share-based compensation costs that have been included in the Company’s consolidated statements of operations were as follows (in thousands): Year Ended December 31, 2015 2014 2013 Share-Based Compensation Expense Allocation Details: Cost of services $7,208 $6,668 $10,740Selling, general and administrative 24,463 13,503 13,061Restatement and other costs — 8,761 1,224Total share-based compensation expense (1) $31,671 $28,932 $25,025(1) Includes $2.4 million and $1.8 million in share-based compensation expense paid in cash during the years ended December 31, 2015 and 2014, respectively.There was $47.2 million, $42.8 million and $43.3 million of total, unrecognized share-based compensation expense related to stock options and RSAsgranted under the Plans, which the Company expects to recognize over a weighted-average period of 2.9 years, 3.2 and 2.8 years as of December 31, 2015,2014 and 2013, respectively. Refer to the consolidated statements of stockholders’ equity (deficit) for the tax benefits realized for the tax deductions fromstock option exercises.F-18Accretive Health, Inc.Notes to Consolidated Financial StatementsNote 5. Share-Based Compensation (continued)Stock optionsThe following table sets forth a summary of all employee and non-employee option activity under all plans and inducement grants for the years endedDecember 31, 2015, 2014 and 2013: Shares Weighted-AverageExercisePrice Weighted-AverageRemainingContractualTerm(in years) AggregateIntrinsic Value(in thousands)Outstanding at January 1, 2013 17,707,139 $13.88 7.6 $25,957Granted 8,345,437 10.09 Exercised (9,400) 4.34 Canceled (1,057,052) 17.60 Forfeited (4,445,851) 15.64 Outstanding at December 31, 2013 20,540,273 11.77 7.4 15,673Granted 4,406,856 8.78 Exercised — — Canceled (1,494,219) 13.41 Forfeited (3,528,505) 12.14 Outstanding at December 31, 2014 19,924,405 10.91 6.9 9,444Granted 2,231,504 5.60 Exercised (1,374,438) 1.13 Canceled (4,484,843) 14.10 Forfeited (1,036,362) 8.47 Outstanding at December 31, 2015 15,260,266 10.23 7.0 261Outstanding, vested and exercisable at December 31, 2013 9,605,505 $11.89 5.9 $15,096Outstanding, vested and exercisable at December 31, 2014 11,879,209 $11.73 5.6 $9,444Outstanding, vested and exercisable at December 31, 2015 8,876,517 $11.63 6.1 $108The weighted-average grant date fair value of options granted during the years ended December 31, 2015, 2014 and 2013 was $2.78, $4.40 and $5.19per share, respectively. The total intrinsic value of the options exercised in the years ended December 31, 2015 and 2013 was $4.9 million and $0.1 million,respectively. No options were exercised in the year ended December 31, 2014. The total fair value of options vested during the years ended December 31,2015, 2014 and 2013 was $14.9 million, $22.9 million and $27.1 million, respectively.Stock option activity for non-employee consultantsIncluded in the table and disclosures above are options to purchase 125,779, 109,887, and 265,517 shares held by non-employee consultants as ofDecember 31, 2015, 2014 and 2013, respectively. These options had a weighted average exercise price of $15.67, $17.12 and $20.05 at December 31, 2015,2014 and 2013, respectively.F-19Accretive Health, Inc.Notes to Consolidated Financial StatementsNote 5. Share-Based Compensation (continued)Restricted stock awardsIn the third quarter of 2011, the Company began to grant RSAs to its employees. A summary of the activity during the years ended December 31, 2015,2014 and 2013 is shown below: Shares Weighted-Average GrantDate Fair Value Weighted-AverageRemainingContractualTerm(in years)Outstanding and Unvested at January 1, 2013 160,220 $21.23 9.0Granted 508,303 11.46 Vested (50,004) 11.47 Forfeited (160,220) 21.23 Outstanding and Unvested at December 31, 2013 458,299 $11.45 9.4Granted 2,365,000 8.39 Vested (127,084) 11.46 Forfeited (218,750) 9.40 Outstanding and Unvested at December 31, 2014 2,477,465 $8.71 9.3Granted 8,994,729 3.34 Vested (1,892,049) 5.24 Forfeited (324,213) 7.61 Outstanding and Unvested at December 31, 2015 9,255,932 $4.24 9.4The total fair value of RSAs vested during the years ended December 31, 2015, 2014 and 2013 was $9.9 million, $1.5 million and $0.6 million,respectively. The Company’s RSA agreements allow employees to deliver to the Company shares of stock upon vesting of their RSAs in lieu of their paymentof the required personal employment-related taxes. The Company does not withhold taxes in excess of minimum required statutory requirements. During theyears ended December 31, 2015, 2014 and 2013, employees delivered to the Company 441,537, 45,142 and 16,623 shares of stock, respectively, which theCompany recorded at a cost of approximately $1.6 million, $0.4 million and $0.2 million, respectively. As of December 31, 2015, the Company held 533,427shares of surrendered common stock in treasury related to the vesting of RSAs.Forfeited and canceled RSAs are added to treasury stock. For the years ended December 31, 2015, 2014 and 2013, 324,213, 218,750 and 160,220shares were respectively added to treasury stock due to canceled RSAs.Modifications of share-based awardsAs described in Note 7, Restatement and Other, during 2013, the Company failed to timely file its annual report on Form 10-K for the fiscal year endedDecember 31, 2012, and on March 4, 2013, its Registration Statement on Form S-8 was suspended. As a result, individuals were not permitted to exercisevested options until the S-8 became effective. During the second quarter of 2013, the Company modified the terms of the share-based awards for thoseindividuals who were involuntarily terminated in connection with the 2013 restructuring plan as described in Note 8. These modifications allowed for theextension of the exercise period for vested options from 60 days following each affected employee's respective termination date to the later of 60 daysfollowing the filing of the Company's 2012 consolidated financial statements with the Securities and Exchange Commission ("SEC") or December 31, 2013.During the quarter ended June 30, 2013, 13 employees were terminated under the 2013 restructuring plan, resulting in an increase in share-basedcompensation expense of $1.1 million for the year ended December 31, 2013.F-20Accretive Health, Inc.Notes to Consolidated Financial StatementsNote 5. Share-Based Compensation (continued)During the second quarter of 2014, the Company modified the terms of awards granted to 39 employees (including the 13 who were affected in 2013)who were terminated under the 2013 restructuring plan to allow for the extension of the exercise period for vested options until such time as the Company'sregistration statement on Form S-8 had been effective for 60 consecutive days. Such modifications resulted in a net increase in share-based compensationexpense of $2.3 million for the year ended December 31, 2014.During the first quarter of 2014, in connection with the resignation of a senior executive from the Company, the Company modified the terms of awardspreviously granted to such executive. Such modification extended the term to exercise vested options from 60 days following his effective resignation dateto such time as the Company's registration statement on Form S-8 had been effective for 60 consecutive days. Such modification resulted in a net increase ofshare-based compensation expense for the year ended December 31, 2014 of $5.6 million.During the second quarter of 2013, the Company modified the terms of an award granted to Mary Tolan, the Company's former chief executive officer,in connection with her transition to the role of the Chairman of the Board of the Company. This modification allowed for the extension of the exercise periodfor options vested as of the date of the modification from 60 days following the termination of employment to the expiration of the original award (ten yearsfrom the grant date). This modification resulted in a net increase in share-based compensation expense of $0.1 million and $1.5 million for the years endedDecember 31, 2014 and 2013, respectively.During the second quarter of 2014, the Company granted to the Chief Operating Officer (the "COO") retention equity awards subject to the approval ofour stockholders of an amendment to our 2010 Stock Incentive Plan (the "2010 Plan"). In the event that the stockholders did not approve the amendmentprior to December 31, 2014, then in lieu of the incentive equity awards, the COO would be entitled to receive cash payments following each date that anyportion of such equity grant would have otherwise vested equal to: (i) for stock options, the difference between the exercise price and the closing price of thecommon stock on the vesting date and (ii) for restricted stock, the closing price of the common stock on the vesting date. The Company determined thatstockholder approval to amend the 2010 Plan would not occur by December 31, 2014 and accrued for these grants at the value as explained above. For theyears ended December 31, 2015 and 2014, the Company incurred $0.6 million and $0.9 million of share-based compensation expense related to this grant,respectively.Additionally, as part of the COO's retention agreement, the Company modified the terms of a stock option granted to the COO at the commencement ofhis employment. This modification would be triggered upon termination of employment by the Company without cause or by the COO for good reason andif triggered, the vested portion of the stock option would remain exercisable for a period of time equal to 60 days plus the number of days of service with theCompany, but not longer than two years, or until the stock option otherwise expires, if earlier. This modification resulted in a net increase in share-basedcompensation expense of $0.2 million for year ended December 31, 2014.During the year ended December 31, 2014, the Company settled share-based awards in cash with three employees who had options that expired duringthe year as all employees were restricted from exercising vested options during the year. This modification resulted in an increase in share-basedcompensation expense of $0.9 million for the year ended December 31, 2014.F-21Accretive Health, Inc.Notes to Consolidated Financial StatementsNote 5. Share-Based Compensation (continued)During the second quarter of 2015, in connection with the resignation of a member of the Board who was also the former Chief Executive Officer of theCompany, the Company modified the terms of awards previously granted to such Board member. This modification allowed for the continuation of vesting ofoptions despite his resignation from the Board. Such modification resulted in a net increase of share-based compensation expense for the year endedDecember 31, 2015 of $3.1 million.During the third quarter of 2015, the Compensation Committee of the Board approved the grant of cash bonuses to the participants in the Company's2014 annual cash incentive bonus plan who received all or a portion of their 2014 annual cash incentive award in the form of restricted shares of theCompany's common stock (the "2014 Bonus Plan RSA Grantees"). Such bonuses were paid to 2014 Bonus Plan RSA Grantees on the second regularlyscheduled payroll date following the Company’s scheduled second quarter earnings release on August 5, 2015 and were equal to the product of (i) $2.66(which amount represents the difference of $5.38, the trading price per share of the Company’s common stock as of the close of trading on the date that theCompany determined the number of restricted shares to be granted to 2014 Bonus Plan RSA Grantees, minus $2.72, the trading price per share of theCompany’s common stock as of the close of trading on the second business day following the earnings release), multiplied by (ii) the number of restrictedshares granted to the applicable 2014 Bonus Plan RSA Grantee. The aggregate number of restricted shares granted to 2014 Bonus Plan RSA Grantees was683,401. This modification resulted in a net increase of share-based compensation expense for the year ended December 31, 2015 of $1.8 million.Note 6. Retirement PlanThe Company maintains a 401(k) retirement plan (the "401(k) plan") that is intended to be a tax-qualified defined contribution plan underSection 401(k) of the Internal Revenue Code. In general, all employees are eligible to participate. The 401(k) plan includes a salary deferral arrangementpursuant to which participants may elect to reduce their current compensation by up to the statutorily prescribed limit, equal to $18,000, $17,500 and$17,500 in 2015, 2014 and 2013, respectively, and have the amount of the reduction contributed to the 401(k) plan. The Company currently matchesemployee contributions up to 50% of the first 3% of base compensation that a participant contributes to the 401(k) plan. In 2015, 2014 and 2013, director-level and above employees were excluded from the matching contribution feature of the plan. For the years ended December 31, 2015, 2014 and 2013, totalCompany contributions to the plan were $0.4 million, $0.5 million and $0.6 million, respectively.Note 7. Restatement and OtherIn the first quarter of 2013, the Company determined that it would restate its previously issued consolidated financial statements (the "Restatement").The Restatement corrected accounting errors relating to timing of recognition of net services revenue, the presentation of net services revenue and cost ofservices and certain capitalized costs for internal use software, goodwill, income taxes and other miscellaneous items. The Company completed theRestatement in December 2014. In connection with the Restatement, the Company spent additional time and expended additional resources redesigning itsaccounting processes and internal controls over financial reporting.Restatement and other costs are comprised of reorganization-related and Restatement expenses and certain other costs. The Company incurredRestatement and other costs of $9.3 million, $86.8 million and $34.0 million for the years ended December 31, 2015, 2014 and 2013, respectively.F-22Accretive Health, Inc.Notes to Consolidated Financial StatementsNote 7. Restatement and Other (continued)RestatementThe Company incurred Restatement costs of $2.5 million, $57.3 million and $23.1 million during the years ending December 31, 2015, 2014 and2013, respectively. These costs were due to legal, accounting and consulting costs incurred related to the Restatement.Reorganization-relatedThe Company incurred reorganization-related costs of $3.2 million, $22.1 million and $5.2 million during the years ending December 31, 2015, 2014and 2013, respectively.In 2013, the Company initiated a restructuring plan (the "Restructuring Plan") consisting of reductions in workforce in order to align its organizationalstructure and resources to better serve its customers. The plan consisted of two separate staff reductions that occurred in 2013. Pursuant to the RestructuringPlan, the Company incurred $3.9 million for severance and other costs during the year ended December 31, 2013. In addition, the Company incurred $1.2million non-cash expense related to share-based compensation for modification of existing option agreements for affected employees.In January 2014, the Company continued and revised the Restructuring Plan to include additional reductions to its workforce in certain corporate,administrative and management functions. The Restructuring Plan consists of severance payments, medical and dental benefits, outplacement job training forcertain U.S.-based employees and relocation costs. In connection with the Restructuring Plan, the Company incurred $22.1 million in pretax restructuringcharges during the year ended December 31, 2014, consisting of $17.1 million in severance and employee benefits, including $7.9 million of non-cashexpense related to share-based compensation for modification of existing options for affected employees and $5.0 million in facilities and other relatedexpenses. For the year ended December 31, 2015, the Company incurred pretax restructuring charges of $3.2 million, consisting of $0.6 million in severanceand employee benefits and $2.6 million in facilities related expenses.The Company has included $0.3 million and $2.2 million in accrued compensation and benefits and other accrued expenses in the accompanyingconsolidated balance sheet at December 31, 2015, respectively, and has included $3.3 million and $0.2 million in accrued compensation and benefits andother accrued expenses in the accompanying consolidated balance sheet at December 31, 2014, respectively,The Company's reorganization activity was as follows (in thousands): Severance andEmployee Benefits Facilities andOther Costs TotalReorganization liability at January 1, 2013$— $— $—Restructuring charges5,173 — 5,173Cash payments(2,806) — (2,806)Non-cash charges(1,224) — (1,224)Reorganization liability at December 31, 2013$1,143 $— $1,143Restructuring charges17,108 5,010 22,118Cash payments(7,050) (3,482) (10,532)Non-cash charges(7,905) (1,370) (9,275)Reorganization liability at December 31, 2014$3,296 $158 $3,454Restructuring charges596 2,564 3,160Cash payments(3,575) (546) (4,121)Reorganization liability at December 31, 2015$317 $2,176 $2,493F-23Accretive Health, Inc.Notes to Consolidated Financial StatementsNote 7. Restatement and Other (continued)OtherDuring the years ended December 31, 2015, 2014 and 2013, the Company incurred other costs of $3.6 million, $7.4 million and $5.7 million,respectively. For the year ended December 31, 2015, these costs included $3.8 million in costs related to the exploration of potential strategic alternatives,offset by a decrease of $0.2 million in employment tax expense relating to prior years.For the year ended December 31, 2014, such costs included $6.5 million in other costs associated with its transformation office, which was created toprovide continuity and cross functional accountability associated with the continued execution of the Company's turnaround plan during the periodsubsequent to Stephen Schuckenbrock's resignation as our Chief Executive Officer and prior to the appointment of Dr. Emad Rizk as our Chief ExecutiveOfficer. In addition, the Company incurred other non-recurring costs in 2014 of $0.9 million in additional employment tax expense relating to prior years.In 2013, the Company incurred costs for litigation, primarily related to the lawsuit filed against the Company in January 2012 by the MinnesotaAttorney General that is described in Note 10, Commitments and Contingencies, of $3.3 million. In 2013, the Company accrued $2.3 million for thesettlement of certain claims by former shareholders of SDI Acquisition, Inc. (a wholly owned subsidiary of Company).F-24Accretive Health, Inc.Notes to Consolidated Financial StatementsNote 8. Income TaxesThe domestic and foreign components of income (loss) before income taxes consist of the following (in thousands): Year Ended December 31, 2015 2014 2013Domestic $(139,058) $(130,945) $202,222Foreign 3,245 2,594 2,210Total income (loss) before income taxes $(135,813) $(128,351) $204,432For the years ended December 31, 2015, 2014 and 2013, the Company’s current and deferred income tax expense (benefit) attributable to income (loss)from operations are as follows (in thousands): Current Deferred TotalYear Ended December 31, 2013 U.S. Federal $(5,060) $75,737 $70,677State & Local (330) 3,635 3,305Foreign 367 — 367 $(5,023) $79,372 74,349Year Ended December 31, 2014 U.S. Federal $(627) $(42,240) $(42,867)State & Local 46 (6,363) (6,317)Foreign 1,025 (572) 453 $444 $(49,175) $(48,731)Year Ended December 31, 2015 U.S. Federal $68 $(43,199) $(43,131)State & Local (176) (8,468) (8,644)Foreign 530 (312) 218 $422 $(51,979) $(51,557)Reconciliation of the difference between the actual tax rate and the statutory U.S. federal income tax rate is as follows: Year Ended December 31, 2015 2014 2013Federal statutory tax rate 35 % 35%35%Increase in income tax rate resulting from: State and local income taxes, net of federal tax benefits 4 % 3% 1%Non-deductible executive compensation (1)% Actual tax rate 38 % 38% 36%In the three month period ended March 31, 2014, the Company corrected the statutory rate used in one of its state deferred calculations for the yearended December 31, 2013. The Company discovered this error in the process of preparing its annual and quarterly financial statements for the year endedDecember 31, 2014, and recorded the amount in the first quarter of 2014. The correction of this error increased tax expense for the yearF-25Accretive Health, Inc.Notes to Consolidated Financial StatementsNote 8. Income Taxes (continued)ended December 31, 2014 by approximately $2.4 million. The Company has determined the amount is immaterial for the quarterly and annual periods in2013 and the year ended December 31, 2014.The following table sets forth the Company’s net deferred tax assets as of December 31, 2015 and 2014 (in thousands): As of December 31, 2015 2014Deferred Tax assets: Deferred customer billings 220,075 181,567Net operating loss carryforwards 48,201 41,654Share-based compensation 24,995 33,895Accrued bonus 2,008 3,791Other reserves 606 1,019Alternative minimum tax 1,537 1,185Other 2,446 1,235Fixed assets 435 —R&D credit 189 711Charitable contributions 534 514Stock warrants 101 127Total gross deferred tax assets 301,127 265,698Less valuation allowance (302) (299)Net deferred tax assets 300,825 265,399Deferred tax liabilities: Goodwill and fixed assets — (817)Total deferred tax liability — (817)Net deferred tax asset $300,825 $264,582At December 31, 2015, the Company had cumulative U.S. federal net operating loss carryforwards of approximately $123.0 million which are availableto offset U.S. federal taxable income in future periods through 2035.At December 31, 2015, the Company has cumulative state net operating carryforwards of approximately $130.0 million which are available to offsetstate taxable income in future periods through 2035. A valuation allowance is required to be established when, based on currently available information, it ismore likely than not that all or a portion of a deferred tax asset will not be realized. The guidance on accounting for income taxes provides important factorsin determining whether a deferred tax asset will be realized, including whether there has been sufficient taxable income in recent years and whether sufficientincome can reasonably be expected in future years in order to utilize the deferred tax asset.Consideration is given to the weight of all available evidence, both positive and negative. Generally, a cumulative loss in recent years is negativeevidence in determining the need for a deferred tax asset valuation allowance. However, the recent cumulative losses in book income are primarily the resultof a delay in revenue recognition on contracts that have been in place for a number of years. Under the Restatement, revenue is being deferred by theCompany until a future event occurs and the revenue becomes fixed, per the terms of each contract. The Company believes that the deferred revenue fromcontracts that the Company has previously entered into will be recognized in the future. The majority of the deferred revenue amounts have already beenreported on income tax returns filed in accordance with a previously established and approved method of accounting for federal and stateF-26Accretive Health, Inc.Notes to Consolidated Financial StatementsNote 8. Income Taxes (continued)income tax reporting. The significant positive evidence related to the projected realization of the deferred customer billings from existing contracts andprojected taxable income outweighs the negative evidence from the cumulative losses incurred in recent years based on the Restatement. Accordingly, theCompany believes that it is more likely than not that the remaining deferred tax assets will be realized, except there is a possibility that approximately $1.5million of the deferred tax asset recorded at December 31, 2015 for costs related to the exploration of strategic alternatives with Ascension Health("Ascension") may not be realized.The Company has recorded valuation allowances at December 31, 2015 and 2014 of $0.3 million and $0.3 million, respectively, based on ourassessment that it is more likely than not that a portion of the Company’s separate state income tax net operating loss will not be realized.The Company has not recognized a deferred tax liability for the undistributed earnings of its foreign subsidiaries that arose in 2015 or 2014 because theCompany considers such earnings to be indefinitely reinvested outside of the United States. As of December 31, 2015 and 2014, the undistributed earnings ofsuch subsidiaries were $9.0 million and $6.8 million, respectively. It is not practicable to estimate the amount of recognized deferred tax liabilities, if any, forthese undistributed foreign earnings.The 2015, 2014 and 2013 current tax provision includes $0.5 million, $1.0 million and $0.4 million, respectively, for income taxes arising from thepre-tax income of the Company’s India subsidiaries. The tax provisions are net of the impact of a tax holiday in India. The Company’s benefits from this taxholiday were $0.7 million for the year ended December 31, 2015, $0.5 million for the year ended December 31, 2014 and $0.4 million for the year endedDecember 31, 2013. The tax holiday is set to expire on March 31, 2021.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 uponexamination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements are measured basedon the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. The Company’s unrecognized tax benefits asof December 31, 2015, 2014 and 2013 totaled $1.2 million, $1.1 million and $1.3 million, respectively.F-27Accretive Health, Inc.Notes to Consolidated Financial StatementsNote 8. Income Taxes (continued)The following table summarizes the activity related to the unrecognized tax benefits (in thousands): Tax BenefitUnrecognized tax benefits atDecember 31, 2012$2,411Increases in positions taken in a current period67Increases in positions taken in prior period—Decreases due to lapse of statute of limitations(1,176) Unrecognized tax benefits atDecember 31, 2013$1,302Increases in positions taken in a current period66Increases in positions taken in prior period94Decreases in positions taken in a prior period(51)Decreases due to lapse of statute of limitations(313) Unrecognized tax benefits atDecember 31, 2014$1,098Increases in positions taken in a current period134Increases in position taken in prior period597Decreases in positions taken in prior period—Decreases due to lapse of statute of limitations(587)Unrecognized tax benefits atDecember 31, 2015$1,242 As of December 31, 2015, approximately $1.2 million of the total gross unrecognized tax benefits represented the amount that, if recognized, wouldresult in an adjustment to the effective income tax rate in future periods. The Company recognizes interest and penalties related to income tax matters as partof income tax expense. The Company recorded adjustments to interest and potential penalties related to these unrecognized tax benefits during 2015, and intotal, as of December 31, 2015, the Company has recorded a liability for interest and potential penalties of $0.4 million. The Company anticipates changes tothe reserves within the next 12 months to be primarily related to interest. The Company believes it has sufficient accruals for contingent tax liabilities.In connection with tax return examinations, contingencies can arise that generally result from different interpretations of tax laws and regulations asthey pertain to the amount, timing or inclusion of revenues and expenses in taxable income, or the ability to utilize tax credits to reduce income taxespayable. While it is probable, based on the potential outcome of the Company’s federal and state tax examinations or the expiration of the statute oflimitations for specific jurisdictions, that the liability for unrecognized tax benefits may increase or decrease within the next 12 months, the Company doesnot expect any such change would have a material effect on our financial condition, results of operations or cash flow.The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. U.S. federalincome tax returns for 2014, 2013, 2012 and 2011 are currently open for examination. The 2013, 2012 and 2011 U.S. federal income tax returns are currentlyunder examination. State jurisdictions vary for open tax years. The statute of limitations for most states ranges from three to six years. Local tax authoritieshave completed their income tax examinations of the Company’s subsidiary in India for fiscal years 2009 and 2010. The proposed adjustments in India havebeen appealed, and the Company believes the ultimate outcome of these appeals will not result in a material adjustment to its tax liability.F-28Accretive Health, Inc.Notes to Consolidated Financial StatementsNote 8. Income Taxes (continued)Pursuant to the acquisition of a business in May 2006, the sellers, certain of which are employees of the Company, are obligated to indemnify theCompany for federal and state income taxes, including 50% of any interest and penalties incurred, related to periods up to and including the date of theacquisition. The potential amount due to the Company related to this indemnity was $1.3 million as of December 31, 2014 and 2013. As of December 31,2015, the Company released $1.3 million due to the lapse of the statute of limitations. The amount due from the related party was secured by the fair value ofshares and cost held by the Company in escrow. The escrow agreement expired on June 15, 2015. The cost and fair value of the shares were $0.8 million and$1.0 million at December 31, 2014 and 2013, respectively. Given that the fair value of the shares was less than the amount due from the related party in 2014and 2013, the Company recorded a reserve of $0.5 million and $0.3 million, respectively, to reflect the difference between the fair value of the shares and thereceivable they securitized. Subsequent to the expiration of the escrow agreement in 2015, the shares held as security by the Company were released to theformer sellers.Note 9. Earnings (Loss) Per ShareBasic and diluted net income (loss) per common share are calculated as follows (in thousands, except share and per share data): Year Ended December 31, 2015 2014 2013Net income (loss) $(84,256) $(79,620) $130,083Basic weighted-average common shares 96,806,885 95,760,762 95,687,940Add: Effect of dilutive securities — — 1,157,724Diluted weighted-average common shares 96,806,885 95,760,762 96,845,664Net income (loss) per common share (basic) $(0.87) $(0.83) $1.36Net income (loss) per common share (diluted) $(0.87) $(0.83) $1.34Stock options totaling 18,450,699 were not included in the computation of diluted income per share for the year ended December 31, 2013 as theoptions were anti-dilutive. Due to the net loss, stock options and RSAs totaling 24,516,198 and 22,401,870 were not included in the computation of dilutedincome (loss) per share for the years ended December 31, 2015 and 2014, respectively.F-29Accretive Health, Inc.Notes to Consolidated Financial StatementsNote 10. Commitments and ContingenciesOperating LeasesThe Company rents office space and equipment under operating leases, primarily for its Chicago corporate office, U.S. shared services centers and Indiaoperations. Office space lease terms range from one to 11 years, whereas equipment lease terms range from one to three years. The Company’s leases containvarious rent holidays and rent escalation clauses and entitlements for tenant improvement allowances. Lease payments are amortized to expense on a straight-line basis over the lease term.Total rent expense under all operating leases was $6.2 million, $4.9 million and $4.7 million for the years ended December 31, 2015, 2014 and 2013,respectively.The aggregate future minimum rental commitments under all noncancelable operating leases having remaining terms in excess of one year as ofDecember 31, 2015 are as follows (in thousands):20165,26720176,55920186,27520195,62020205,395Thereafter13,178 Total$42,294 Revolving Credit FacilityThe Company's $3.0 million line of credit with the Bank of Montreal expired on February 15, 2015 and has not been renewed. Consequently, theCompany has reclassified the $5.0 million in restricted cash to current assets at December 31, 2014. The $3.0 million line of credit could only be utilized bythe Company in the form of letters of credit and was secured by a $5.0 million demand deposit with the Bank of Montreal, which is presented as restrictedcash in the Company’s consolidated balance sheets. Any amounts outstanding under the line of credit accrued interest at the greater of (i) the bank-established prime commercial rate, (ii) LIBOR plus 1% rate, or (iii) a rate that combines the characteristics of both. The line of credit had an initial term ofthree years and was renewable annually thereafter. At December 31, 2014, the Company's outstanding letter of credit was approximately $0.7 million.Legal ProceedingsOther than as described below, the Company is not presently a party to any material litigation or regulatory proceeding and is not aware of any pendingor threatened litigation or regulatory proceeding against the Company which, individually or in the aggregate, could have a material adverse effect on itsbusiness, operating results, financial condition or cash flows.The Company, along with certain of its directors and former officers, has been named in several putative shareholder derivative lawsuits filed in the U.S.District Court for the Northern District of Illinois on May 3, 2012 and July 31, 2012 (consolidated as Maurras Trust v. Accretive Health et al.), in the CircuitCourt of Cook County, Illinois on June 23, 2012 and June 27, 2012 (consolidated as In re Accretive Health, Inc. Derivative Litigation) and in the Court ofChancery of the State of Delaware on November 5, 2012 (Doyle v. Tolan et al.). The primary allegations are that its directors and officers breached theirfiduciary duties in connection with the alleged violations of certain federal and Minnesota privacy and debt collection laws.F-30Accretive Health, Inc.Notes to Consolidated Financial StatementsNote 10. Commitments and Contingencies (continued)On July 11, 2013, the Court of Chancery of the State of Delaware granted the Company's motion to stay Doyle v. Tolan et al., in favor of the actionpending in the U.S. District Court for the Northern District of Illinois. On September 24, 2013, the U.S. District Court for the Northern District of Illinoisgranted the Company's motion to dismiss without prejudice, giving plaintiffs in that case leave to file an amended consolidated complaint, which plaintiffsfiled on October 22, 2013, amending their complaint to also include allegations with respect to the Restatement. On February 25, 2015, the Company entereda settlement agreement with plaintiffs in all aforementioned suits that would resolve the derivative actions, on the basis of certain governance reforms alreadyimplemented and payment of attorneys' fees in the amount of $0.6 million. On July 23, 2015, the U.S. District Court for the Northern District of Illinoisgranted final approval of the settlement agreement. The Delaware and Cook County derivative suits are within the scope of the settlement approved by thefederal district court and were dismissed on August 12, 2015 and August 17, 2015, respectively.On May 17, 2013, the Company, along with certain of its directors, former directors and former officers, was named as a defendant in a putativesecurities class action lawsuit filed in the U.S. District Court for the Northern District of Illinois (Hughes v. Accretive Health, Inc. et al.). The primaryallegations, relating to its March 8, 2013 announcement that the Company would be restating its prior period financial statements, are that its publicstatements, including filings with the SEC, were false and/or misleading with respect to its revenue recognition and earnings prospects. On November 27,2013, plaintiffs voluntarily dismissed the Company’s directors and former directors, other than Mary Tolan. On January 31, 2014, the Company filed amotion to dismiss the complaint. On September 25, 2014, the Court granted the Company motion to dismiss without prejudice, however, the plaintiffs filed asecond amended complaint on October 23, 2014. On November 10, 2014, the Company filed a motion to dismiss the second amended complaint. While thatmotion was still pending, on January 8, 2015, plaintiffs filed a motion to amend the second amended complaint, seeking to add allegations regarding therecently issued Restatement. On April 22, 2015, the court granted plaintiffs’ motion to amend, and a third amended complaint was filed on May 13, 2015.The Company moved to dismiss the third amended complaint on June 3, 2015. Such motion is fully briefed and awaiting decision. On December 7, 2015, theparties executed a memorandum of understanding to resolve the suit for $3.9 million and filed a notice of settlement with the district court. On March 8,2016, the district court granted preliminary approval to the settlement. The final fairness hearing has been set for June 28, 2016. The Company believes thesettlement payment of $3.9 million will be covered by insurance.The SEC’s Division of Enforcement in the Chicago Regional Office commenced an investigation regarding the circumstances surrounding theRestatement following the March 8, 2013 announcement. The Company fully cooperated with the investigation. On December 7, 2015, the Companyreceived a termination letter from the SEC indicating that the investigation has been completed and that the SEC Staff did not intend to recommend anyenforcement action by the SEC.On February 11, 2014, the Company was named as a defendant in a putative class action lawsuit filed in the U.S. District Court for the Southern Districtof Alabama (Church v. Accretive Health, Inc.). The primary allegation is that the Company attempted to collect debts without providing the notice requiredby the Fair Debt Collections Practice Act, or the FDCPA. On November 24, 2015, the district court granted the Company's motion for summary judgment anddismissed the case with prejudice. Plaintiff filed a notice of appeal on December 21, 2015.On July 22, 2014, the Company was named as a defendant in a putative class action lawsuit filed in the U.S. District Court for the Eastern District ofMichigan (Anger v. Accretive Health, Inc.). The primary allegations are that the Company attempted to collect debts without providing the notice required bythe FDCPA and Michigan Fair Debt Collection Practices Act and failed to abide by the terms of an agreed payment plan in violation of those same statutes.On August 27, 2015, the Court granted in part and denied in part the Company’s motion to dismiss. An amended complaint was filed on November 30, 2015.Discovery is underway. The Company believes that it has meritorious defenses and intends to vigorously defend itself against these claims. The outcome isnot presently determinable.F-31Accretive Health, Inc.Notes to Consolidated Financial StatementsNote 10. Commitments and Contingencies (continued)On February 6, 2015, the Company was named as a defendant in a putative class action lawsuit filed in the U.S. District Court for the Eastern District ofMichigan (Cassale v. Accretive Health, Inc.). The primary allegations were that the Company attempted to collect debts without complying with theprovisions of the FDCPA. The case was settled in April 2015.In April 2015, the Company was named among other defendants in an employment action brought by a former employee before the Maine HumanRights Commission, or the MHRC, alleging that she was improperly terminated in retaliation for uncovering alleged Medicare fraud. The Company filed itsresponse with the MHRC on May 19, 2015 seeking that the Company be dismissed entirely from the action. On June 23, 2015, the MHRC issued its Noticeof Right to Sue and decision to terminate its process with respect to all charges asserted by the former employee. The Plaintiff has filed a parallel qui tamaction in the District of Maine (Worthy v. Eastern Maine Healthcare Systems) in which she makes the same allegations. The U.S. Department of Justicedeclined to intervene in the federal court action, and the case was unsealed in April 2015. The Company intends to file an answer and/or move to dismiss theThird Amended Complaint on March 21, 2016. The Company believes that it has meritorious defenses to both the potential employment law action forwhich the MHRC has granted the Notice of Right to Sue letter and the federal qui tam case, and intends to vigorously defend itself against these claims. Theoutcomes are not presently determinable.On June 17, 2015, the Company filed a confidential arbitration demand with the American Arbitration Association against Salem Hospital for unpaidfees due under the parties’ Health Services Agreement in an aggregate amount of $9.3 million. On July 31, 2015, Salem Hospital filed its answer, in which itdenied the Company’s claims and asserted counterclaims against the Company in the amount of $2.7 million. The outcome is not presently determinable.On November 16, 2015, the Company was named in a putative class action lawsuit filed in the U.S. District Court for the Eastern District of Michigan(Dye v. Accretive Health, Inc.). The primary allegations were that the Company attempted to collect debts without complying with the provisions of theFDCPA. The case was voluntarily dismissed on December 4, 2015.On December 10, 2015, the plaintiff in the Dye action filed a class-action complaint in the Circuit Court for the County of Macomb, Michigan, allegingthat the Company’s attempts to collect his debts had violated the Michigan Occupational Code. The Company filed its motion to dismiss on February 8,2016 and a hearing is scheduled on March 28, 2016. The Company believes that it has meritorious defenses and intends to vigorously defend itself againstthe claims. The outcome is not presently determinable.Note 11. Segments and Customer ConcentrationsThe Company has determined that it has a single operating segment in accordance with how its business activities are managed and evaluated. All ofthe Company’s significant operations are organized around the single business of providing end-to-end management services of revenue cycle operations forU.S.-based hospitals and other medical providers. Accordingly, for purposes of segment disclosures, the Company has only one reporting segment. All of theCompany’s net services revenue and trade accounts receivable are derived from healthcare providers domiciled in the United States.While managed independently and governed by separate contracts, several of the Company’s RCM customers are affiliated with a single healthcaresystem. The Company evaluates each separate affiliated contract as a customer. The Company has between 25 and 30 individual customers for RCM servicesin each of the three years ended December 31, 2015, 2014 and 2013. The Company recognizes revenue on RCM services when there is a contract terminationor other contractual agreement event, as defined in Note 2, Summary of Significant Accounting Policies in accordance with its accounting policy. TheCompany’s revenue is not consistent with its cash flows in that cashF-32Accretive Health, Inc.Notes to Consolidated Financial StatementsNote 11. Segments and Customer Concentrations (continued)may be accumulated over three to five years prior to a revenue recognition event. Therefore, measuring customers as a percent of total revenue may not bemeaningful.Hospital systems affiliated with Ascension have accounted for a significant portion of the Company’s net services revenue each year since theCompany’s formation. In 2015, 2014 and 2013, net services revenue from hospitals affiliated with Ascension represented 45%, 12% and 73% of theCompany’s total net services revenue, respectively. An affiliate of Ascension, individually, accounted for 45%, 12% and 28% of the Company’s total netservices revenue for 2015, 2014 and 2013, respectively.The Ascension system, through its individual customer contracts with the Company, account for more than 75%, 76% and 55% of the Company’s totaldeferred customer billings at December 31, 2015, 2014 and 2013, respectively. The loss of the customers within this large health system would have amaterial adverse impact on the Company’s operations.The Company does not have a concentration of credit risk within accounts receivable as reported in the consolidated balance sheets with any one largecustomer at December 31, 2015, 2014 and 2013.Note 12. Subsequent EventsIn December 2015, the Company announced a long-term strategic partnership with Ascension Health Alliance, the parent of its largest customer andthe nation’s largest Catholic and non-profit health system, and TowerBrook Capital Partners ("TowerBrook"), an investment management firm, whichtransaction was completed on February 16, 2016. As part of the transaction, the Company amended and restated its Master Professional Services Agreement("A&R MPSA"), with Ascension, effective February 16, 2016 with a term of ten years. Pursuant to the A&R MPSA and with certain limited exceptions, theCompany will become the exclusive provider of revenue cycle management services and PAS with respect to acute care services provided by the hospitalsaffiliated with Ascension that execute supplement agreements with the Company. In addition, at the close of the transaction, the Company issued to TCP-ASC ACHI Series LLLP, a limited liability limited partnership jointly owned by Ascension Health Alliance and investment funds affiliated withTowerBrook: (i) 200,000 shares of its 8.00% Series A Convertible Preferred Stock, par value $0.01 per share (the "Series A Preferred Stock"), for an aggregateprice of $200 million and (ii) a warrant to acquire up to 60 million shares of its common stock, on the terms and subject to the conditions set forth in theWarrant Agreement. The Series A Preferred Stock is immediately convertible into shares of common stock.F-33Accretive Health, Inc.Notes to Consolidated Financial StatementsNote 13. Quarterly Financial Information (Unaudited)The following tables provide our Quarterly Condensed Consolidated Statements of Operations (in thousands, except per share data): 1st Quarter Ended March 31, 2nd Quarter Ended June 30, 3rd Quarter EndedSeptember, 30 4th Quarter EndedDecember 31, 20152014 20152014 20152014 20152014Net services revenue $10,971$12,964 $22,085$58,975 $15,842$90,745 $68,341$47,456Total operating expenses 60,83397,599 64,34286,167 70,68576,001 57,42379,026Income (loss) from operations (49,862)(84,635) (42,257)(27,192) (54,843)14,744 10,918(31,570)Net income (loss) $(30,445)$(54,723) $(26,288)$(16,799) $(32,970)$9,553 $5,447$(17,651) Net income (loss) per common share Basic $(0.32)$(0.57) $(0.27)$(0.18) $(0.34)$0.10 $0.06(0.18)Diluted $(0.32)$(0.57) $(0.27)$(0.18) $(0.34)$0.10 $0.06(0.18)F-34EXHIBIT INDEX ExhibitNumber Description 3.1 Restated Certificate of Incorporation of the Registrant, as amended (incorporated by reference to Exhibit 3.2 to Amendment No. 4 to theRegistration 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 RegistrationStatement 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 10.1 to theCurrent 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 10.1 to the Current Reporton 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.4.1 Specimen Certificate evidencing shares of Common Stock (incorporated by reference to Exhibit 4.1 to Amendment No. 4 to theRegistration Statement on Form S-1 (File No. 333-162186) filed on April 26, 2010)10.1* Amended and Restated Stock Option Plan, as amended (incorporated by reference to Exhibit 10.1 to Amendment No. 4 to theRegistration 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 byreference 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 onForm 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 theRegistration Statement on Form S-1 (File No. 333-162186) filed on September 29, 2009)10.5 Third Amended and Restated Stockholders’ Agreement, dated as of February 22, 2009, among the Registrant and the parties namedtherein, as amended (incorporated by reference to Exhibit 10.5 to the Registration Statement on Form S-1 (File No. 333-172707) filed onMarch 9, 2011)10.6 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 toExhibit 10.6 to the Registration Statement on Form S-1 (File No. 333-162186) filed on September 29, 2009)10.7 Lease Agreement, dated as of May 4, 2005, between the Registrant and Zeller Management Corporation, as amended by First LeaseAmendment, dated as of January 30, 2007, and Second Lease Amendment, dated as of November 26, 2008 (incorporated by reference toExhibit 10.7 to the Registration Statement on Form S-1 (File No. 333-162186) filed on September 29, 2009)10.8* Employment Agreement, dated as of June 17, 2005, between the Registrant and John T. Staton, as amended (incorporated by reference toExhibit 10.19 to the Registration Statement on Form S-1 (File No. 333-162186) filed on September 29, 2009)10.9* Form of Indemnification Agreement, entered into between the Registrant and each director and executive officer (incorporated byreference to Exhibit 10.1 to Current Report on Form 8-K (File No. 001-34746) filed on February 16, 2016)10.11* Form of Incentive Stock Option Agreement under the 2010 Stock Incentive Plan (incorporated by reference to Exhibit 10.24 toAmendment No. 4 to the Registration Statement on Form S-1 (File No. 333-162186) filed on April 26, 2010)ExhibitNumber Description 10.12* Form of Nonstatutory Stock Option Agreement under the 2010 Stock Incentive Plan (incorporated by reference to Exhibit 10.25 toAmendment No. 4 to the Registration Statement on Form S-1 (File No. 333-162186) filed on April 26, 2010)10.13+# Master Professional Services Agreement by and between Ascension Health and the Registrant effective as of August 6, 2012(incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 (File No. 001-34746) filed on November 8, 2012)10.14* Chairman’s Agreement, dated April 24, 2013, between Registrant and Mary A. Tolan (incorporated by reference to Exhibit 10.14 toAnnual Report on Form 10-K for the fiscal year ended December 31, 2013 (File No. 001-34746) filed on December 30, 2014)10.15* Mutual General Release Agreement, dated April 24, 2013, between Registrant and Mary A. Tolan (incorporated by reference to Exhibit10.15 to Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (File No. 001-34746) filed on December 30, 2014)10.16* Employment Agreement, dated April 2, 2013, between Registrant and Stephen F. Schuckenbrock (incorporated by reference to Exhibit10.16 to Annual Report on Form 10-K filed for the fiscal year ended December 31, 2013 (File No. 001-34746) filed on December 30,2014)10.17* Stock Option Agreement, dated April 3, 2013, between Registrant and Stephen F. Schuckenbrock (incorporated by reference to Exhibit10.17 to Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (File No. 001-34746) filed on December 30, 2014)10.18* Offer Letter, dated April 27, 2013, between Registrant and Joseph Flanagan (incorporated by reference to Exhibit 10.18 to AnnualReport on Form 10-K for the fiscal year ended December 31, 2013 (File No. 001-34746) filed on December 30, 2014)10.19* Restricted Stock Award, dated June 3, 2013, between Registrant and Joseph Flanagan (incorporated by reference to Exhibit 10.19 toAnnual Report on Form 10-K for the fiscal year ended December 31, 2013 (File No. 001-34746) filed on December 30, 2014)10.20* Nonstatutory Stock Option Award Agreement, dated June 3, 2013, between Registrant and Joseph Flanagan (incorporated by referenceto Exhibit 10.20 to Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (File No. 001-34746) filed on December30, 2014)10.21* Transition Agreement, dated April 24, 2013, between Registrant and Gregory N. Kazarian (incorporated by reference to Exhibit 10.21 toAnnual Report on Form 10-K for the fiscal year ended December 31, 2013 (File No. 001-34746) filed on December 30, 2014)10.22* Severance Agreement and Release of Claims, dated June 28, 2013, between Registrant and Richard Gillette (incorporated by referenceto Exhibit 10.22 to Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (File No. 001-34746) filed on December30, 2014)10.23* Offer Letter, dated August 24, 2013, between Registrant and Sean D. Orr (incorporated by reference to Exhibit 10.23 to Annual Reporton Form 10-K for the fiscal year ended December 31, 2013 (File No. 001-34746) filed on December 30, 2014)10.24* Resignation Letter, dated March 28, 2014, between Registrant and John T. Staton (incorporated by reference to Exhibit 10.24 to AnnualReport on Form 10-K for the fiscal year ended December 31, 2013 (File No. 001-34746) filed on December 30, 2014)10.25* Amendment to Offer Letter, dated April 29, 2014, between Registrant and Joseph Flanagan (incorporated by reference to Exhibit 10.25to Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (File No. 001-34746) filed on December 30, 2014)10.26* Nonstatutory Stock Option Award Agreement, dated April 29, 2014, between Registrant and Joseph Flanagan (incorporated by referenceto Exhibit 10.26 to Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (File No. 001-34746) filed on December30, 2014)10.27* Restricted Stock Award Agreement, dated April 29, 2014, between Registrant and Joseph Flanagan (incorporated by reference toExhibit 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)10.28* Offer Letter, dated June 3, 2014, between Registrant and Thomas Gibson (incorporated by reference to Exhibit 10.28 to Annual Reporton Form 10-K for the fiscal year ended December 31, 2013 (File No. 001-34746) filed on December 30, 2014)ExhibitNumber Description10.29* Offer Letter, dated July 10, 2014, between Registrant and Emad Rizk (incorporated by reference to Exhibit 10.29 to Annual Report onForm 10-K for the fiscal year ended December 31, 2013 (File No. 001-34746) filed on December 30, 2014)10.30* Nonstatutory Stock Option Award Agreement, dated July 21, 2014, between Registrant and Emad Rizk (incorporated by reference toExhibit 10.30 to Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (File No. 001-34746) filed on December 30,2014)10.31* Restricted Stock Award Agreement, dated July 21, 2014, between Registrant and Emad Rizk (incorporated by reference to Exhibit 10.31to Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (File No. 001-34746) filed on December 30, 2014)10.32* Resignation Letter Agreement, dated August 6, 2014, between Registrant and Sean Orr (incorporated by reference to Exhibit 10.32 toAnnual Report on Form 10-K for the fiscal year ended December 31, 2013 (File No. 001-34746) filed on December 30, 2014)10.33* Offer Letter, dated August 6, 2014, between Registrant and Peter Csapo (incorporated by reference to Exhibit 10.33 to Annual Report onForm 10-K for the fiscal year ended December 31, 2013 (File No. 001-34746) filed on December 30, 2014)10.34* Nonstatutory Stock Option Award Agreement, dated August 12, 2014, between Registrant and Peter Csapo (incorporated by reference toExhibit 10.34 to Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (File No. 001-34746) filed on December 30,2014)10.35* Restricted Stock Award Agreement, dated August 12, 2014, between Registrant and Peter Csapo (incorporated by reference to Exhibit10.35 to Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (File No. 001-34746) filed on December 30, 2014)10.36* Chairman Services Agreement, dated November 14, 2014, between Registrant and Steve Shulman (incorporated by reference to Exhibit10.36 to Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (File No. 001-34746) filed on December 30, 2014)10.37* Offer Letter, dated January 9, 2015, between Registrant and Richard Evans (incorporated by reference to Exhibit 10.37 to AnnualReport on Form 10-K for the fiscal year ended December 31, 2014 (File No. 001-34746) filed on June 23, 2015)10.38* Omnibus Amendment, dated May 18, 2015, to Employment Agreement dated April 2, 2013 between Registrant and Stephen F.Schuckenbrock and Stock Option Agreement, dated April 3, 2013, between Registrant and Stephen F. Schuckenbrock (incorporated byreference to Exhibit 10.38 to Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (File No. 001-34746) filed onJune 23, 2015)10.39* Retention Bonus and Enhanced Severance Agreement, dated August 12, 2015, between Registrant and Emad Rizk (incorporated byreference to Exhibit 10.2 to Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 (File No. 001-34746) filed onNovember 9, 2015)10.40* Retention Bonus and Enhanced Severance Agreement, dated August 12, 2015, between Registrant and Peter Csapo (incorporated byreference to Exhibit 10.4 to Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 (File No. 001-34746) filed onNovember 9, 2015)10.41* Retention Bonus and Enhanced Severance Agreement, dated August 12, 2015, between Registrant and Joseph Flanagan (incorporatedby reference to Exhibit 10.5 to Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 (File No. 001-34746) filed onNovember 9, 2015)10.42* Amended and Restated 2010 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (FileNo. 001-34746) filed on August 20, 2015)10.43* Form of Restricted Stock Award Agreement under the Amended and Restated 2010 Stock Incentive Plan10.44* Amendment to Retention and Severance Bonus Agreement, dated October 19, 2015, between Registrant and Emad Rizk (incorporatedby reference to Exhibit 10.3 to Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 (File No. 001-34746) filed onNovember 9, 2015)10.45* Letter Agreement, dated December 7, 2015, between Registrant and Emad Rizk.10.46* Letter Agreement, dated December 7, 2015, between Registrant and Joseph Flanagan.10.47* Restricted Stock Award Agreement, dated December 31, 2015, between Registrant and Peter Csapo.ExhibitNumber Description10.48* Restricted Stock Award Agreement, dated December 31, 2015, between Registrant and Joseph Flanagan.10.49* Restricted Stock Award Agreement, dated December 31, 2015, between Registrant and Emad Rizk.10.50 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 toCurrent Report on 8-K (File No. 001-34746) filed December 9, 2015).21.1 Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 to Amendment No. 4 to the Registration Statement on Form S-1filed on April 26, 2010)23.1 Consent of Ernst & Young LLP31.1 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 200231.2 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 200232.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-OxleyAct of 200232.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-OxleyAct of 2002101 The following materials from the Accretive Health, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2014, formattedin eXtensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements ofOperations and Comprehensive Income (Loss), (iii) the Consolidated Statements of Stockholders’ Equity, (iv) the ConsolidatedStatements of Cash Flows, and (v) related notes.*Management contract or compensatory plan or arrangement required to be filed pursuant to Item 15(b) of Form 10-K.+Confidential treatment requested as to certain portions, which portions have been omitted and filed separately with the Securities and ExchangeCommission.#Registrant entered into an Amended & Restated Master Professional Services Agreement with Ascension Health effective as of February 16, 2016.Registrant intends to file a copy of such agreement with its Quarterly Report on Form-10Q for the quarter ended March 31, 2016. Exhibit 3.5CERTIFICATE OF DESIGNATIONS OF8.00% SERIES A CONVERTIBLEPREFERRED STOCK,PAR VALUE $0.01 PER SHARE, OFACCRETIVE HEALTH, INC._______________________Pursuant to Sections 151 and 103 of theGeneral Corporation Law of the State of Delaware_______________________ACCRETIVE HEALTH, INC., a corporation organized and existing under the laws of the State of Delaware (the "Company"), certifies that pursuant to theauthority contained in its Restated Certificate of Incorporation, as amended from time to time (the "Certificate of Incorporation"), and in accordance with theprovisions of Section 151 of the General Corporation Law of the State of Delaware, the Board of Directors of the Company (the "Board of Directors") has dulyapproved and adopted the following resolution on December 7, 2015, and the resolution was adopted by all necessary action on the part of the Company:RESOLVED, that pursuant to the authority vested in the Board of Directors by the Certificate of Incorporation and Section 151 of the General CorporationLaw of the State of Delaware, the Board of Directors does hereby designate, create, authorize and provide for the issue of a series of 370,000 shares ofPreferred Stock, par value $0.01 per share, having the voting powers and such designations, preferences and relative, participating, optional and other specialrights, and qualifications, limitations and restrictions that are set forth in this resolution of the Board of Directors pursuant to authority expressly vested in itby the provisions of the Certificate of Incorporation and hereby constituting an amendment to the Certificate of Incorporation as follows:Section 1Designation. The designation of the series of preferred stock of the Company is "8.00% Series A Convertible Preferred Stock," parvalue $0.01 per share (the "Series A Preferred Stock"). Each share of the Series A Preferred Stock shall be identical in all respects to every other share of theSeries A Preferred Stock. The Series A Preferred Stock shall be perpetual.Section 2Number of Shares. The authorized number of shares of Series A Preferred Stock is 370,000 shares. Series A Preferred Stock that isredeemed, purchased or otherwise acquired by the Company, or converted into another class or series of Capital Stock shall not be reissued as Series APreferred Stock, and the Company shall take such actions as are necessary to cause such acquired or converted shares to resume the status of authorized butunissued shares of Preferred Stock.Section 3Defined Terms and Rules of Construction.(a)Definitions. As used herein with respect to the Series A Preferred Stock:"Affiliate" of any Person shall mean any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with suchPerson. For purposes of this definition, "control" when used with respect to any Person has the meaning specified in Rule 12b-2 under the Exchange Act; andthe terms "controlling" and "controlled" have meanings correlative to the foregoing."Beneficially Own" shall mean "beneficially own" as defined in Rule 13d-3 under the Exchange Act."Board of Directors" shall mean the board of directors of the Company.1"Business Day" shall mean a day that is a Monday, Tuesday, Wednesday, Thursday or Friday and is not a day on which banking institutions in New York,New York or Chicago, Illinois generally are authorized or obligated by law, regulation or executive order to close."Bylaws" shall mean the Amended and Restated Bylaws of the Company in effect on the date hereof, as they may be amended from time to time."Capital Stock" shall mean any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (in each casehowever designated) stock issued by the Company."Certificate of Incorporation" shall mean the Restated Certificate of Incorporation of the Company, as amended from time to time, including by thisCertificate of Designations."Certificate of Designations" shall mean this Certificate of Designations relating to the Series A Preferred Stock, as it may be amended from time to time."Change of Control" shall mean the occurrence of any of the following:(1) any Person shall Beneficially Own, directly or indirectly, through a purchase, merger or other acquisition transaction or series of transactions, shares of theCompany's Capital Stock entitling such Person to exercise more than 50% of the total voting power of all classes of Voting Stock of the Company, other thanan acquisition by the Company, any of the Company's Subsidiaries or any of the Company's employee benefit plans (for purposes of this clause (1), "Person"shall include any syndicate or group that would be deemed to be a "person" under Section 13(d)(3) of the Exchange Act); provided, that a Change of Controlpursuant to this clause (1) shall not result from transfers by any Permitted Holder to any other Permitted Holder (other than pursuant to a transaction describedin clause (2) below or a tender or exchange offer); or(2) the Company (i) merges or consolidates with or into any other Person, another Person merges with or into the Company, or the Company conveys, sells,transfers or leases all or substantially all of the Company's assets to another Person or (ii) engages in any recapitalization, reclassification or other transactionin which all or substantially all of the Common Stock is exchanged for or converted into cash, securities or other property, in each case other than a merger orconsolidation:(A) that does not result in a reclassification, conversion, exchange or cancellation of the Company's outstanding Common Stock; provided that the holders ofthe Common Stock outstanding immediately prior to such transaction hold the majority of the Common Stock immediately following such transaction;(B) which is effected solely to change the Company's jurisdiction of incorporation and results in a reclassification, conversion or exchange of outstandingshares of the Common Stock solely into shares of common stock of the surviving entity; or(C) where the Voting Stock outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock of the surviving or transfereePerson constituting a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person (immediately after giving effect to suchissuance)."Close of Business" shall mean 5:00 p.m., Eastern Time, on any Business Day."Closing Price" shall mean the price per share of the final trade of the Common Stock on the applicable Trading Day on the principal national securitiesexchange or market on which the Common Stock is listed or admitted to trading (including any over-the-counter market)."Code" shall mean the Internal Revenue Code of 1986, as amended."Commission" shall mean the U.S. Securities and Exchange Commission, including the staff thereof.2"Common Participation Amount" shall have the meaning ascribed to in Section 4(a)."Common Stock" shall mean the common stock, par value $.01 per share, of the Company."Company" shall mean Accretive Health, Inc., a corporation organized and existing under the laws of the State of Delaware, and any successor thereof."Conversion Price" shall mean the quotient of (i) the sum of (A) the Liquidation Preference plus (B) an amount per share equal to accrued but unpaiddividends not previously added to the Liquidation Preference on such share of Series A Preferred Stock from and including the immediately precedingDividend Payment Date to but excluding the conversion date and (ii) $1,000."Conversion Rate" shall mean 400, subject to adjustment as set forth in Section 8."Current Market Price" shall mean the average Closing Price for the ten (10) consecutive Trading Days immediately preceding, but not including, the date asof which the Current Market Price is to be determined."Debt Documents" shall mean each agreement of the Company for borrowed money in an aggregate principal amount in excess of $25.0 million (with"principal amount" for purposes of this definition to include undrawn committed or available amounts) that is entered into by the Company from time to timeand as may be amended, supplemented, restated, renewed, replaced, refinanced or otherwise modified from time to time. For the avoidance of doubt, (x)obligations under multiple agreements may not be aggregated for purposes of satisfying the definition of Debt Document, (y) mortgages, real estate leases,capital lease obligations, purchase money agreements, sale-leaseback transactions, equipment financing, inventory financing, letters of credit and receivablesfinancing shall be eligible to constitute Debt Documents and (z) interest rate swaps, currency or commodity hedges and other derivative instruments shall beeligible to constitute Debt Documents measured on the basis of liability to the Company determined as of the date of the most recent quarterly or annualbalance sheet of the Company, and not based on notional amount."Distributed Property" shall have the meaning ascribed to it in Section 8(c)."Dividend Payment Date" shall mean January 1, April 1, July 1 and October 1 of each year, commencing on April 1, 2016; provided that if any such DividendPayment Date would otherwise occur on a day that is not a Business Day, such Dividend Payment Date shall instead be (and any dividend payable on SeriesA Preferred Stock on such Dividend Payment Date shall instead be payable on) the immediately succeeding Business Day."Dividend Period" shall mean the period commencing on and including a Dividend Payment Date and shall end on and include the day immediatelypreceding the next Dividend Payment Date; provided that the initial Dividend Period shall commence on and include the Original Issue Date and shall endon and include the day immediately preceding the first Dividend Payment Date."Dividend Rate" shall mean 8.00% per annum."Dividend Record Date" shall have the meaning ascribed to it in Section 4(a)."Equity-Linked Security" shall have the meaning ascribed to it in Section 8(d)."Exchange Act" shall mean the Securities Exchange Act of 1934, as amended."Exchange Property" shall have the meaning ascribed to it in Section 10(a)."Excluded Issuance" shall mean, any issuances of (1) Capital Stock to any employee, officer or director of the Company pursuant to a stock option, incentivecompensation stock purchase or similar plan outstanding as of the Original Issue Date or, subsequent to the Original Issue Date, approved by the Board ofDirectors or a duly authorized committee of the Board of Directors, (2) securities pursuant to any merger, joint venture, partnership, consolidation,dissolution,3liquidation, tender offer, recapitalization, reorganization, share exchange, business combination or similar transaction or any other direct or indirectacquisition by the Company, whereby the Company's securities comprise, in whole or in part, the consideration paid by the Company in such transaction, (3)securities pursuant to a registration statement declared effective by the Securities and Exchange Commission, or a prospectus approved by the appropriatefunctional regulator under the applicable securities laws of any foreign jurisdiction, for which the securities so registered are to be offered and sold to thebroad investing public by means of an at-the-market underwritten offering (excluding, for the avoidance of doubt, any rights offering or any offering at adiscount to the Current Market Price other than any underwriting discount, fee or commission), (4) Capital Stock pursuant to options, warrants, notes or otherrights to acquire securities of the Company outstanding on the Original Issue Date or issued pursuant to an Excluded Issuance under clauses (1) and (2)above, (5) Common Stock upon conversion of the Series A Preferred Stock and exercise of the Warrant issued to the Investor pursuant to that certainSecurities Purchase Agreement, dated as of December 7, 2015, by and among the Company, the Investor and, solely for purposes of Sections 8.11, 9.2, 10.1,10.2 and 10.5 through 10.15 thereof, Ascension Health Alliance d/b/a Ascension and (6) securities in connection with any dividend, distribution, split orcombination referred to in Section 8(a)."Fundamental Change" shall mean the occurrence of any of the following: (1) a Change of Control, (2) the Company, within the meaning of Title 11 of theU.S. Code or any similar federal or state law for the relief of debtors, (a) commences a voluntary case, (b) consents to the entry of an order for relief against itin an involuntary case, (c) consents to the appointment of a custodian of it for all or substantially all of its property or (d) makes a general assignment for thebenefit of its creditors, or (3) the Common Stock has not been re-listed on any of the Nasdaq Global Select Market, the Nasdaq Global Market, the NasdaqCapital Market, the New York Stock Exchange or any other United States national securities exchange on or prior to the one year anniversary of the OriginalIssue Date or, if re-listed prior to such date, the Common Stock ceases to be so listed on any such exchange at any time thereafter without the simultaneouslisting on another of such exchanges."Independent Majority" shall have the meaning ascribed to it in Section 8(e)."Internal Reorganization Event" shall have the meaning ascribed to it in Section 10(d)."Investor" means TCP-ASC ACHI Series LLLP, a Delaware limited liability limited partnership."Investor Majority" means (1) at any time prior to when any Series A Preferred Stock has been converted into shares of Common Stock, Permitted Holders thathold a majority of the Series A Preferred Stock held at such time by all Permitted Holders and (2) at any time after any Series A Preferred Stock has beenconverted into shares of Common Stock, Permitted Holders that hold a majority of the shares of Common Stock held at such time by all Permitted Holders(assuming, for this purpose, that all Series A Preferred Stock then held by the Permitted Holders as of such time is converted as of such time into shares ofCommon Stock)."Investor Rights Agreement" shall mean the investor rights agreement, dated February 16, 2016, as amended from time to time, by and between the Companyand the Investor."Junior Stock" shall mean the Common Stock and any other class or series of Capital Stock that ranks junior to the Series A Preferred Stock (1) as to thepayment of dividends or (2) as to the distribution of assets on any liquidation, dissolution or winding up of the Company, or both."Liquidating Distribution" shall have the meaning ascribed to it in Section 8(c)."Liquidation Preference" shall initially mean $1,000 per share of Series A Preferred Stock; provided, however, that to the extent that the Company does notdeclare a PIK Dividend or declare and pay a dividend in cash on a Dividend Payment Date pursuant to Section 4(b) and (c), an amount equal to the NetPreferred Dividend shall be added to the Liquidation Preference of such share on the applicable Dividend Payment Date."Net Preferred Dividend" has the meaning ascribed to it in Section 4(b).4"Original Issue Date" shall mean February 16, 2016."Ownership Threshold" shall have the meaning given in the Investor Rights Agreement."Parity Stock" shall mean any class or series of Capital Stock (other than the Series A Preferred Stock) that ranks equally with the Series A Preferred Stockboth (1) in the priority of payment of dividends and (2) in the distribution of assets upon any liquidation, dissolution or winding up of the Company (in eachcase, without regard to whether dividends accrue cumulatively or non-cumulatively)."Per Share Amount" shall have the meaning ascribed to it in Section 7(a)."Permitted Holders" shall mean, collectively, Investor, TowerBrook Capital Partners L.P., Ascension Health Alliance or any of their respective Affiliates."Permitted Transfer" shall have the meaning ascribed to it in the Investor Rights Agreement."Person" shall mean any individual, company, partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporatedorganization, government or agency or political subdivision thereof or any other entity."PIK Dividend" has the meaning ascribed to in Section 4(c)."Preferred Director" has the meaning ascribed to it in Section 9(b)."Preferred Dividend" has the meaning ascribed to it in Section 4(b)."Preferred Stock" shall mean any and all series of preferred stock of the Company, including the Series A Preferred Stock."Record Date" shall mean, with respect to any dividend, distribution or other transaction or event in which the holders of Common Stock have the right toreceive any cash, securities or other property or in which the Common Stock (or other applicable security) is exchanged for or converted into anycombination of cash, securities or other property, the date fixed for determination of shareholders entitled to receive such cash, securities or other property(whether such date is fixed by the Board of Directors or by statute, contract, this Certificate of Designations or otherwise)."Reorganization Event" shall have the meaning ascribed to it in Section 10(a)."Reorganization Event Date" shall have the meaning ascribed to it in Section 10(a)."Series A Preferred Stock" shall have the meaning ascribed to it in Section 1."Spin-Off" shall have the meaning ascribed to it in Section 8(c)."Subsidiary" shall mean any company, partnership, limited liability company, joint venture, joint stock company, trust, unincorporated organization or otherentity for which the Company owns at least 50% of the Voting Stock of such entity."Trading Day" shall mean any Business Day on which the Common Stock is traded, or able to be traded, on the principal national securities exchange ormarket on which the Common Stock is listed or admitted to trading (including any over-the-counter market)."Trigger Event" shall have the meaning ascribed to it in Section 8(c).5"Voting Stock" shall mean Capital Stock of the class or classes pursuant to which the holders thereof have the general voting power under ordinarycircumstances (determined without regard to any classification of directors) to elect one or more members of the Board of Directors (without regard to whetheror not, at the relevant time, Capital Stock of any other class or classes (other than Common Stock) shall have or might have voting power by reason of thehappening of any contingency).(b)Rules of Construction. Unless the context otherwise requires: (i) a term has the meaning assigned to it herein; (ii) an accounting term nototherwise defined herein has the meaning accorded to it in accordance with generally accepted accounting principles in effect from time to time in the UnitedStates, applied on a consistent basis; (iii) words in the singular include the plural, and in the plural include the singular; (iv) "or" is not exclusive; (v) "will"shall be interpreted to express a command; (vi) "including" means including without limitation; (vii) provisions apply to successive events and transactions;(viii) references to any Section or clause refer to the corresponding Section or clause, respectively, of this Certificate of Designations; (ix) any reference to aday or number of days, unless expressly referred to as a Business Day or Trading Day, shall mean the respective calendar day or number of calendar days; (x)references to sections of or rules under the Exchange Act shall be deemed to include substitute, replacement or successor sections or rules, and any termdefined by reference to a section of or rule under the Exchange Act shall include Commission and judicial interpretations of such section or rule; (xi)references to sections of the Code shall be deemed to include any substitute, replacement or successor sections as well as the Treasury Regulationspromulgated thereunder from time to time; (xii) headings are for convenience only; and (xiii) unless otherwise expressly provided in this Certificate ofDesignations, a reference to any specific agreement or other document shall be deemed a reference to such agreement or document as amended from time totime in accordance with the terms of such agreement or document.Section 4Dividends.(a)Participation with Dividends on Common Stock. No cash dividend may be declared or paid on the Common Stock during a Dividend Periodunless a cash dividend is also declared or paid (as applicable) on the Series A Preferred Stock for such Dividend Period in an amount (the "CommonParticipation Amount") equal to (A) the Per Share Amount as of the Record Date for such dividend (the "Dividend Record Date") multiplied by (B) theamount per share distributed or to be distributed in respect of the Common Stock in connection with such cash dividend.(b)Dividend Rate on Series A Preferred Stock. In addition to participation in cash dividends on Common Stock as set forth in Section 4(a), holdersof the Series A Preferred Stock shall be entitled to receive, on each share of Series A Preferred Stock and with respect to each Dividend Period, an amount(such amount, the "Net Preferred Dividend") equal to the Dividend Rate multiplied by the Liquidation Preference per share of Series A Preferred Stock (the"Preferred Dividend"). If and to the extent that the Company does not pay the entire Net Preferred Dividend for a particular Dividend Period in cash or declareand pay a PIK Dividend on the applicable Dividend Payment Date for such period, the amount of such Net Preferred Dividend not paid in cash or notdeclared and paid as a PIK Dividend shall be added to the Liquidation Preference in accordance with the definition thereof. Amounts payable at the DividendRate shall begin to accrue and be cumulative from the Original Issue Date, whether or not the Company has funds legally available for such dividends or suchdividends are declared, shall compound on each Dividend Payment Date (i.e., no dividends shall accrue on other dividends unless and until the firstDividend Payment Date for such other dividends has passed without such other dividends having been paid on such date) and shall be payable in arrears onthe first Dividend Payment Date after such Dividend Period. Dividends that are payable on the Series A Preferred Stock on any Dividend Payment Date shallbe payable to holders of record of the Series A Preferred Stock as they appear on the stock register of the Company on the Record Date for such dividend,which shall be the date 15 days prior to the applicable Dividend Payment Date.Dividends payable at the Dividend Rate on the Series A Preferred Stock in respect of any Dividend Period shall be computed on the basis of a 360-day yearconsisting of twelve 30-day months. The amount of dividends payable at the Dividend Rate on the Series A Preferred Stock on any date prior to the end of aDividend Period, and for the initial Dividend Period, shall be computed on the basis of a 360-day year consisting of twelve 30-day months, and actual dayselapsed over a 30-day month (i.e., during each Dividend Period other than the Initial Dividend Period, $20.00 of Preferred Dividend accrues).6(c)Payment of Dividends. Notwithstanding anything to the contrary in this Certificate of Designations, cash dividends shall be paid only to theextent (i) the Company has funds legally available for such payment, (ii) there are no provisions in any of the Debt Documents prohibiting the payment ofcash dividends on the Series A Preferred Stock in such amount on the applicable Dividend Payment Date and (iii) the Board of Directors, or an authorizedcommittee thereof, declares such dividend payable. To the extent the Board of Directors desires to declare any cash dividend or other distribution in cash onthe Common Stock during any Dividend Period that requires a corresponding cash dividend on the Series A Preferred Stock in accordance with Section 4(a),it may do so only to the extent that (i) the Company has funds legally available for the payment of such dividend or distribution in cash on all of the shares ofCommon Stock and Series A Preferred Stock then outstanding and (ii) such cash dividend or distribution on the Common Stock and the Series A PreferredStock shall be payable only on the applicable Dividend Payment Date for such Dividend Period. Notwithstanding anything to the contrary set forth in thisSection 4, prior to the seventh anniversary of the Original Issue Date, the Preferred Dividend will be payable in kind in additional shares of Series A PreferredStock (the "PIK Dividend") and following the seventh anniversary of the Original Issue Date, the Preferred Dividend will be payable in cash. With respect tothe PIK Dividend, the number of shares of Series A Preferred Stock to be issued in payment of such PIK Dividend with respect to each outstanding share ofSeries A Preferred Stock shall be determined by dividing (A) the amount of the Preferred Dividend by (B) the Liquidation Preference (excluding any amountsadded to the initial Liquidation Preference pursuant to the proviso in the definition of Liquidation Preference and Section 4(b)) per share of Series A PreferredStock. To the extent that any Preferred Dividend would result in the issuance of a fractional share of Series A Preferred Stock to any holder, then the amountof such fraction multiplied by the Liquidation Preference shall be paid in cash (unless there are no legally available funds with which to make such cashpayment, in which event such cash amount shall be added to the Liquidation Preference in accordance with Section 4(a)).(d)Priority of Dividends. Subject to Sections 4(a), (b) and (c), Section 8 and Section 9, such dividends (payable in cash, securities or other property)as may be determined by the Board of Directors or an authorized committee thereof may be declared and paid on any Capital Stock, including CommonStock and other Junior Stock, from time to time out of any funds legally available for such payment.Section 5Liquidation Rights.(a)Voluntary or Involuntary Liquidation. In the event of any liquidation, dissolution or winding up of the affairs of the Company, whethervoluntary or involuntary, holders of the Series A Preferred Stock shall be entitled to receive for each share of Series A Preferred Stock, out of the assets of theCompany or proceeds thereof (whether capital or surplus) available for distribution to shareholders of the Company, and after satisfaction of all liabilities andobligations to creditors of the Company, on par with each share of Parity Stock but before any distribution of such assets or proceeds is made to or set asidefor the holders of Junior Stock, an amount equal to the greater of (1) the sum of (a) the Liquidation Preference per share of the Series A Preferred Stock plus (b)an amount per share equal to accrued but unpaid dividends not previously added to the Liquidation Preference from and including the immediatelypreceding Dividend Payment Date to but excluding the date fixed for such liquidation, dissolution or winding up of the Company and (2) the per shareamount of all cash, securities and other property (such securities or other property having a value equal to its fair market value as reasonably determined bythe Board of Directors) to be distributed in respect of the Common Stock such holder would have been entitled to receive had it converted such Series APreferred Stock immediately prior to the date fixed for such liquidation, dissolution or winding up of the Company. To the extent such amount is paid in fullto all holders of Series A Preferred Stock and all the holders of Parity Stock, the holders of Junior Stock of the Company shall be entitled to receive allremaining assets of the Company (or proceeds thereof) according to their respective rights and preferences.(b)Partial Payment. If in connection with any distribution described in Section 5(a) above the assets of the Company or proceeds thereof are notsufficient to pay the liquidation preferences in full to all holders of Series A Preferred Stock and all holders of Parity Stock, the amounts paid to the holders ofSeries A Preferred Stock and to the holders of all such other Parity Stock shall be paid pro rata in accordance with the respective aggregate liquidationpreferences of the holders of Series A Preferred Stock and the holders of all such other Parity Stock.(c)Merger, Consolidation and Sale of Assets Not Liquidation. For purposes of this Section 5, the merger or consolidation of the Company with anyother corporation or other entity, including a merger or consolidation in which7the holders of Series A Preferred Stock receive cash, securities or other property for their shares, or the sale, lease or exchange (for cash, securities or otherproperty) of all or substantially all of the assets of the Company, shall not be deemed to constitute a liquidation, dissolution or winding up of the Company,but instead shall be subject to the provisions of Section 10.Section 6Redemption.(a)Redemption at the Option of the Holder.(1)Upon the occurrence of a Fundamental Change, each holder of the Series A Preferred Stock shall have the right to require the Company torepurchase all or any part of such holder's Series A Preferred Stock for cash at a purchase price per share equal to 101% of the sum of (a) the LiquidationPreference per share of the Series A Preferred Stock plus (b) an amount equal to accrued but unpaid dividends not previously added to the LiquidationPreference per share on such share of Series A Preferred Stock from and including the immediately preceding Dividend Payment Date to but excluding thedate of redemption; provided, however, that (i) the Company shall not be required to repurchase any Series A Preferred Stock pursuant to this Section 6(a) tothe extent such repurchase would be prohibited by any provision of any Debt Document and (ii) if the Company does not repurchase any outstanding sharesof Series A Preferred Stock due to clause (i) of this proviso then, for so long as the Company fails to satisfy its repurchase obligation under this Section 6(a)with respect to such shares, the Dividend Rate for such outstanding shares of Series A Preferred Stock will increase to 10%, effective as of the date of theFundamental Change, and will remain at 10% until the date on which the Company satisfies its repurchase obligation with respect to such shares.(2)No later than 30 days after the occurrence of a Fundamental Change, the Company shall send notice by first class mail, postage prepaid, addressedto the holders of record of the shares of Series A Preferred Stock at their respective last addresses appearing on the books of the Company stating (1) that aFundamental Change has occurred, (2) that all shares of Series A Preferred Stock tendered prior to a Business Day no earlier than 30 days nor later than 60days from the date such notice is mailed shall be accepted for redemption and (3) the procedures that holders of the Series A Preferred Stock must follow inorder to redeem their shares of Series A Preferred Stock, including the place or places where certificates for such shares are to be surrendered for payment ofthe redemption price; provided, however, that if the Company is not permitted to repurchase the Series A Preferred Stock due to clause (i) of the proviso ofSection 6(a)(1), then the notice shall, in lieu of the information in (2) and (3) of this paragraph, include a statement identifying the relevant provision(s) in theDebt Documents and stating the new Dividend Rate applicable to the Series A Preferred Stock pursuant to this Section 6(a). Any notice mailed as provided inthis Subsection shall be conclusively presumed to have been duly given, whether or not the holder receives such notice, but failure duly to give such noticeby mail, or any defect in such notice or in the mailing thereof, to any holder of shares of Series A Preferred Stock designated for redemption shall not affectthe validity of the proceedings for the redemption of any other shares of Series A Preferred Stock.Section 7Conversion.(a)Conversion at the Option of the Holders. Each share of Series A Preferred Stock may be converted on any date, from time to time, at the option ofthe holder thereof, into the number of shares of Common Stock (the "Per Share Amount") equal to the Conversion Price multiplied by the Conversion Rate ineffect at such time.The right of conversion attaching to any shares of Series A Preferred Stock may be exercised by the holders thereof by delivering the shares to be converted tothe office of the Company, accompanied by a duly signed and completed notice of conversion in form reasonably satisfactory to the Company. Theconversion date shall be the date on which the shares of Series A Preferred Stock and the duly signed and completed notice of conversion are received by theCompany. The Person entitled to receive the Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders ofsuch Common Stock as of such conversion date, and such Person or Persons shall cease to be a record holder of the Series A Preferred Stock on that date. Aspromptly as practicable on or after the conversion date (and in any event no later than three Trading Days thereafter), the Company shall issue the number ofwhole shares of Common Stock issuable upon conversion, with any fractional shares (after aggregating all Series A Preferred Stock being converted on suchdate) rounded to the nearest whole share. Such delivery shall be made, at the option of the applicable holder, in certificated form or by book-entry. Any suchcertificate or certificates shall be delivered by the8Company to the appropriate holder on a book-entry basis or by mailing certificates evidencing the shares to the holders at their respective addresses as setforth in the conversion notice.(b)Common Stock Reserved for Issuance. The Company shall at all times reserve and keep available out of its authorized and unissued CommonStock, solely for issuance upon the conversion of the Series A Preferred Stock, such number of shares of Common Stock as shall from time to time be issuableupon the conversion of all the shares of Series A Preferred Stock then outstanding. Any shares of Common Stock issued upon conversion of Series A PreferredStock shall be (i) duly authorized, validly issued and fully paid and nonassessable, (ii) shall rank pari passu with the other shares of Common Stockoutstanding from time to time and (iii) shall be approved for listing on the principal national securities exchange or market on which the Common Stock islisted or admitted to trading (including any over-the-counter market).(c)Taxes. The Company shall pay any and all transfer taxes that may be payable in respect of the issue or delivery of shares of Common Stock onconversion of Series A Preferred Stock. The Company shall not, however, be required to pay any tax which may be payable in respect of any transfer involvedin the issue and delivery of shares of Common Stock in a name other than that in which the Series A Preferred Stock so converted were registered, and no suchissue or delivery shall be made unless and until the Person requesting such issue has paid to the Company the amount of any such tax, or has established tothe satisfaction of the Company that such tax has been paid.Section 8Dilution Adjustments. The Conversion Rate shall be adjusted from time to time (successively and for each event described) by theCompany as follows:(a)If the Company shall, at any time or from time to time while any of the Series A Preferred Stock is outstanding, issue shares of Common Stock as adividend or distribution on shares of Common Stock, or if the Company effects a share split or share combination in respect of the Common Stock, then theConversion Rate shall be adjusted based on the following formula:whereCR0=the Conversion Rate in effect immediately prior to the Close of Business on the Record Date for suchdividend or distribution, or the Close of Business on the effective date of such share split orcombination, as applicable;CR'=the new Conversion Rate in effect immediately after the Close of Business on the Record Date for suchdividend or distribution, or the Close of Business on the effective date of such share split or sharecombination, as applicable;OS0=the number of shares of Common Stock outstanding immediately prior to the Close of Business on theRecord Date for such dividend or distribution, or the Close of Business on the effective date of suchshare split or share combination, as applicable; andOS'=the number of shares of Common Stock outstanding immediately after such dividend or distribution, orthe Close of Business on the effective date of such share split or share combination, as applicable.The Company shall not pay any dividend or make any distribution on shares of Common Stock held in treasury by the Company.(b)Except as otherwise provided for by Section 8(c), if the Company shall, at any time or from time to time while any of the Series A Preferred Stockis outstanding, distribute to all or substantially all holders of its outstanding shares9of Common Stock any options, rights or warrants entitling them for a period of not more than 45 days from the Record Date of such distribution to subscribefor or purchase shares of Common Stock at a price per share less than the Closing Price of the Common Stock on the Trading Day immediately preceding theRecord Date of such distribution, the Conversion Rate shall be adjusted based on the following formula:whereCR0=the Conversion Rate in effect immediately prior to the Close of Business on the Record Date for suchdistribution;CR'=the new Conversion Rate in effect immediately after the Close of Business on the Record Date forsuch distribution;OS0=the number of shares of Common Stock outstanding immediately prior to the Close of Business onthe Record Date for such distribution;X=the total number of shares of Common Stock issuable pursuant to such options, rights or warrants;andY=the number of shares of Common Stock equal to the aggregate price payable to exercise such options,rights or warrants divided by the average Closing Price of the Common Stock over the 10consecutive Trading Day period ending on the Record Date.To the extent that shares of Common Stock are not delivered pursuant to any such options, rights or warrants that are non-transferable upon the expiration ortermination of such options, rights or warrants, the Conversion Rate shall be readjusted to the Conversion Rate which would then be in effect had theadjustments made upon the distribution of such options, rights or warrants been made on the basis of the delivery of only the number of shares of CommonStock actually delivered.In determining the aggregate price payable to exercise such options, rights or warrants, there shall be taken into account any amount payable on exercisethereof, with the value of such consideration, if other than cash, to be determined in good faith by the Board of Directors.10(c) If the Company, at any time or from time to time while any of the Series A Preferred Stock is outstanding, shall, by dividend or otherwise, distribute to allor substantially all holders of its Common Stock shares of any class of Capital Stock of the Company, cash, evidences of its indebtedness, assets, property orrights or warrants to acquire Capital Stock or other securities, but excluding (i) dividends or distributions as to which an adjustment under Section 8(a) orSection 8(b) shall apply, (ii) dividends or distributions paid exclusively in cash to the extent that the Series A Preferred Stock participates on an as-convertedbasis with the Common Stock in a cash dividend or distribution in accordance with Section 4(a), and (iii) SpinOffs to which the provision set forth below inthis Section 8(c) shall apply (any of such shares of Capital Stock, cash, indebtedness, assets, property or rights or warrants to acquire Common Stock or othersecurities, hereinafter in this Section 8(c) called the "Distributed Property"), then, in each such case the Conversion Rate shall be adjusted based on thefollowing formula:whereCR0=the Conversion Rate in effect immediately prior to the Close of Business on the Record Date for suchdistribution;CR'=the new Conversion Rate in effect immediately after the Close of Business on the Record Date for suchdistribution;SP0=the average Closing Price of the Common Stock over the 10 consecutive Trading Day period endingon the Record Date for such distribution; andFMV=(i) for cash dividends or distributions, the amount of cash distributed and (ii) for other DistributedProperty, the fair market value (as determined in good faith by the Board of Directors) of the portion ofDistributed Property, in each case, with respect to each outstanding share of Common Stock on theRecord Date for such distribution.Notwithstanding the foregoing, if the then fair market value (as so determined) of the portion of the Distributed Property so distributed applicable to oneshare of Common Stock is equal to or greater than SP0 as set forth above (a "Liquidating Distribution"), then in lieu of the foregoing adjustment, theCompany shall distribute to each holder of Series A Preferred Stock on the date such Distributed Property is distributed to holders of Common Stock, butwithout requiring such holder to convert its shares of Series A Preferred Stock, the amount of Distributed Property such holder would have received had suchholder owned a number of shares of Common Stock equal to the Per Share Amount on the Record Date fixed for determination for shareholders entitled toreceive such Liquidating Distribution; provided, however, that the Company shall not distribute Distributed Property to either the holders of the CommonStock or the Preferred Stock to the extent such distribution would be prohibited by any provision of any Debt Document. If the Board of Directors determinesthe fair market value of any distribution for purposes of this Section 8(c) by reference to the actual or when issued trading market for any securities, it shall indoing so consider the prices in such market over the same period used in computing the Current Market Price of the Common Stock for purposes ofcalculating SP0 in the formula in this Section 8(c).11With respect to an adjustment pursuant to this Section 8(c) where there has been a payment of a dividend or other distribution on the Common Stockconsisting of shares of Capital Stock of any class or series, or similar equity interest, of or relating to a Subsidiary or other business unit of the Company (a"Spin-Off"), the Conversion Rate in effect immediately before the Close of Business on the 10th Trading Day immediately following, and including, theeffective date of the Spin-Off shall be increased based on the following formula:whereCR0=the Conversion Rate in effect immediately prior to the Close of Business on the 10th Trading Dayimmediately following, and including, the effective date of the Spin-Off;CR'=the new Conversion Rate in effect from and after the Close of Business on the 10th Trading Dayimmediately following, and including, the effective date of the Spin-Off;FMV=the average of the Closing Prices of the Capital Stock or similar equity interest distributed to holders ofCommon Stock applicable to one share of Common Stock over the 10 consecutive Trading Day periodimmediately following, and including, the effective date of the Spin-Off; andMP0=the average Closing Price of the Common Stock over the 10 consecutive Trading Day periodcalculated immediately following, and including, the effective date of the Spin-Off.Such adjustment shall occur on the 10th Trading Day immediately following, and including, the effective date of the Spin-Off.For purposes of this Section 8(c), Section 8(a) and Section 8(b) hereof, any dividend or distribution to which this Section 8(c) is applicable that also includesshares of Common Stock, or rights or warrants to subscribe for or purchase shares of Common Stock to which Section 8(a) or 8(b) hereof applies (or both),shall be deemed instead to be (1) a dividend or distribution of the evidences of indebtedness, assets or shares of Capital Stock other than such shares ofCommon Stock or rights or warrants to which Section 8(a) or 8(b) hereof applies (and any Conversion Rate adjustment required by this Section 8(c) withrespect to such dividend or distribution shall then be made) immediately followed by (2) a dividend or distribution of such shares of Common Stock or suchoptions, rights or warrants to which Section 8(a) or 8(b) hereof applies (and any further Conversion Rate adjustment required by Section 8(a) and 8(b) hereofwith respect to such dividend or distribution shall then be made), except (A) the Close of Business on the Record Date of such dividend or distribution shallbe substituted for "the Close of Business on the Record Date," "the Close of Business on the Record Date or the Close of Business on the effective date," "afterthe Close of Business on the Record Date for such dividend or distribution or the Close of Business on the effective date of such share split or sharecombination" and "the Close of Business on the Record Date for such distribution" within the meaning of Section 8(a) and 8(b) hereof and (B) any shares ofCommon Stock included in such dividend or distribution shall not be deemed "outstanding immediately prior to the Close of Business on the Record Date orthe Close of Business on the effective date" within the meaning of Section 8(a) hereof.If the Company shall, at any time or from time to time while any of the Series A Preferred Stock is outstanding, distribute options, rights or warrants to all orsubstantially all holders of Common Stock entitling the holders thereof to subscribe for, purchase or convert into shares of Capital Stock (either initially orunder certain circumstances), which options, rights or warrants, until the occurrence of a specified event or events ("Trigger Event"): (x) are deemed to betransferred with such shares of Common Stock; (y) are not exercisable; and (z) are also issued in respect of future issuances of Common Stock, shall bedeemed not to have been distributed for purposes of this Section 8(c), (and no adjustment to12the Conversion Rate under this Section 8(c) shall be required) until the occurrence of the earliest Trigger Event and a distribution or deemed distributionunder the terms of such options, rights or warrants at which time an appropriate adjustment (if any is required) to the Conversion Rate shall be made in thesame manner as provided for under this Section 8(c). If any such options, rights or warrants are subject to events, upon the occurrence of which such options,rights or warrants become exercisable to purchase different securities, evidences of indebtedness or other assets, then the date of the occurrence of any andeach such event shall be deemed to be the date of distribution and Record Date with respect to new options, rights or warrants for purposes of this Section 8(c)(and a termination or expiration of the existing rights or warrants without exercise by any of the holders thereof). In addition, in the event of any distribution(or deemed distribution) of options, rights or warrants (of the type described in the preceding sentence) with respect thereto that was counted for purposes ofcalculating a distribution amount for which an adjustment to the Conversion Rate under this Section 8(c) was made, (1) in the case of any such options, rightsor warrants that shall all have been redeemed or repurchased without exercise by any holders thereof, the Conversion Rate shall be readjusted upon such finalredemption or repurchase to give effect to such distribution or Trigger Event, as the case may be, as though it were a distribution under this Section 8(c),equal to the per share redemption or repurchase price received by a holder or holders of Common Stock with respect to such options, rights or warrants(assuming such holder had retained such options, rights or warrants), made to all holders of Common Stock as of the date of such redemption or repurchase,and (2) in the case of such options, rights or warrants that shall have expired or been terminated without exercise by any holders thereof, the Conversion Rateshall be readjusted as if such options, rights or warrants had not been issued.(d) If the Company, during the eighteen month period following the Original Issue Date, shall issue shares of Common Stock or any other securityconvertible into, exercisable or exchangeable for Common Stock (such Common Stock or other security, "Equity-Linked Securities"), for a consideration pershare of Common Stock (or conversion price per share of Common Stock) less than the Current Market Price of Common Stock on the date the Companyfixes the offering price (or conversion price) of Equity-Linked Securities, the Conversion Rate shall be increased based on the following formula:where:CR0=the Conversion Rate in effect immediately prior to the issuance of such Equity-Linked Securities;CR'=the new Conversion Rate in effect immediately after the issuance of such Equity-Linked Securities;AC=the aggregate consideration paid or payable for such Equity Linked Securities;OS0=the number of shares of Common Stock outstanding immediately prior to the issuance of suchEquity-Linked Securities;OS'=the number of shares of Common Stock outstanding immediately after the issuance of such Equity-Linked Securities or issuable pursuant to such Equity-Linked Securities; andSP'=the Closing Price of the Common Stock on the date of issuance of such Equity-Linked Securities.The adjustment shall become effective immediately after such issuance.This Section 8(d) shall not apply to Excluded Issuances.(e) The Company may make increases in the Conversion Rate, in addition to any other increases required by this Section 8, if the Board of Directors (byaction of a majority of the directors that are neither "Investor Designees" (as defined in the Investor Rights Agreement) nor Preferred Directors ("IndependentMajority")) deems it advisable and13necessary to avoid or diminish any income tax to holders of the Common Stock resulting from any dividend or distribution of shares of Common Stock (orissuance of options, rights or warrants for Common Stock) or from any event treated as such for income tax purposes or for any other reason provided,however, that if there are any Investor Designees or Preferred Directors on the Board of Directors at such time, the Company may not take such action withoutthe approval of the Investor Designees and Preferred Directors, which approval may only be withheld if the Investor Designees and Preferred Directorsreasonably determine that such action is likely to result in a material increase in U.S. federal income tax or withholding tax to holders of Series A PreferredStock. If the Company takes any action affecting the Common Stock, other than an action described in Sections 8(a) though 8(d), which upon adetermination by the Board of Directors by action of an Independent Majority, such determination intended to be a "fact" for purposes of Section 151(a) ofthe General Corporation Law of the State of Delaware, would materially adversely affect the conversion rights of the holders of the Series A Preferred Stock,the Conversion Rate shall be increased, to the extent permitted by law, in such manner, if any, and at such time, as the Board of Directors by action of anIndependent Majority determines in good faith to be equitable in the circumstances.Section 9Voting Rights.(a)General. The holders of shares of Series A Preferred Stock shall be entitled to vote with the holders of shares of Common Stock on all matterssubmitted to a vote of shareholders of the Company, except as otherwise provided herein or by applicable law. Each holder of shares of Series A PreferredStock shall be entitled to the number of votes equal to the largest number of whole shares of Common Stock into which all shares of Series A Preferred Stockheld of record by such holder could then be converted pursuant to Section 7 at the record date for the determination of the shareholders entitled to vote onsuch matters or, if no such record date is established, at the date such vote is taken or any written consent of shareholders is first executed. The holders ofshares of Series A Preferred Stock shall be entitled to notice of any meeting of shareholders of the Company in accordance with the Bylaws.(b)Election of Directors.(1)Election. If (i) the Investor is entitled to designate one or more directors to the Board of Directors pursuant to the terms and conditions of Section2.1 of the Investor Rights Agreement and (ii) the shareholders of the Company fail to elect any of the directors so designated by the Investor, in each case atany annual or special meeting called for, among other items, the election of directors, then the Investor Majority shall be entitled to elect such persons to theBoard of Directors that were designated by the Investor and not subsequently elected to the Board of Directors by the shareholders of the Company (eachsuch director, a "Preferred Director").(2)Term. Each Preferred Director shall serve until the next annual meeting of the shareholders of the Company and until his or her successor iselected and qualifies in accordance with this Section 9(b) and the Bylaws, unless such Preferred Director is earlier removed in accordance with the Bylaws orInvestor Rights Agreement, resigns or is otherwise unable to serve. Subject to the Investor Rights Agreement, in the event any Preferred Director is removed,resigns or is unable to serve as a member of the Board of Directors, the Investor Majority shall have the right to fill such vacancy. Each Preferred Director mayonly be elected to the Board of Directors by the holders of the Series A Preferred Stock in accordance with this Section 9(b), and each such director's seat shallotherwise remain vacant.(3)Non-Limitation of Voting Rights. For the avoidance of doubt, the right of the Permitted Holders to vote for the election of the Preferred Directorsshall be in addition to the right of the Series A Preferred Stock to vote together with the holders of Common Stock for the election of the other members of theBoard of Directors.(c)Class Voting Rights as to Particular Matters. In addition to any other vote or consent of shareholders required by law or by the Certificate ofIncorporation, the affirmative vote or consent of the Investor Majority, given in person or by proxy, either in writing without a meeting or by vote at anymeeting called for the purpose, shall be necessary for effecting any of the actions described in clauses (1) through (3) below:14(1)Dividends, Repurchase and Redemption.(A)The declaration or payment of any dividend or distribution on Common Stock, other Junior Stock or Parity Stock (other than (i) a dividendpayable solely in Junior Stock and (ii) dividends or distributions paid exclusively in cash to the extent that the Series A Preferred Stock participates on an as-converted basis with the Common Stock in a cash dividend or distribution in accordance with Section 4(a)) if, at the time of such declaration, payment ordistribution, dividends on the Series A Preferred Stock have not been paid in full in cash; or(B)the purchase, redemption or other acquisition for consideration by the Company, directly or indirectly, of any Common Stock, other Junior Stockor Parity Stock (except as necessary to effect (1) a reclassification of Junior Stock for or into other Junior Stock, (2) a reclassification of Parity Stock for or intoother Parity Stock with the same or lesser aggregate liquidation preference, (3) a reclassification of Parity Stock into Junior Stock, (4) the exchange orconversion of one share of Junior Stock for or into another share of Junior Stock, (5) the exchange or conversion of one share of Parity Stock for or intoanother share of Parity Stock with the same or lesser per share liquidation amount or (6) the exchange or conversion of one share of Parity Stock into JuniorStock), in each case if, at the time of such purchase, redemption or other acquisition, dividends on the Series A Preferred Stock have not been paid in full incash;(2)Amendment of Series A Preferred Stock. Any amendment, alteration or repeal of any provision of the Certificate of Incorporation or Certificateof Designations so as to adversely affect the relative rights, preferences, privileges or voting powers of the Series A Preferred Stock; or(3)Authorizations, Issuances and Reclassifications. The authorization or creation of, issuance of, or reclassification into, Parity Stock (includingadditional shares of the Series A Preferred Stock other than shares of the Series A Preferred Stock issued as PIK Dividends) or Capital Stock that would ranksenior to the Series A Preferred Stock.(d)Changes after Provision for Redemption. No vote or consent of the holders of Series A Preferred Stock shall be required pursuant to Section 9(c)if, at or prior to the time when any such vote or consent would otherwise be required pursuant to such Section, all outstanding shares of Series A PreferredStock shall have been redeemed, or shall have been called for redemption upon proper notice and sufficient funds shall have been deposited in trust for suchredemption, in each case pursuant to Section 6 above.Section 10Reorganization Events.(a)In the event of:(1)any consolidation or merger of the Company with or into another Person or of another Person with or into the Company;(2)any sale, transfer, lease or conveyance to another Person of the property of the Company as an entirety or substantially as an entirety;(3)any statutory share exchange of the Company with another Person (other than in connection with a merger or acquisition); or(4)any tender offer or exchange offer which, in combination with any related transactions, would result in a Change of Control of the Company (inwhich case, the Reorganization Event for such purposes shall be all such transactions taken together),in each case in which holders of Common Stock would be entitled to receive cash, securities or other property for their shares of Common Stock (any suchevent specified in this Section 10(a), a "Reorganization Event"), each share of Series A Preferred Stock outstanding immediately prior to such ReorganizationEvent shall (subject to conversion rights pursuant to Section 7), in the event of a Change of Control, be exchanged for (or in the event that the transaction isnot a Change of Control, be exchanged for the right to receive upon conversion of the Series A Preferred Stock thereafter15at the time of the holder's election, in accordance with the terms hereof) whichever of the following has the greatest value (as determined by the Board ofDirectors in its reasonable discretion): (A) an amount in cash equal to the sum of (1) the Liquidation Preference per share of the Series A Preferred Stock plus(2) an amount per share equal to accrued but unpaid dividends not previously added to the Liquidation Preference from and including the immediatelypreceding Dividend Payment Date to but excluding the date on which such Reorganization Event occurs (the "Reorganization Event Date"); (B) an amountequal to the product of (I) the Per Share Amount as of the Reorganization Event Date multiplied by (II) the amount of cash, securities or other property (suchsecurities or other property having a value equal to its fair market value as reasonably determined by the Board of Directors) distributed or to be distributed inrespect of the Common Stock in connection with such Reorganization Event to a holder of Common Stock that was not the counterparty to theReorganization Event or an Affiliate of such counterparty (such cash, securities and other property, the "Exchange Property"); and (C) to the extent theReorganization Event constitutes or would constitute a Fundamental Change, an amount in cash equal to the product of (x) 101% multiplied by (y) the sumof (1) the Liquidation Preference per share of the Series A Preferred Stock plus (2) an amount per share equal to accrued but unpaid dividends not previouslyadded to the Liquidation Preference from and including the immediately preceding Dividend Payment Date to, but excluding, the Reorganization EventDate; provided, however, that the Company shall not distribute cash, securities or other property as provided in this Section 10(a) to either the holders of theCommon Stock or the Preferred Stock to the extent such distribution would be prohibited by any provision of any Debt Document. In case of anyReorganization Event, provision shall be made in such transaction so that the holders of any Series A Preferred Stock shall be entitled, but not obligated, toparticipate in whole or in part in such Reorganization Event directly by surrendering such Series A Preferred Stock in exchange for the Exchange Propertyreceivable in such Reorganization Event applicable to such Series A Preferred Stock on an as converted basis.(b)In the event that (i) the Board of Directors determines pursuant to Section 10(a) that the Series A shall be exchanged for Exchange Property and(ii) the holders of the shares of the Common Stock have the opportunity to elect the form of consideration to be received in such transaction, the "ExchangeProperty" that holders of the Series A Preferred Stock shall be entitled to receive shall be determined by the holders of a majority of the outstanding shares ofSeries A Preferred Stock.(c)The above provisions of this Section 10 shall similarly apply to successive Reorganization Events.(d)Notwithstanding anything to the contrary, Section 10(a) shall not apply in the case of, and a Reorganization Event shall not be deemed to be, amerger, consolidation, reorganization or statutory share exchange (x) among the Company and its direct and indirect Subsidiaries or (y) between theCompany and any Person for the primary purpose of changing the domicile of the Company (a "Internal Reorganization Event"). Without limiting the rightsof the holders of the Series A Preferred Stock set forth in Section 9(c)(2), the Company shall not effectuate an Internal Reorganization Event unless the SeriesA Preferred Stock shall be outstanding as a class of preferred stock of the surviving company having the same rights, terms, preferences, liquidationpreference and accrued and unpaid dividends as the Series A Preferred Stock in effect immediately prior to such Internal Reorganization Event, as adjustedfor such Internal Reorganization Event pursuant to this Certificate of Designations after giving effect to any such Internal Reorganization Event. TheCompany (or any successor) shall, within 20 days of the occurrence of any Internal Reorganization Event, provide written notice to the holders of the SeriesA Preferred Stock of the occurrence of such event. Failure to deliver such notice shall not affect the operation of this Section 10(d) or the validity of anyInternal Reorganization Event.Section 11Record Holders. To the fullest extent permitted by applicable law, the Company may deem and treat the record holder of anyshare of the Series A Preferred Stock as the true and lawful owner thereof for all purposes, and the Company shall not be affected by any notice to thecontrary.Section 12Notices.(a)General. All notices or communications in respect of the Series A Preferred Stock shall be sufficiently given if given in writing and delivered inperson or by first class mail, postage prepaid, or if given in such other manner as may be permitted in this Certificate of Designations, in the Certificate ofIncorporation or Bylaws or by applicable law or regulation. Notwithstanding the foregoing, if the Series A Preferred Stock is issued in book-entry formthrough The16Depository Trust Company or any similar facility, such notices may be given to the holders of the Series A Preferred Stock in any manner permitted by suchfacility.(b)Notice of Certain Events. The Company shall, to the extent not included in the Exchange Act reports of the Company, provide reasonablewritten notice to each holder of the Series A Preferred Stock of any event that has resulted in (i) a Fundamental Change and (ii) an event the occurrence ofwhich would result in an adjustment to the Conversion Rate, including the then applicable Conversion Rate.Section 13Replacement Certificates. The Company shall replace any mutilated certificate at the holder's expense upon surrender of thatcertificate to the Company. The Company shall replace certificates that become destroyed, stolen or lost at the holder's expense upon delivery to theCompany of reasonably satisfactory evidence that the certificate has been destroyed, stolen or lost, together with any indemnity that may be required by theCompany.Section 14Other Rights. The shares of Series A Preferred Stock shall not have any rights, preferences, privileges or voting powers orrelative, participating, optional or other special rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or in the Certificate ofIncorporation or as provided by applicable law and regulation.Section 15Further Assurances. The Company shall take such actions as are reasonably required in order for the Company to satisfy itsobligations under this Certificate of Designations, including, without limitation, using reasonable best efforts in obtaining the approval of the holders of anyclass or series of Capital Stock or making any filings, in each case as required pursuant to applicable law or the listing requirements (if any) of any nationalsecurities exchange on which any class or series of Capital Stock is then listed or traded. The Company further agrees to cooperate with the holders of SeriesA Preferred in the making of any filings under applicable law that are to be made by the Company or any such holder in connection with any PIK Dividendsor the exercise of any such holder's rights hereunder.17IN WITNESS WHEREOF, the Company has caused this Certificate of Designations to be duly executed and acknowledged by its undersigned dulyauthorized officer this 12th of February, 2016.ACCRETIVE HEALTH, INC.By: /s/ Emad Rizk Name: Emad RizkTitle: President and CEO18Exhibit 10.43 GRANT OF RESTRICTED STOCKPursuant to Accretive Health, Inc.Amended and Restated 2010 Stock Incentive PlanGENERAL TERMS AND CONDITIONSFor valuable consideration, receipt of which is acknowledged, the parties hereto agree as follows:1.Issuance of Restricted Shares.(a)In consideration of services rendered and to be rendered to the Company by the Participant, the Company has granted to theParticipant, subject to the terms and conditions set forth in this Restricted Stock Grant Agreement (this “Agreement”) and in the Company’s Amended andRestated 2010 Stock Incentive Plan (the “Plan”), an award consisting of the number of shares of restricted common stock of the Company, $0.01 par value pershare (the “Restricted Stock”), that is set forth in the Notice of Grant that forms part of this Agreement (the “Notice of Grant”) opposite the heading “ShareAmount”.(b)The Restricted Stock will initially be issued by the Company in book entry form only, in the name of the Participant. Followingthe vesting of any Restricted Stock pursuant to Section 2 below, the Company shall, if requested by the Participant, issue and deliver to the Participant acertificate representing the vested shares of Restricted Stock. The Participant agrees that the Restricted Stock shall be subject to the forfeiture provisions setforth in Section 3 of this Agreement and the restrictions on transfer set forth in Section 4 of this Agreement.2.Vesting.The Restricted Stock shall vest in accordance with the Vesting Schedule set forth in the Notice of Grant (the “Vesting Schedule”). Any fractionalshares resulting from the application of the percentages in the Vesting Schedule shall be rounded down to the nearest whole number of shares.3.Forfeiture of Unvested Restricted Stock Upon Cessation of Service.In the event that the Participant ceases to perform services to the Company for any reason or no reason, with or without cause, all of the shares ofRestricted Stock that are unvested as of the time of such cessation shall be forfeited immediately and automatically to the Company, without the payment ofany consideration to the Participant, effective as of such cessation. The Participant shall have no further rights with respect to any shares of Restricted Stockthat are so forfeited. If the Participant provides services to a subsidiary of the Company, any references in this Agreement to provision of services to theCompany shall instead be deemed to refer to service with such subsidiary.4.Restrictions on Transfer.The Participant shall not sell, assign, transfer, pledge, hypothecate or otherwise dispose of, by operation of law or otherwise (collectively “transfer”)any shares of Restricted Stock, or any interest therein, until such shares of Restricted Stock have vested, except that the Participant may transfer suchunvested shares of Restricted Stock: (a) to or for the benefit of any spouse, children, parents, uncles, aunts, siblings, grandchildren and any other relativesapproved by the Compensation Committee (collectively, “Approved Relatives”) or to a trust established solely for1the benefit of the Participant and/or Approved Relatives, provided that such Restricted Stock shall remain subject to this Agreement (including withoutlimitation the vesting provisions set forth in Section 2, the forfeiture provisions set forth in Section 3 and the restrictions on transfer set forth in this Section4) and such permitted transferee shall, as a condition to such transfer, deliver to the Company a written instrument confirming that such transferee shall bebound by all of the terms and conditions of this Agreement; or (b) as part of the sale of all or substantially all of the shares of capital stock of the Company(including pursuant to a merger or consolidation). The Company shall not be required (i) to transfer on its books any of the shares of Restricted Stock whichhave been transferred in violation of any of the provisions of this Agreement or (ii) to treat as owner of such shares of Restricted Stock or to pay dividends toany transferee to whom such shares of Restricted Stock have been transferred in violation of any of the provisions of this Agreement.5.Restrictive Legends.The book entry account reflecting the issuance of the shares of Restricted Stock in the name of the Participant shall bear a legend or other notationupon substantially the following terms:“These shares of stock are subject to forfeiture provisions and restrictions on transfer set forth in a certain Restricted Stock Grant Agreement betweenthe corporation and the registered owner of these shares (or his or her predecessor in interest), and such Agreement is available for inspection without chargeat the office of the Secretary of the corporation.”6.Rights as a Shareholder.Except as otherwise provided in this Agreement, for so long as the Participant is the registered owner of the Restricted Stock, the Participant shallhave all rights as a shareholder with respect to the Restricted Stock, whether vested or unvested, including, without limitation, rights to vote the RestrictedStock and act in respect of the Restricted Stock at any meeting of shareholders; provided, however, that the payment of dividends on unvested shares ofRestricted Stock shall be deferred until after such shares vest and shall be paid to the Participant no later than the end of the calendar year in which thedividends are paid to stockholders of that class of stock or, if later, the 15th day of the third month following the applicable vesting date of such shares ofRestricted Stock. No interest will be paid on any such deferred dividends. In the event that any shares of Restricted Stock are forfeited in accordance withterms of this Agreement during the pendency of any such deferred dividends declared with respect to such shares, then the Participant shall also forfeit anyright to receive such deferred dividends.7.Provisions of the Plan.This Agreement is subject to the provisions of the Plan, a copy of which is furnished to the Participant with this Agreement.8.Tax Matters.(a)Acknowledgments; Section 83(b) Election. The Participant acknowledges that he or she is responsible for obtaining the adviceof the Participant’s own tax advisors with respect to the acquisition of the Restricted Stock and the Participant is relying solely on such advisors and not onany statements or representations of the Company or any of its agents with respect to the tax consequences relating to the Restricted Stock. The Participantunderstands that the Participant (and not the Company) shall be responsible for the Participant’s tax liability that may arise in connection with theacquisition, vesting and/or disposition of the Restricted Stock. The Participant acknowledges that he or she has been informed of the availability of makingan election under Section 83(b) of the Internal Revenue Code, as amended, with respect to the issuance of the Restricted Stock.(b)Withholding. The Participant acknowledges and agrees that the Company has the right to deduct from payments of any kindotherwise due to the Participant any federal, state, local or other taxes of any kind required by law to be withheld with respect to the vesting of the shares ofRestricted Stock. On each date on which shares of Restricted Stock vest, the Company shall deliver written notice to the Participant of the amount of2withholding taxes due with respect to the vesting of the shares of Restricted Stock that vest on such date; provided, however, that the total tax withholdingcannot exceed the Company’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes,including payroll taxes, that are applicable to such supplemental taxable income). The Participant shall satisfy such tax withholding obligations bytransferring to the Company, on each date on which shares of Restricted Stock vest under this Agreement, such number of shares of Restricted Stock that veston such date as have a fair market value (calculated using the last reported sale price of the common stock of the Company on the New York Stock Exchangeor the NASDAQ, as applicable (or, if the Company’s common stock is not then traded on the New York Stock Exchange or the NASDAQ, then on any otherUnited States stock exchange upon which the Company’s common stock is then listed, or otherwise as reported through the facilities of the OTC MarketsGroup, Inc.) on the trading date immediately prior to such vesting date) equal to the amount of the Company’s tax withholding obligation in connection withthe vesting of such Restricted Stock (such withholding method a “Surrender”) unless, prior to any vesting date, the Compensation Committee determines thata Surrender shall not be available to the Participant, in which case, the Participant shall be required to satisfy his tax obligations hereunder in a mannerpermitted by the Plan upon the vesting date.9.Restrictive Covenants.(a)General. This award represents a substantial economic benefit to the Participant. The Participant, by virtue of such Participant'srole with the Company, has access to, and is involved in the formulation of, certain confidential and secret information of the Company regarding itsoperations and each Participant could materially harm the business of the Company by competing with the Company or soliciting employees or customers ofthe Company.(b)Non-Solicitation. During the time in which Participant performs services for the Company and for a period of eighteen (18)months after the Participant ceases to perform services for the Company, regardless of the reason, Participant shall not, directly or indirectly, either alone or inconjunction with any person, firm, association, company or corporation:(i)Hire, recruit, solicit or otherwise attempt to employ or retain or enter into any business relationship with, any personwho is or was an employee of the Company within the twelve (12) month period immediately preceding the cessation of Participant’s service with theCompany; or(ii)Solicit the sale of any products or services that are similar to or competitive with products or services offered by,manufactured by, designed by, or distributed by Company, to any person, company or entity which was or is a customer or potential customer of Companyfor such products or services.(c)Non-Disclosure.(i)Participant will not, without the Company’s prior written permission, directly or indirectly, utilize for any purpose otherthan for a legitimate business purpose solely on behalf of the Company, or directly or indirectly, disclose to anyone outside of the Company, either during orafter Participant’s relationship with the Company ends, the Company’s Confidential Information, as long as such matters remain Confidential Information.(ii)This Agreement shall not prohibit Participant from (i) revealing evidence of criminal wrongdoing to law enforcement,(ii) disclosing or discussing concerns regarding regulatory or legal compliance with any governmental agency or entity to the extent that such disclosures ordiscussions are protected under any whistleblower protection provisions of Federal or state laws or regulations or (iii) divulging the Company’s ConfidentialInformation by order of court or agency of competent jurisdiction. However, Participant shall promptly inform the Company of any such situations and shalltake such reasonable steps to prevent disclosure of the Company’s Confidential Information until the Company has been informed of such requesteddisclosure and the Company has had an opportunity to respond to the court or agency.3(d)Return of Company Property. Participant agrees that, in the event that Participant’s service to the Company is terminated forany reason, Participant shall immediately return all of the Company’s property, including without limitation, (i) tools, pagers, computers, printers, key cards,documents or other tangible property of the Company, and (ii) the Company’s Confidential Information in any media, including paper or electronic form, andParticipant shall not retain in Participant’s possession any copies of such information.(e)Ownership of Software and Inventions. All discoveries, designs, improvements, ideas, inventions, software, whether patentableor copyrightable or not, shall be works-made-for-hire and Company shall be deemed the sole owner throughout the universe of any and all rights ofwhatsoever nature therein, with the rights to use the same in perpetuity in any manner the Company determines in its sole discretion without any furtherpayment to Participant whatsoever. If, for any reason, any of such results and proceeds which relate to the business shall not legally be a work-for-hire and/orthere are any rights which do not accrue to the Company under the preceding sentence, then Participant hereby irrevocably assigns and agrees to quitclaimany and all of Participant’s right, title and interest thereto including, without limitation, any and all copyrights, patents, trade secrets, trademarks and/or otherrights of whatsoever nature therein, whether or not now or hereafter known, existing, contemplated, recognized or developed to the Company, and theCompany shall have the right to use the same in perpetuity throughout the universe in any manner the Company determines without any further payment toParticipant whatsoever. Participant shall, from time to time, as may be reasonably requested by the Company, at the Company’s expense, do any and allthings which the Company may deem useful or desirable to establish or document the Company’s exclusive ownership of any and all rights in any suchresults and proceeds, including, without limitation, the execution of appropriate copyright and/or patent applications or assignments. To the extentParticipant has any rights in the results and proceeds of Participant’s services that cannot be assigned in the manner described above, Participantunconditionally and irrevocably waives the enforcement of such rights. Notwithstanding anything to the contrary set forth herein, works developed by theParticipant (i) which are developed independently from the work developed for the Company regardless of whether such work was developed before or afterthe Participant performed services for the Company; or (ii) applications independently developed which are unrelated to the business and which Participantdevelops during non-business hours using non-business property shall not be deemed work for hire and shall not be the exclusive property of the Company.(f)Non-Competition.(i)During the time in which Participant performs services for the Company and for a period of twelve (12) months after thecessation of Participant’s service to the Company, regardless of the reason, Participant shall not, directly or indirectly, either alone or in conjunction with anyperson, firm, association, company or corporation, within the Restricted Area, own, manage, operate, or participate in the ownership, management, operation,or control of, or be employed by or provide services to, any entity which is in competition with the Company.(ii)Notwithstanding anything to the contrary, nothing in this Paragraph (f) prohibits Participant from being a passiveowner of not more than one percent (1%) of the outstanding stock of any class of a corporation which is publicly traded, so long as Participant has no activeparticipation in the business of such corporation.(g)Acknowledgments. Participant acknowledges and agrees that the restrictions contained in this Agreement with respect to time,geographical area and scope of activity are reasonable and do not impose a greater restraint than is necessary to protect the goodwill and other legitimatebusiness interests of the Company and that the Participant has had the opportunity to review the provisions of this Agreement with his legal counsel. Inparticular, the Participant agrees and acknowledges (a) that the Company is currently engaging in business and actively marketing its services and productsthroughout the United States, (b) that Participant’s duties and responsibilities for the Company are co-extensive with the entire scope of the Company'sbusiness, (c) that the Company has spent significant time and effort developing and protecting the confidentiality of its methods of doing business,technology, customer lists, long term customer relationships and trade secrets, and (d) that such methods, technology, customer lists, customer relationshipsand trade secrets have significant value.4(h)Enforcement. The Participant agrees that the restrictions contained in this Agreement are necessary for the protection of thebusiness, the Confidential Information, customer relationships and goodwill of the Company and are considered by the Participant to be reasonable for thatpurpose and that the scope of restricted activities, the geographic scope and the duration of the restrictions set forth in this Agreement are considered by theParticipant to be reasonable. The Participant further agrees that any breach of any of the restrictive covenants in this Agreement would cause the Companysubstantial, continuing and irrevocable harm for which money damages would be inadequate and therefore, in the event of any such breach or any threatenedbreach, in addition to such other remedies as may be available, the Company shall be entitled to specific performance and injunctive relief. This Agreementshall not in any way limit the remedies in law or equity otherwise available to the Company or its Affiliates. The Participant further agrees that to the extentany provision or portion of the restrictive covenants of this Agreement shall be held, found or deemed to be unreasonable, unlawful or unenforceable by acourt of competent jurisdiction, then any such provision or portion thereof shall be deemed to be modified to the extent necessary in order that any suchprovision or portion thereof shall be legally enforceable to the fullest extent permitted by applicable law. Without limitation to any other remedies availablehereunder or at law in the event of any breach of any of the restrictive covenants in this Agreement by Participant, the Participant agrees that (i) any shares ofRestricted Stock issued by the Company to the Participant pursuant to this Agreement shall be forfeited for no consideration and (ii) in the event that theParticipant sold the shares of Restricted Stock issued to the Participant pursuant to this Agreement, then the Participant shall be required to pay to theCompany in cash, within 30 days of a request by the Company for such payment, the price at which the Participant sold the shares.(i)Severability; Modification. It is expressly agreed by Participant that:(i)Modification. If, at the time of enforcement of this Agreement, a court holds that the duration, geographical area orscope of activity restrictions stated herein are unreasonable under circumstances then existing or impose a greater restraint than is necessary to protect thegoodwill and other business interests of the Company, Participant agrees that the maximum duration, scope or area reasonable under such circumstances willbe substituted for the stated duration, scope or area and that the court will be allowed to revise the restrictions contained herein to cover the maximumduration, scope and area permitted by law, in all cases giving effect to the intent of the parties that the restrictions contained herein be given effect to thebroadest extent possible; and(ii)Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effectiveand valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under applicable law, suchinvalidity, illegality or unenforceability will not affect any other provision, but this Agreement will be reformed, construed and enforced as if such invalid,illegal or unenforceable provision had never been contained herein.(iii)Non-Disparagement. Participant understands and agrees that Participant will not disparage the Company, its officers,directors, administrators, representatives, employees, contractors, consultants or customers and will not engage in any communications or other conductwhich might interfere with the relationship between the Company and its current, former, or prospective employees, contractors, consultants, customers,suppliers, regulatory entities, and/or any other persons or entities.(j)Definitions.(i)Affiliate. “Affiliate” means any entity controlling or controlled by or under common control with theCompany or another Affiliate, at the time of execution of the Agreement and any time thereafter, where “control” is defined as the ownership of atleast fifty percent (50%) of the equity or beneficial interest of such entity, and any other entity with respect to which the Company has significantmanagement or operational responsibility (even though the Company may own less than fifty percent (50%) of the equity of such entity).(ii)Confidential Information. “Confidential Information” as used in this Agreement shall include the Company’strade secrets as defined under Illinois law, as well as any other information or material which is not generally known to the public, and which:51.is generated, collected by or utilized in the operations of the Company’s business and relates to the actual or anticipated business,research or development of the Company; or2.is suggested by or results from any task assigned to Participant by the Company or work performed by Participant for or on behalf of theCompany.Confidential Information shall not be considered generally known to the public if Participant or others improperly reveal such information to the publicwithout the Company’s express written consent and/or in violation of an obligation of confidentiality to the Company. Examples of ConfidentialInformation include, but are not limited to, all customer, client, supplier and vendor lists, budget information, contents of any database, contracts, productdesigns, technical know-how, engineering data, pricing and cost information, research and development work, software, business plans, proprietary data,projections, market research, perceptual studies, strategic plans, marketing information, financial information (including financial statements), salesinformation, training manuals, employee lists and compensation of employees, and all other competitively sensitive information with respect to theCompany, whether or not it is in tangible form, and including without limitation any of the foregoing contained or described on paper or in computersoftware or other storage devices, as the same may exist from time to time.(iii)Restricted Area. For purposes of this Agreement, the term “Restricted Area” shall mean the United States ofAmerica.10.Miscellaneous.(a)Authority of Compensation Committee. In making any decisions or taking any actions with respect to the matters covered bythis Agreement, the Compensation Committee shall have all of the authority and discretion, and shall be subject to all of the protections, provided for in thePlan. All decisions and actions by the Compensation Committee with respect to this Agreement shall be made in the Compensation Committee’s discretionand shall be final and binding on the Participant.(b)No Right to Continued Service. The Participant acknowledges and agrees that, notwithstanding the fact that the vesting of theRestricted Stock is contingent upon his or her continued service to the Company, this Agreement does not constitute an express or implied promise ofcontinued service relationship with the Participant or confer upon the Participant any rights with respect to a continued service relationship with theCompany.(c)Governing Law. This Agreement shall be construed, interpreted and enforced in accordance with the internal laws of the State ofDelaware without regard to any applicable conflicts of laws provisions.(d)Exclusive Jurisdiction/Venue. All disputes that arise from or relate to this Agreement shall be decided exclusively by bindingarbitration in Cook County, Illinois under the Commercial Arbitration Rules of the American Arbitration Association. The parties agree that the arbitrator’saward shall be final, and may be filed with and enforced as a final judgment by any court of competent jurisdiction. Notwithstanding the foregoing, anydisputes related to the enforcement of the restrictive covenants contained in Section 9 of this Agreement shall be subject to and determined under Delawarelaw and adjudicated in Illinois courts.[signature page follows]6I hereby acknowledge that I have read this Agreement, have received and read the Plan, and understand and agree to comply with the terms and conditions ofthis Agreement and the Plan.PARTICIPANT ACCEPTANCE[To be accepted electronically]7Exhibit 10.45December 2, 2015Emad Rizkc/o Accretive Health, Inc.401 North Michigan AvenueSuite 2700Chicago, Illinois 60611Re:Retention and Enhanced Severance Letter AgreementDear Emad:As you know, TowerBrook Capital Partners, L.P. (“TowerBrook”) and Ascension Health Alliance d/b/a Ascension (“Ascension Health”) have been indiscussions with Accretive Health, Inc. (the “Company”) with respect to a potential transaction in which an entity to be formed by TowerBrook andAscension Health (the “Investor”) will make a cash investment in the Company in exchange for shares of the Company (the “Investment” and the agreementthrough which the Investment is effected, the “SPA”). Prior to entering into the SPA, the Investor has asked that you agree that your retention and enhancedseverance letter agreement with the Company, dated as of August 12, 2015 and amended as of October 19, 2015 (the “Retention Agreement”), will terminatesooner than December 31, 2015 (its current expiration date). Although the Investment will not constitute a “Change of Control” within the meaning of yourRetention Agreement, in consideration for your agreement to the early termination of your Retention Agreement, the Company will grant you an equityaward, as described in further detail in this letter agreement (the “Letter Agreement”).If the SPA is not executed by the parties thereto on or prior to December 31, 2015 or if, prior to the date on which the Investment is completed (the“Investment Date”), the SPA is terminated by the parties thereto in accordance with its terms, this Letter Agreement shall be null and void ab initio and of nofurther force or effect.1.Termination of Retention Agreement. You and the Company hereby agree that, notwithstanding anything to the contrary contained inyour Retention Agreement, your Retention Agreement shall terminate and be null and void and of no further force or effect as of the date the SPA is executedby all parties thereto. Without limiting the foregoing, you hereby knowingly and voluntarily relinquish and release any and all rights and claims that youcurrently possess or may or would otherwise possess under or in respect of the Retention Agreement.2.Grant of Restricted Stock Award. In consideration of your agreement to terminate the Retention Agreement and in full satisfaction of anyobligations the Company may have had to you under the Retention Agreement, promptly following the Investment Date (or such earlier date as may beagreed among the Investor, the Company, and you) and subject to your continued employment with the Company through the Investment Date or suchearlier date, as applicable, the Company shall grant to you a Restricted Stock Award (as defined in the Company’s Amended and Restated 2010 StockIncentive Plan (the “Plan”)) under the Plan in respect of 1,500,000 shares of the Company’s common stock, par value $0.01 (the “Common Stock”). TheRestricted Stock Award shall vest in equal annual installments on the first three anniversaries of the Investment Date, subject to your continued employmentthrough each such anniversary date, and shall accelerate in full upon your earlier termination of employment (a) by the Company without Cause (as definedin that certain offer letter, dated as of July 10, 2014, by and between the Company and you (the “Offer Letter”)), (b) by you for Good Reason (as defined in theOffer Letter), or (c) due to your death or Disability (as defined in the Offer Letter). Except as set forth in the immediately preceding sentence, the RestrictedStock Award shall have substantially the same terms and conditions (excluding any vesting or accelerated vesting terms and conditions) as set forth in therestricted stock award agreement filed as Exhibit 10.31 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014.3.Golden Parachute Excise Tax. If your receipt of (or vesting in) the Restricted Stock Award as provided for under this Letter Agreement,along with the aggregate amount of any other payments or benefits that1could be paid, provided, or delivered to you by the Company or its affiliates are considered “parachute payments” (as defined in Section 280G of the InternalRevenue Code of 1986, as amended (the “Code”)) (such payments and benefits, the “Parachute Payments”), then the aggregate amount of ParachutePayments to which you will be entitled will equal the amount that produces the greatest after-tax benefit to you after taking into account any excise taxpayable by you under Section 4999 of the Code (the “Excise Tax”). You acknowledge and agree that application of this Section 3 will reduce the amount ofParachute Payments otherwise payable to you, only if doing so would place you in a better net after-tax economic position as compared with not doing so(taking into account the Excise Tax payable in respect of such Parachute Payments). In such event, the Company will reduce or eliminate the ParachutePayments by first reducing or eliminating the portion of the Parachute Payments that are payable in cash and then by reducing or eliminating the non-cashportion of the Parachute Payments, in each case, in reverse order beginning with payments or benefits that are to be paid the furthest in the future. Alldeterminations to be made under this Section 3 will be made, at the Company’s expense, by a nationally recognized certified public accounting firm selectedby the Company.4.Miscellaneous.(a)Amendments. This Letter Agreement may not be amended or modified other than by a written agreement executed by the partieshereto or their respective successors or legal representatives.(b)Governing Law. This Letter Agreement shall be governed by and construed in accordance with the laws of the State ofDelaware, without giving effect to conflicts of laws principles thereof.(c)Entire Agreement. This Letter Agreement constitutes the complete understanding between the parties hereto relating to thesubject matter hereof, and supersedes in its entirety any prior oral or written agreements, understandings, or representations relating to the subject matterhereof, including, without limitation, the Retention Agreement. Notwithstanding the foregoing and for the avoidance of doubt, this Letter Agreement shallnot supersede any rights you may have under your Offer Letter as in existence prior to the execution of your Retention Agreement (including, withoutlimitation, with respect to any termination of employment protections set forth in Sections 8 and 9 of your Offer Letter) and the Offer Letter shall remain infull force and effect.[Signature Page Follows]2Please confirm your agreement to all of the foregoing by executing this Letter Agreement as indicated below.Very truly yours,ACCRETIVE HEALTH, INC.By: /s/ Daniel A. Zaccardo_______________Name: Daniel A. ZaccardoTitle: Senior Vice President, General Counsel & Corporate SecretaryAcknowledged and Agreed:/s/ Emad RizkEmad Rizk[Signature Page to Letter Agreement]3Exhibit 10.46December 2, 2015Joe Flanaganc/o Accretive Health, Inc.401 North Michigan AvenueSuite 2700Chicago, Illinois 60611Re:Retention and Enhanced Severance Letter AgreementDear Joe:As you know, TowerBrook Capital Partners, L.P. (“TowerBrook”) and Ascension Health Alliance d/b/a Ascension (“Ascension Health”) have been indiscussions with Accretive Health, Inc. (the “Company”) with respect to a potential transaction in which an entity to be formed by TowerBrook andAscension Health (the “Investor”) will make a cash investment in the Company in exchange for shares of the Company (the “Investment” and the agreementthrough which the Investment is effected, the “SPA”). Prior to entering into the SPA, the Investor has asked that you agree that your retention and enhancedseverance letter agreement with the Company, dated as of August 12, 2015 (the “Retention Agreement”), will terminate sooner than December 31, 2015 (itscurrent expiration date). Although the Investment will not constitute a “Change of Control” within the meaning of your Retention Agreement, inconsideration for your agreement to the early termination of your Retention Agreement, the Company will grant you an equity award, as described in furtherdetail in this letter agreement (the “Letter Agreement”).If the SPA is not executed by the parties thereto on or prior to December 31, 2015 or if, prior to the date on which the Investment is completed (the“Investment Date”), the SPA is terminated by the parties thereto in accordance with its terms, this Letter Agreement shall be null and void ab initio and of nofurther force or effect.1.Termination of Retention Agreement. You and the Company hereby agree that, notwithstanding anything to the contrary contained inyour Retention Agreement, your Retention Agreement shall terminate and be null and void and of no further force or effect as of the date the SPA is executedby all parties thereto. Without limiting the foregoing, you hereby knowingly and voluntarily relinquish and release any and all rights and claims that youcurrently possess or may or would otherwise possess under or in respect of the Retention Agreement.2.Grant of Restricted Stock Award. In consideration of your agreement to terminate the Retention Agreement and in full satisfaction of anyobligations the Company may have had to you under the Retention Agreement, promptly following the Investment Date (or such earlier date as may beagreed among the Investor, the Company, and you) and subject to your continued employment with the Company through the Investment Date or suchearlier date, as applicable, the Company shall grant to you a Restricted Stock Award (as defined in the Company’s Amended and Restated 2010 StockIncentive Plan (the “Plan”)) under the Plan in respect of 952,000 shares of the Company’s common stock, par value $0.01 (the “Common Stock”). TheRestricted Stock Award shall vest in equal annual installments on the first three anniversaries of the Investment Date, subject to your continued employmentthrough each such anniversary date, and shall accelerate in full upon your earlier termination of employment (a) by the Company without Cause (as definedin that certain offer letter, dated as of April 27, 2013 and amended as of April 29, 2014, by and between the Company and you (the “Offer Letter”)), (b) by youfor Good Reason (as defined in the Offer Letter), or (c) due to your death or Disability (as defined in the Offer Letter). Except as set forth in the immediatelypreceding sentence, the Restricted Stock Award shall have substantially the same terms and conditions (excluding any vesting or accelerated vesting termsand conditions) as set forth in the restricted stock award agreement filed as Exhibit 10.31 to the Company’s Annual Report on Form 10-K for the fiscal yearended December 31, 2014.3.Golden Parachute Excise Tax. If your receipt of (or vesting in) the Restricted Stock Award as provided for under this Letter Agreement,along with the aggregate amount of any other payments or benefits that1could be paid, provided, or delivered to you by the Company or its affiliates are considered “parachute payments” (as defined in Section 280G of the InternalRevenue Code of 1986, as amended (the “Code”)) (such payments and benefits, the “Parachute Payments”), then the aggregate amount of ParachutePayments to which you will be entitled will equal the amount that produces the greatest after-tax benefit to you after taking into account any excise taxpayable by you under Section 4999 of the Code (the “Excise Tax”). You acknowledge and agree that application of this Section 3 will reduce the amount ofParachute Payments otherwise payable to you, only if doing so would place you in a better net after-tax economic position as compared with not doing so(taking into account the Excise Tax payable in respect of such Parachute Payments). In such event, the Company will reduce or eliminate the ParachutePayments by first reducing or eliminating the portion of the Parachute Payments that are payable in cash and then by reducing or eliminating the non-cashportion of the Parachute Payments, in each case, in reverse order beginning with payments or benefits that are to be paid the furthest in the future. Alldeterminations to be made under this Section 3 will be made, at the Company’s expense, by a nationally recognized certified public accounting firm selectedby the Company.4.Miscellaneous.(a)Amendments. This Letter Agreement may not be amended or modified other than by a written agreement executed by the partieshereto or their respective successors or legal representatives.(b)Governing Law. This Letter Agreement shall be governed by and construed in accordance with the laws of the State ofDelaware, without giving effect to conflicts of laws principles thereof.(c)Entire Agreement. This Letter Agreement constitutes the complete understanding between the parties hereto relating to thesubject matter hereof, and supersedes in its entirety any prior oral or written agreements, understandings, or representations relating to the subject matterhereof, including, without limitation, the Retention Agreement. Notwithstanding the foregoing and for the avoidance of doubt, this Letter Agreement shallnot supersede any rights you may have under your Offer Letter as in existence prior to the execution of your Retention Agreement (including, withoutlimitation, with respect to any termination of employment protections set forth in Sections 8 and 9 of your Offer Letter) and the Offer Letter shall remain infull force and effect.[Signature Page Follows]2Please confirm your agreement to all of the foregoing by executing this Letter Agreement as indicated below.Very truly yours,ACCRETIVE HEALTH, INC.By: /s/ Daniel A. Zaccardo __________Name: Daniel A. ZaccardoTitle: Senior Vice President, General Counsel & Corporate SecretaryAcknowledged and Agreed:/s/ Joe FlanaganJoe Flanagan[Signature Page to Letter Agreement]3Exhibit 10.47Execution VersionAccretive Health, Inc.Restricted Stock Award AgreementRECITALSWHEREAS, TowerBrook Capital Partners, L.P. (“TowerBrook”) and Ascension Health Alliance d/b/a Ascension (“Ascension Health”) have entered into anagreement, dated December 7, 2015, with the Company with respect to a transaction in which an entity to be formed by TowerBrook and Ascension Health(the “Investor”) will make a cash investment in the Company in exchange for shares of convertible preferred stock of the Company (the “Investment” and theagreement through which the Investment is effected, the “SPA”);WHEREAS, the Participant and the Company are parties to that certain retention and enhanced severance letter agreement with the Company, dated as ofAugust 13, 2015 (the “Retention Agreement”);WHEREAS, the Company and Participant desire to enter into this Agreement, which will supersede and replace the Retention Agreement in its entirety.GENERAL TERMS AND CONDITIONSThis Restricted Stock Award is granted to the Participant under the Amended and Restated Accretive Health, Inc. 2010 Stock Incentive Plan (the “Plan”).Terms that are not defined herein shall have the meaning ascribed to such terms under the Plan (except as otherwise expressly provided herein).For valuable consideration, receipt of which is acknowledged, the parties hereto agree as follows:1.Issuance of Restricted Shares.(a)In consideration of services rendered and to be rendered to the Company by the Participant, the Company has granted to the Participanton December 31, 2015 (the “Grant Date”), subject to the terms and conditions set forth in this Restricted Stock Award Agreement (this “Agreement”) and thePlan, an award of 676,800 restricted shares of common stock, $0.01 par value per share, of the Company (the “Restricted Stock”).(b)The Restricted Stock will initially be issued by the Company in book entry form only, in the name of the Participant. Following thevesting of any Restricted Stock pursuant to Section 2 below, the Company shall, if requested by the Participant, issue and deliver to the Participant acertificate representing the vested shares of Restricted Stock. The Participant agrees that the Restricted Stock shall be subject to the forfeiture provisions setforth in Section 3 of this Agreement and the restrictions on transfer set forth in Section 4 of this Agreement.2.Vesting.(a)General. Subject to the provisions of Sections 2(b) and 8 hereof, so long as the Participant is employed by the Company, the shares ofRestricted Stock subject to this award shall become vested as follows:(i)Initial Vesting Tranche. One-third (1/3rd) of the shares of Restricted Stock subject to this award shall become vested on the first(1st) anniversary of the “Closing Date” of the Investment (as defined in the SPA), subject to the Participant’s continued employment with the Companythrough such vesting date.(ii)Second Vesting Tranche. One-third (1/3rd) of the shares of Restricted Stock subject to this award shall become vested on thesecond (2nd) anniversary of the Closing Date, subject to the Participant’s continued employment with the Company through such vesting date.1(iii)Third Vesting Tranche. One-third (1/3rd) of the shares of Restricted Stock subject to this award shall become vested on the third(3rd) anniversary of the Closing Date, subject to the Participant’s continued employment with the Company through such vesting date.(iv)Any fractional shares resulting from the application of the vesting provisions contained in this Section 2 shall be roundeddown to the nearest whole number of shares.(b)Termination by the Company Without Cause, Resignation by the Participant For Good Reason, or Upon Death or Disability.Notwithstanding the provisions of Section 2(a) hereof, in the event of the Participant’s termination of employment by the Company without “Cause” or bythe Participant for “Good Reason”, or due to the Participant’s death or “Disability”, any unvested portion of the Restricted Stock shall become fully vested asof the date of such termination.3.Forfeiture of Unvested Restricted Stock Upon Cessation of Service or Failure to Consummate the Investment.Except as otherwise expressly provided in Section 2 hereof, in the event that the Participant ceases to perform services to the Company for anyreason or no reason, with or without cause, all of the shares of Restricted Stock that are unvested as of the time of such cessation shall be forfeitedimmediately and automatically to the Company, without the payment of any consideration to the Participant, effective as of such cessation. The Participantshall have no further rights with respect to any shares of Restricted Stock that are so forfeited. If the Participant provides services to a subsidiary of theCompany, any references in this Agreement to provision of services to the Company shall instead be deemed to refer to service with such subsidiary. If, forany reason, the Investment is not ultimately consummated, this Agreement and the Restricted Stock granted hereunder, shall automatically be cancelled andforfeited for no consideration. In addition, the Participant, in his sole discretion shall have the right to forfeit all or any portion of the Restricted Stock prior tothe applicable vesting date for such Restricted Stock.4.Restrictions on Transfer.The Participant shall not sell, assign, transfer, pledge, hypothecate or otherwise dispose of, by operation of law or otherwise (collectively “transfer”)any shares of Restricted Stock, or any interest therein, until such shares of Restricted Stock have vested, except that the Participant may transfer such shares ofRestricted Stock: (a) to or for the benefit of any spouse, children, parents, uncles, aunts, siblings, grandchildren and any other relatives approved by theCompensation Committee (collectively, “Approved Relatives”) or to a trust established solely for the benefit of the Participant and/or Approved Relatives,provided that such Restricted Stock shall remain subject to this Agreement (including, without limitation, the forfeiture provisions set forth in Section 3hereof and the restrictions on transfer set forth in this Section 4) and the Plan, and such permitted transferee shall, as a condition to such transfer, deliver to theCompany a written instrument confirming that such transferee shall be bound by all of the terms and conditions of this Agreement; or (b) as part of the sale ofall or substantially all of the shares of capital stock of the Company (including pursuant to a merger or consolidation). The Company shall not be required (i)to transfer on its books any of the shares of Restricted Stock which have been transferred in violation of any of the provisions of this Agreement, or (ii) to treatas owner of such shares of Restricted Stock or to pay dividends to any transferee to whom such shares of Restricted Stock have been transferred in violation ofany of the provisions of this Agreement.5.Restrictive Legends.The book entry account reflecting the issuance of the shares of Restricted Stock in the name of the Participant shall bear a legend or other notationupon substantially the following terms:“These shares of stock are subject to forfeiture provisions and restrictions on transfer set forth in a certain Restricted Stock Award Agreementbetween the corporation and the registered owner of these shares (or his predecessor in interest), and such Agreement is available for inspection withoutcharge at the office of the Secretary of the corporation.”26.Rights as a Shareholder.Except as otherwise provided in this Agreement, for so long as the Participant is the registered owner of the Restricted Stock, the Participant shallhave all rights as a shareholder with respect to the Restricted Stock, whether vested or unvested, including, without limitation, rights to vote the RestrictedStock and act in respect of the Restricted Stock at any meeting of shareholders; provided, however, that the payment of dividends on unvested RestrictedStock shall be deferred until after such shares vest and shall be paid to the Participant within thirty (30) days following the applicable vesting date of suchshares of Restricted Stock.7.Provisions of the Plan.This Agreement is subject to the provisions of the Plan, a copy of which is furnished to the Participant with this Agreement.8.Tax Matters.(a)Acknowledgments. The Participant acknowledges that he is responsible for obtaining the advice of the Participant’s own tax advisorswith respect to the acquisition of the Restricted Stock and the Participant is relying solely on such advisors and not on any statements or representations ofthe Company or any of its agents with respect to the tax consequences relating to the Restricted Stock. The Participant understands that the Participant (andnot the Company) shall be responsible for the Participant’s tax liability that may arise in connection with the acquisition, vesting and/or disposition of theRestricted Stock.(b)Withholding. The Participant acknowledges and agrees that the Company has the right to deduct from payments of any kind otherwisedue to the Participant any federal, state, local or other taxes of any kind required by law to be withheld with respect to the vesting of the shares of RestrictedStock. On each date on which shares of Restricted Stock vest, the Company shall deliver written notice to the Participant of the amount of withholding taxesdue with respect to the vesting of the shares of Restricted Stock that vest on such date; provided, however, that the total tax withholding cannot exceed theCompany’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payrolltaxes, that are applicable to such supplemental taxable income). The Participant shall satisfy such tax withholding obligations by transferring to theCompany, on each date on which shares of Restricted Stock vest under this Agreement, such number of shares of Restricted Stock that vest on such date ashave a fair market value (calculated using the last reported sale price of the common stock of the Company on the New York Stock Exchange (or if not thentraded on such exchange, on the principal national securities exchange in the United States on which it is then traded) on the trading date immediately priorto such vesting date) equal to the amount of the Company’s tax withholding obligation in connection with the vesting of such Restricted Stock (suchwithholding method a “Surrender”) unless, prior to any vesting date, (x) the Compensation Committee determines that a Surrender shall not be available tothe Participant or (y) the Participant elects to forego a Surrender, in which case, the Participant shall be required to satisfy his tax obligations hereunder in amanner permitted by the Plan upon the relevant vesting date; provided, however, that, notwithstanding the foregoing, in the event that a vesting date occursduring a “blackout period” during which the Participant is prohibited from selling shares of Company common stock, the Compensation Committee shall,unless prohibited by law, securities or exchange regulations, make a Surrender available to the Participant.(c)Section 83(b) Election. The Participant acknowledges (i) that he has been informed of the availability of making an election underSection 83(b) of the Internal Revenue Code, as amended, with respect to the issuance of the Restricted Stock (a “Section 83(b) Election”) and (ii) that, to theextent the Participant chooses to make a Section 83(b) Election, he may make such Section 83(b) Election with respect to all or a portion of the RestrictedStock. The Company acknowledges (i) that the Participant’s choice to make (or not make) a Section 83(b) Election is a voluntary choice by the Participantand (ii) the Participant is under no duty (fiduciary, contractual or otherwise) to the Company to make such Section 83(b) Election. For the avoidance ofdoubt, the Participant shall, consistent with the terms and conditions of the Plan and Section 8(b) of this Agreement, be responsible for satisfying any and allof the Participant’s tax liabilities in connection with any Section 83(b) Election the Participant chooses to make.3(d)Section 280G. If the Participant’s receipt of (or vesting in) the Restricted Stock, along with the aggregate amount of any other paymentsor benefits that could be paid, provided, or delivered to the Participant by the Company or its affiliates are considered “parachute payments” (as defined inSection 280G of the Code) (such payments and benefits, the “Parachute Payments”), then the aggregate amount of Parachute Payments to which theParticipant will be entitled will equal the amount that produces the greatest after-tax benefit to the Participant after taking into account any excise taxpayable by the Participant under Section 4999 of the Code (the “Excise Tax”). The Participant acknowledges and agrees that application of this Section 8(d)will reduce the amount of Parachute Payments otherwise payable to the Participant, only if doing so would place the Participant in a better net after-taxeconomic position as compared with not doing so (taking into account the Excise Tax payable in respect of such Parachute Payments). In such event, theCompany will reduce or eliminate the Parachute Payments by first reducing or eliminating the portion of the Parachute Payments that are payable in cash andthen by reducing or eliminating the non-cash portion of the Parachute Payments, in each case, in reverse order beginning with payments or benefits that are tobe paid the furthest in the future. All determinations to be made under this Section 8(d) will be made, at the Company’s expense, by a nationally recognizedcertified public accounting firm selected by the Company.9.Restrictive Covenants.(a)General. This award represents a substantial economic benefit to the Participant. The Participant, by virtue of such Participant’s role withthe Company, has access to, and is involved in the formulation of, certain confidential and secret information of the Company regarding its operations andeach Participant could materially harm the business of the Company by competing with the Company or soliciting employees or customers of the Company.(b)Non-Solicitation. During the time in which Participant performs services for the Company and for a period of twenty-four (24) monthsafter the Participant ceases to perform services for the Company, regardless of the reason, Participant shall not, directly or indirectly, either alone or inconjunction with any person, firm, association, company or corporation:(i)Hire, recruit, solicit or otherwise attempt to employ or retain or enter into any business relationship with, any person who is orwas an employee of the Company within the twelve (12)-month period immediately preceding the cessation of Participant’s service with the Company; or(ii)Solicit the sale of any products or services that are similar to or competitive with products or services offered by, manufacturedby, designed by, or distributed by the Company, to any person, company or entity which was or is a customer or potential customer of the Company for suchproducts or services.(iii)For the avoidance of doubt, the Participant shall not be considered to have solicited away any business or customer of theCompany if that business or customer contacts the Participant without any solicitation by the Participant or any other person who is acting in concert with, orat the direction of, the Participant. Further, for the avoidance of doubt, the Participant shall not be considered to have solicited, diverted or taken away anyemployee of the Company if that employee contacts the Participant without any solicitation by the Participant or any other person who is acting in concertwith, or at the direction of, the Participant, it being the parties’ intention that the Participant will not be prohibited from accepting solicitations from anyemployee when neither the Participant nor any other person acting in concert with, or at the direction of, the Participant contacted or otherwise solicited theemployee, provided that the foregoing shall in no way limit the application of the restriction on hiring employees contemplated by Section 9(b)(i) hereof.(c)Non-Disclosure.(i)Participant will not, without the Company’s prior written permission, directly or indirectly, utilize for any purpose other than fora legitimate business purpose solely on behalf of the Company, or directly or indirectly, disclose to anyone outside of the Company, either during or afterParticipant’s relationship with the Company ends, the Company’s Confidential Information, as long as such matters remain Confidential Information.4(ii)This Agreement shall not prevent Participant from revealing evidence of criminal wrongdoing to law enforcement or prohibitParticipant from divulging the Company’s Confidential Information by order of a court or agency of competent jurisdiction. However, Participant shallpromptly inform the Company of any such situations and shall take such reasonable steps to prevent disclosure of the Company’s Confidential Informationuntil the Company has been informed of such requested disclosure and the Company has had an opportunity to respond to the court or agency.(d)Return of Company Property. Participant agrees that, in the event that Participant’s service to the Company is terminated for any reason,Participant shall immediately return all of the Company’s property, including, without limitation, (i) tools, pagers, computers, printers, key cards, documentsor other tangible property of the Company, and (ii) the Company’s Confidential Information in any media, including paper or electronic form, and Participantshall not retain in Participant’s possession any copies of such information.(e)Ownership of Software and Inventions. All discoveries, designs, improvements, ideas, inventions, software, whether patentable orcopyrightable or not, shall be works-made-for-hire and the Company shall be deemed the sole owner throughout the universe of any and all rights ofwhatsoever nature therein, with the rights to use the same in perpetuity in any manner the Company determines in its sole discretion without any furtherpayment after the term of this Agreement to Participant whatsoever. If, for any reason, any of such results and proceeds which relate to the business shall notlegally be a work-for-hire and/or there are any rights which do not accrue to the Company under the preceding sentence, then Participant hereby irrevocablyassigns and agrees to quitclaim any and all of Participant’s right, title and interest thereto including, without limitation, any and all copyrights, patents, tradesecrets, trademarks and/or other rights of whatsoever nature therein, whether or not now or hereafter known, existing, contemplated, recognized or developedto the Company, and the Company shall have the right to use the same in perpetuity throughout the universe in any manner the Company determines withoutany further payment to Participant whatsoever. Participant shall, from time to time, as may be reasonably requested by the Company, at the Company’sexpense, do any and all things which the Company may deem useful or desirable to establish or document the Company’s exclusive ownership of any and allrights in any such results and proceeds, including, without limitation, the execution of appropriate copyright and/or patent applications or assignments. Tothe extent Participant has any rights in the results and proceeds of Participant’s services that cannot be assigned in the manner described above, Participantunconditionally and irrevocably waives the enforcement of such rights. Notwithstanding anything to the contrary set forth herein, works developed by theParticipant (i) which are developed independently from the work developed for the Company regardless of whether such work was developed before or afterthe Participant performed services for the Company; or (ii) applications independently developed which are unrelated to the business and which Participantdevelops during non-business hours using non-business property shall not be deemed work for hire and shall not be the exclusive property of the Company.(f)Non-Competition.(i)During the time in which Participant performs services for the Company and for a period of twenty-four (24) months after thecessation of Participant’s service to the Company, regardless of the reason, Participant shall not, directly or indirectly, either alone or in conjunction with anyperson, firm, association, company or corporation, within the Restricted Area, own, manage, operate, or participate in the ownership, management, operation,or control of, or be employed by or provide services to, a “Competing Business”. For the purposes of this Agreement, the term “Competing Business” shallmean any entity or business: (1) engaged in the business of offering finance-related services to health care systems and hospitals, including, but not limitedto, the collection of medical debt, hospital billings and revenue management; or (2) engaged in any other business or activity in which the Company hasbeen engaged prior to the date hereof or in which the Company is engaged during the term of the Participant’s employment.(ii)Notwithstanding anything to the contrary, nothing in this paragraph (f) prohibits Participant from being a passive owner of notmore than one percent (1%) of the outstanding stock of any class of a corporation which is publicly traded, so long as Participant has no active participationin the business of such corporation.5(g)Acknowledgments. The Participant acknowledges and agrees that the restrictions contained in this Agreement with respect to time,geographical area and scope of activity are reasonable and do not impose a greater restraint than is necessary to protect the goodwill and other legitimatebusiness interests of the Company and that the Participant has had the opportunity to review the provisions of this Agreement with his legal counsel.(h)Enforcement. The Participant agrees that the restrictions contained in this Agreement are necessary for the protection of the business, theConfidential Information, customer relationships and goodwill of the Company and are considered by the Participant to be reasonable for that purpose andthat the scope of restricted activities, the geographic scope and the duration of the restrictions set forth in this Agreement are considered by the Participant tobe reasonable. The Participant further agrees that any breach of any of the restrictive covenants in this Agreement would cause the Company substantial,continuing and irrevocable harm for which money damages would be inadequate and therefore, in the event of any such breach or any threatened breach, inaddition to such other remedies as may be available, the Company shall be entitled to specific performance and injunctive relief. This Agreement shall not inany way limit the remedies in law or equity otherwise available to the Company or its Affiliates. The Participant further agrees that to the extent anyprovision or portion of the restrictive covenants of this Agreement shall be held, found or deemed to be unreasonable, unlawful or unenforceable by a court ofcompetent jurisdiction, then any such provision or portion thereof shall be deemed to be modified to the extent necessary in order that any such provision orportion thereof shall be legally enforceable to the fullest extent permitted by applicable law. Without limitation to any other remedies available hereunder orat law, in the event of any breach of any of the restrictive covenants in this Agreement by the Participant, the Participant agrees that any vested shares ofRestricted Stock issued by the Company to the Participant pursuant to this Agreement shall be forfeited for no consideration. In the event that the Participantsold the shares issued to the Participant pursuant to this Agreement, then the Participant shall be required to pay to the Company in cash, within thirty (30)days of a request by the Company for such payment, the price at which the Participant sold the Shares.(i)Severability; Modification. It is expressly agreed by Participant that:(i)Modification. If, at the time of enforcement of this Agreement, a court holds that the duration, geographical area or scope ofactivity restrictions stated herein are unreasonable under circumstances then existing or impose a greater restraint than is necessary to protect the goodwilland other business interests of the Company, Participant agrees that the maximum duration, scope or area reasonable under such circumstances will besubstituted for the stated duration, scope or area and that the court will be allowed to revise the restrictions contained herein to cover the maximum duration,scope and area permitted by law, in all cases giving effect to the intent of the parties that the restrictions contained herein be given effect to the broadestextent possible.(ii)Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective andvalid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under applicable law, suchinvalidity, illegality or unenforceability will not affect any other provision, but this Agreement will be reformed, construed and enforced as if such invalid,illegal or unenforceable provision had never been contained herein.(iii)Non-Disparagement. Participant understands and agrees that Participant will not disparage the Company, its officers, directors,administrators, representatives, employees, contractors, consultants or customers and will not engage in any communications or other conduct which mightinterfere with the relationship between the Company and its current, former, or prospective employees, contractors, consultants, customers, suppliers,regulatory entities, and/or any other persons or entities.(j)Definitions.(i)Affiliate. “Affiliate” means any entity controlling or controlled by or under common control with the Company or anotherAffiliate, at the time of execution of the Agreement and any time thereafter, where “control” is defined as the ownership of at least fifty percent (50%) of theequity or beneficial interest of such entity, and any other entity with respect to which the Company has significant management or operational responsibility(even though the Company may own less than fifty percent (50%) of the equity of such entity).6(ii)Cause. “Cause” shall have the meaning set forth in the Offer Letter.(iii)Confidential Information. “Confidential Information” as used in this Agreement shall include the Company’s trade secrets asdefined under Illinois law, as well as any other information or material which is not generally known to the public, and which:a)is generated, collected by or utilized in the operations of the Company’s business and relates to the actual or anticipatedbusiness, research or development of the Company; orb)is suggested by or results from any task assigned to Participant by the Company or work performed by Participant for oron behalf of the Company.Confidential Information shall not be considered generally known to the public if Participant or others improperly reveal such information to the publicwithout the Company’s express written consent and/or in violation of an obligation of confidentiality to the Company. Examples of ConfidentialInformation include, but are not limited to, all customer, client, supplier and vendor lists, budget information, contents of any database, contracts, productdesigns, technical know-how, engineering data, pricing and cost information, research and development work, software, business plans, proprietary data,projections, market research, perceptual studies, strategic plans, marketing information, financial information (including financial statements), salesinformation, training manuals, employee lists and compensation of employees, and all other competitively sensitive information with respect to theCompany, whether or not it is in tangible form, and including, without limitation, any of the foregoing contained or described on paper or in computersoftware or other storage devices, as the same may exist from time to time.(iv)Disability. “Disability” shall have the same meaning set forth in the Offer Letter.(v)Good Reason. “Good Reason” shall have the same meaning set forth in the Offer Letter.(vi)Offer Letter. “Offer Letter” means that certain offer letter by and between the Participant and the Company dated August 6,2014.(vii)Restricted Area. For purposes of this Agreement, the term “Restricted Area” shall mean the United States of America.10.Miscellaneous.(a)Authority of Compensation Committee. In making any decisions or taking any actions with respect to the matters covered by thisAgreement, the Compensation Committee shall have all of the authority and discretion, and shall be subject to all of the protections, provided for in the Plan.All decisions and actions by the Compensation Committee with respect to this Agreement shall be made in the Compensation Committee’s discretion andshall be final and binding on the Participant.(b)No Right to Continued Service. The Participant acknowledges and agrees that, notwithstanding the fact that the vesting of the RestrictedStock is contingent upon his continued service to the Company, this Agreement does not constitute an express or implied promise of continued servicerelationship with the Participant or confer upon the Participant any rights with respect to a continued service relationship with the Company.(c)Governing Law. This Agreement shall be construed, interpreted and enforced in accordance with the internal laws of the State ofDelaware without regard to any applicable conflicts of laws provisions.(d)Exclusive Jurisdiction/Venue. All disputes that arise from or relate to this Agreement shall be decided exclusively by binding arbitrationin Cook County, Illinois under the Commercial Arbitration Rules of the American Arbitration Association. The parties agree that the arbitrator’s award shallbe final, and may be filed with and enforced as a final judgment by any court of competent jurisdiction. Notwithstanding the foregoing, any7disputes related to the enforcement of the restrictive covenants contained in Section 9 of this Agreement shall be subject to and determined under Delawarelaw and adjudicated in Illinois courts.(e)Company Representations. The Company acknowledges that, for the avoidance of doubt, this Agreement shall not supersede any rightsthe Participant may have under the Offer Letter as in existence prior to the execution of this Agreement with respect to any termination of employmentprotections set forth in Sections 8 and 9 of the Offer Letter.(f)Participant Representations. The Participant hereby acknowledges, represents and warrants the following: (a) the Participant is an“accredited investor” within the meaning of Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended, and is an experiencedand sophisticated investor and has such knowledge and experience in financial and business matters as are necessary to evaluate the merits and risks of aninvestment in the Company, (b) the Participant has been advised that the Participant may be an “affiliate” within the meaning of Rule 144 under theSecurities Act of 1933, as amended, and may be subject to the limitations of Rule 144, (c) the Participant has no intention of offering or selling any of theshares of Restricted Stock issued hereunder in a transaction that would violate the Securities Act of 1933, as amended, or the securities laws of any state of theUnited States of America or any other applicable jurisdiction, (d) the Participant has been furnished with, and has had access to, such information as theParticipant considers necessary or appropriate for deciding whether to accept the grant of the shares of Restricted Stock hereunder, and the Participant has hadan opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the issuance of such shares of Restricted Stock,and (e) the Participant is able, without impairing the Participant’s financial condition, to hold the shares of Restricted Stock to be issued hereunder for anindefinite period and to suffer a complete loss of the Participant’s investment in such shares of Restricted Stock. The Participant and the Company herebyagree that, notwithstanding anything to the contrary contained in the Retention Agreement, the Retention Agreement shall terminate and be null and voidand of no further force or effect as of the date hereof. Without limiting the foregoing, the Participant hereby knowingly and voluntarily relinquishes andreleases any and all rights and claims that the Participant currently possess or may or would otherwise possess under or in respect of the Retention Agreement.The Participant hereby acknowledges that he has read this Agreement, has received and read the Plan, and understand and agree to comply with theterms and conditions of this Agreement and the Plan.PARTICIPANT ACCEPTANCE Dated: December 31, 2015 /s/ Peter CsapoPeter Csapo8Execution VersionEXHIBIT AELECTION TO INCLUDE VALUE OF PROPERTY IN GROSSINCOME PURSUANT TO SECTION 83(b) OF THEINTERNAL REVENUE CODEOn December 31, 2015 (the “Issue Date”), the undersigned was issued shares of common stock (collectively, the “Shares”) of Accretive Health, Inc.(the “Company”). The Shares are subject to a substantial risk of forfeiture that may not be avoided by a transfer of the Shares to another person. Theundersigned desires to make an election to have the Shares taxed under the provisions of Section 83(b) of the Code.Therefore, pursuant to Section 83(b) of the Code and Treasury Regulation §1.83-2 promulgated thereunder, the undersigned hereby makes anelection, with respect to the Shares (described below), to report as taxable income for the calendar year 2015 the excess (if any) of the fair market value of theShares on the Issue Date over the purchase price thereof.The following information is supplied in accordance with Treasury Regulation §1.83‑2(e):1.The name, address and social security number of the undersigned is as follows:Peter Csapo Social Security No.: 2.A description of the property with respect to which the election is being made: [ ] shares of common stock of Accretive Health, Inc., par value $0.01.3.The date on which the property was transferred: December 31, 2015. The taxable year for which the election is made: calendar year 2015.4.The restrictions to which the property is subject: Time-based vesting restrictions.5.The fair market value on the Issue Date of the property with respect to which the election is being made, determined without regard to any lapserestrictions: $[ ] per share.6.The amount paid for such property: zero ($0).7.A copy of this election has been furnished to the Company and each other person to whom a copy is required to be furnished pursuant to TreasuryRegulation 1.83‑2(d).Signature: Dated: 9Exhibit 10.48Execution Version Accretive Health, Inc.Restricted Stock Award AgreementRECITALSWHEREAS, TowerBrook Capital Partners, L.P. (“TowerBrook”) and Ascension Health Alliance d/b/a Ascension (“Ascension Health”) have entered into anagreement, dated December 7, 2015, with the Company with respect to a transaction in which an entity to be formed by TowerBrook and Ascension Health(the “Investor”) will make a cash investment in the Company in exchange for shares of convertible preferred stock of the Company (the “Investment” and theagreement through which the Investment is effected, the “SPA”);WHEREAS, in connection with the proposed Investment, the Company and the Participant entered into that certain letter agreement dated December 2,2015, 2015 (the “Letter Agreement”), pursuant to which the Company committed to grant the Participant this Restricted Stock Award subject to thecompletion of the Investment; andWHEREAS, the Company desires to fulfill its obligation to the Participant under the Letter Agreement.GENERAL TERMS AND CONDITIONSThis Restricted Stock Award is granted to the Participant under the Amended and Restated Accretive Health, Inc. 2010 Stock Incentive Plan (the “Plan”).Terms that are not defined herein shall have the meaning ascribed to such terms under the Plan (except as otherwise expressly provided herein).For valuable consideration, receipt of which is acknowledged, the parties hereto agree as follows:1.Issuance of Restricted Shares.(a)In consideration of services rendered and to be rendered to the Company by the Participant, the Company has granted to the Participanton December 31, 2015 (the “Grant Date”), subject to the terms and conditions set forth in this Restricted Stock Award Agreement (this “Agreement”) and thePlan, an award of 952,000 restricted shares of common stock, $0.01 par value per share, of the Company (the “Restricted Stock”).(b)The Restricted Stock will initially be issued by the Company in book entry form only, in the name of the Participant. Following thevesting of any Restricted Stock pursuant to Section 2 below, the Company shall, if requested by the Participant, issue and deliver to the Participant acertificate representing the vested shares of Restricted Stock. The Participant agrees that the Restricted Stock shall be subject to the forfeiture provisions setforth in Section 3 of this Agreement and the restrictions on transfer set forth in Section 4 of this Agreement.2.Vesting.(a)General. Subject to the provisions of Sections 2(b) and 8 hereof, so long as the Participant is employed by the Company, the shares ofRestricted Stock subject to this award shall become vested as follows:(i)Initial Vesting Tranche. One-third (1/3rd) of the shares of Restricted Stock subject to this award shall become vested on the first(1st) anniversary of the “Closing Date” of the Investment (as defined in the SPA), subject to the Participant’s continued employment with the Companythrough such vesting date.1(ii)Second Vesting Tranche. One-third (1/3rd) of the shares of Restricted Stock subject to this award shall become vested on thesecond (2nd) anniversary of the Closing Date, subject to the Participant’s continued employment with the Company through such vesting date.(iii)Third Vesting Tranche. One-third (1/3rd) of the shares of Restricted Stock subject to this award shall become vested on the third(3rd) anniversary of the Closing Date, subject to the Participant’s continued employment with the Company through such vesting date.(iv)Any fractional shares resulting from the application of the vesting provisions contained in this Section 2 shall be roundeddown to the nearest whole number of shares.(b)Termination by the Company Without Cause, Resignation by the Participant For Good Reason, or Upon Death or Disability.Notwithstanding the provisions of Section 2(a) hereof, in the event of the Participant’s termination of employment by the Company without “Cause” or bythe Participant for “Good Reason”, or due to the Participant’s death or “Disability”, any unvested portion of the Restricted Stock shall become fully vested asof the date of such termination.3.Forfeiture of Unvested Restricted Stock Upon Cessation of Service or Failure to Consummate the Investment.Except as otherwise expressly provided in Section 2 hereof, in the event that the Participant ceases to perform services to the Company for anyreason or no reason, with or without cause, all of the shares of Restricted Stock that are unvested as of the time of such cessation shall be forfeitedimmediately and automatically to the Company, without the payment of any consideration to the Participant, effective as of such cessation. The Participantshall have no further rights with respect to any shares of Restricted Stock that are so forfeited. If the Participant provides services to a subsidiary of theCompany, any references in this Agreement to provision of services to the Company shall instead be deemed to refer to service with such subsidiary. If, forany reason, the Investment is not ultimately consummated, this Agreement and the Restricted Stock granted hereunder, shall automatically be cancelled andforfeited for no consideration. In addition, the Participant, in his sole discretion shall have the right to forfeit all or any portion of the Restricted Stock prior tothe applicable vesting date for such Restricted Stock.4.Restrictions on Transfer.The Participant shall not sell, assign, transfer, pledge, hypothecate or otherwise dispose of, by operation of law or otherwise (collectively “transfer”)any shares of Restricted Stock, or any interest therein, until such shares of Restricted Stock have vested, except that the Participant may transfer such shares ofRestricted Stock: (a) to or for the benefit of any spouse, children, parents, uncles, aunts, siblings, grandchildren and any other relatives approved by theCompensation Committee (collectively, “Approved Relatives”) or to a trust established solely for the benefit of the Participant and/or Approved Relatives,provided that such Restricted Stock shall remain subject to this Agreement (including, without limitation, the forfeiture provisions set forth in Section 3hereof and the restrictions on transfer set forth in this Section 4) and the Plan, and such permitted transferee shall, as a condition to such transfer, deliver to theCompany a written instrument confirming that such transferee shall be bound by all of the terms and conditions of this Agreement; or (b) as part of the sale ofall or substantially all of the shares of capital stock of the Company (including pursuant to a merger or consolidation). The Company shall not be required (i)to transfer on its books any of the shares of Restricted Stock which have been transferred in violation of any of the provisions of this Agreement, or (ii) to treatas owner of such shares of Restricted Stock or to pay dividends to any transferee to whom such shares of Restricted Stock have been transferred in violation ofany of the provisions of this Agreement.5.Restrictive Legends.The book entry account reflecting the issuance of the shares of Restricted Stock in the name of the Participant shall bear a legend or other notationupon substantially the following terms:2“These shares of stock are subject to forfeiture provisions and restrictions on transfer set forth in a certain Restricted Stock Award Agreementbetween the corporation and the registered owner of these shares (or his predecessor in interest), and such Agreement is available for inspection withoutcharge at the office of the Secretary of the corporation.”6.Rights as a Shareholder.Except as otherwise provided in this Agreement, for so long as the Participant is the registered owner of the Restricted Stock, the Participant shallhave all rights as a shareholder with respect to the Restricted Stock, whether vested or unvested, including, without limitation, rights to vote the RestrictedStock and act in respect of the Restricted Stock at any meeting of shareholders; provided, however, that the payment of dividends on unvested RestrictedStock shall be deferred until after such shares vest and shall be paid to the Participant within thirty (30) days following the applicable vesting date of suchshares of Restricted Stock.7.Provisions of the Plan.This Agreement is subject to the provisions of the Plan, a copy of which is furnished to the Participant with this Agreement.8.Tax Matters.(a)Acknowledgments. The Participant acknowledges that he is responsible for obtaining the advice of the Participant’s own tax advisorswith respect to the acquisition of the Restricted Stock and the Participant is relying solely on such advisors and not on any statements or representations ofthe Company or any of its agents with respect to the tax consequences relating to the Restricted Stock. The Participant understands that the Participant (andnot the Company) shall be responsible for the Participant’s tax liability that may arise in connection with the acquisition, vesting and/or disposition of theRestricted Stock.(b)Withholding. The Participant acknowledges and agrees that the Company has the right to deduct from payments of any kind otherwisedue to the Participant any federal, state, local or other taxes of any kind required by law to be withheld with respect to the vesting of the shares of RestrictedStock. On each date on which shares of Restricted Stock vest, the Company shall deliver written notice to the Participant of the amount of withholding taxesdue with respect to the vesting of the shares of Restricted Stock that vest on such date; provided, however, that the total tax withholding cannot exceed theCompany’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payrolltaxes, that are applicable to such supplemental taxable income). The Participant shall satisfy such tax withholding obligations by transferring to theCompany, on each date on which shares of Restricted Stock vest under this Agreement, such number of shares of Restricted Stock that vest on such date ashave a fair market value (calculated using the last reported sale price of the common stock of the Company on the New York Stock Exchange (or if not thentraded on such exchange, on the principal national securities exchange in the United States on which it is then traded) on the trading date immediately priorto such vesting date) equal to the amount of the Company’s tax withholding obligation in connection with the vesting of such Restricted Stock (suchwithholding method a “Surrender”) unless, prior to any vesting date, (x) the Compensation Committee determines that a Surrender shall not be available tothe Participant or (y) the Participant elects to forego a Surrender, in which case, the Participant shall be required to satisfy his tax obligations hereunder in amanner permitted by the Plan upon the relevant vesting date; provided, however, that, notwithstanding the foregoing, in the event that a vesting date occursduring a “blackout period” during which the Participant is prohibited from selling shares of Company common stock, the Compensation Committee shall,unless prohibited by law, securities or exchange regulations, make a Surrender available to the Participant.(c)Section 83(b) Election. The Participant acknowledges (i) that he has been informed of the availability of making an election underSection 83(b) of the Internal Revenue Code, as amended, with respect to the issuance of the Restricted Stock (a “Section 83(b) Election”) and (ii) that, to theextent the Participant chooses to make a Section 83(b) Election, he may make such Section 83(b) Election with respect to all or a portion of the3Restricted Stock. The Company acknowledges (i) that the Participant’s choice to make (or not make) a Section 83(b) Election is a voluntary choice by theParticipant and (ii) the Participant is under no duty (fiduciary, contractual or otherwise) to the Company to make such Section 83(b) Election. For theavoidance of doubt, the Participant shall, consistent with the terms and conditions of the Plan and Section 8(b) of this Agreement, be responsible forsatisfying any and all of the Participant’s tax liabilities in connection with any Section 83(b) Election the Participant chooses to make.(d)Section 280G. If the Participant’s receipt of (or vesting in) the Restricted Stock, along with the aggregate amount of any other paymentsor benefits that could be paid, provided, or delivered to the Participant by the Company or its affiliates are considered “parachute payments” (as defined inSection 280G of the Code) (such payments and benefits, the “Parachute Payments”), then the aggregate amount of Parachute Payments to which theParticipant will be entitled will equal the amount that produces the greatest after-tax benefit to the Participant after taking into account any excise taxpayable by the Participant under Section 4999 of the Code (the “Excise Tax”). The Participant acknowledges and agrees that application of this Section 8(d)will reduce the amount of Parachute Payments otherwise payable to the Participant, only if doing so would place the Participant in a better net after-taxeconomic position as compared with not doing so (taking into account the Excise Tax payable in respect of such Parachute Payments). In such event, theCompany will reduce or eliminate the Parachute Payments by first reducing or eliminating the portion of the Parachute Payments that are payable in cash andthen by reducing or eliminating the non-cash portion of the Parachute Payments, in each case, in reverse order beginning with payments or benefits that are tobe paid the furthest in the future. All determinations to be made under this Section 8(d) will be made, at the Company’s expense, by a nationally recognizedcertified public accounting firm selected by the Company.9.Restrictive Covenants.(a)General. This award represents a substantial economic benefit to the Participant. The Participant, by virtue of such Participant’s role withthe Company, has access to, and is involved in the formulation of, certain confidential and secret information of the Company regarding its operations andeach Participant could materially harm the business of the Company by competing with the Company or soliciting employees or customers of the Company.(b)Non-Solicitation. During the time in which Participant performs services for the Company and for a period of twenty-four (24) monthsafter the Participant ceases to perform services for the Company, regardless of the reason, Participant shall not, directly or indirectly, either alone or inconjunction with any person, firm, association, company or corporation:(i)Hire, recruit, solicit or otherwise attempt to employ or retain or enter into any business relationship with, any person who is orwas an employee of the Company within the twelve (12)-month period immediately preceding the cessation of Participant’s service with the Company; or(ii)Solicit the sale of any products or services that are similar to or competitive with products or services offered by, manufacturedby, designed by, or distributed by the Company, to any person, company or entity which was or is a customer or potential customer of the Company for suchproducts or services.(iii)For the avoidance of doubt, the Participant shall not be considered to have solicited away any business or customer of theCompany if that business or customer contacts the Participant without any solicitation by the Participant or any other person who is acting in concert with, orat the direction of, the Participant. Further, for the avoidance of doubt, the Participant shall not be considered to have solicited, diverted or taken away anyemployee of the Company if that employee contacts the Participant without any solicitation by the Participant or any other person who is acting in concertwith, or at the direction of, the Participant, it being the parties’ intention that the Participant will not be prohibited from accepting solicitations from anyemployee when neither the Participant nor any other person acting in concert with, or at the direction of, the Participant contacted or otherwise solicited theemployee, provided that the foregoing shall in no way limit the application of the restriction on hiring employees contemplated by Section 9(b)(i) hereof.4(c)Non-Disclosure.(i)Participant will not, without the Company’s prior written permission, directly or indirectly, utilize for any purpose other than fora legitimate business purpose solely on behalf of the Company, or directly or indirectly, disclose to anyone outside of the Company, either during or afterParticipant’s relationship with the Company ends, the Company’s Confidential Information, as long as such matters remain Confidential Information.(ii)This Agreement shall not prevent Participant from revealing evidence of criminal wrongdoing to law enforcement or prohibitParticipant from divulging the Company’s Confidential Information by order of a court or agency of competent jurisdiction. However, Participant shallpromptly inform the Company of any such situations and shall take such reasonable steps to prevent disclosure of the Company’s Confidential Informationuntil the Company has been informed of such requested disclosure and the Company has had an opportunity to respond to the court or agency.(d)Return of Company Property. Participant agrees that, in the event that Participant’s service to the Company is terminated for any reason,Participant shall immediately return all of the Company’s property, including, without limitation, (i) tools, pagers, computers, printers, key cards, documentsor other tangible property of the Company, and (ii) the Company’s Confidential Information in any media, including paper or electronic form, and Participantshall not retain in Participant’s possession any copies of such information.(e)Ownership of Software and Inventions. All discoveries, designs, improvements, ideas, inventions, software, whether patentable orcopyrightable or not, shall be works-made-for-hire and the Company shall be deemed the sole owner throughout the universe of any and all rights ofwhatsoever nature therein, with the rights to use the same in perpetuity in any manner the Company determines in its sole discretion without any furtherpayment after the term of this Agreement to Participant whatsoever. If, for any reason, any of such results and proceeds which relate to the business shall notlegally be a work-for-hire and/or there are any rights which do not accrue to the Company under the preceding sentence, then Participant hereby irrevocablyassigns and agrees to quitclaim any and all of Participant’s right, title and interest thereto including, without limitation, any and all copyrights, patents, tradesecrets, trademarks and/or other rights of whatsoever nature therein, whether or not now or hereafter known, existing, contemplated, recognized or developedto the Company, and the Company shall have the right to use the same in perpetuity throughout the universe in any manner the Company determines withoutany further payment to Participant whatsoever. Participant shall, from time to time, as may be reasonably requested by the Company, at the Company’sexpense, do any and all things which the Company may deem useful or desirable to establish or document the Company’s exclusive ownership of any and allrights in any such results and proceeds, including, without limitation, the execution of appropriate copyright and/or patent applications or assignments. Tothe extent Participant has any rights in the results and proceeds of Participant’s services that cannot be assigned in the manner described above, Participantunconditionally and irrevocably waives the enforcement of such rights. Notwithstanding anything to the contrary set forth herein, works developed by theParticipant (i) which are developed independently from the work developed for the Company regardless of whether such work was developed before or afterthe Participant performed services for the Company; or (ii) applications independently developed which are unrelated to the business and which Participantdevelops during non-business hours using non-business property shall not be deemed work for hire and shall not be the exclusive property of the Company.(f)Non-Competition.(i)During the time in which Participant performs services for the Company and for a period of twenty-four (24) months after thecessation of Participant’s service to the Company, regardless of the reason, Participant shall not, directly or indirectly, either alone or in conjunction with anyperson, firm, association, company or corporation, within the Restricted Area, own, manage, operate, or participate in the ownership, management, operation,or control of, or be employed by or provide services to, a “Competing Business”. For the purposes of this Agreement, the term “Competing Business” shallmean any entity or business: (1) engaged in the business of offering finance-related services to health care systems and hospitals, including, but not limitedto, the collection of medical debt, hospital billings and revenue management; or (2) engaged in any other business or5activity in which the Company has been engaged prior to the date hereof or in which the Company is engaged during the term of the Participant’semployment.(ii)Notwithstanding anything to the contrary, nothing in this paragraph (f) prohibits Participant from being a passive owner of notmore than one percent (1%) of the outstanding stock of any class of a corporation which is publicly traded, so long as Participant has no active participationin the business of such corporation.(g)Acknowledgments. The Participant acknowledges and agrees that the restrictions contained in this Agreement with respect to time,geographical area and scope of activity are reasonable and do not impose a greater restraint than is necessary to protect the goodwill and other legitimatebusiness interests of the Company and that the Participant has had the opportunity to review the provisions of this Agreement with his legal counsel.(h)Enforcement. The Participant agrees that the restrictions contained in this Agreement are necessary for the protection of the business, theConfidential Information, customer relationships and goodwill of the Company and are considered by the Participant to be reasonable for that purpose andthat the scope of restricted activities, the geographic scope and the duration of the restrictions set forth in this Agreement are considered by the Participant tobe reasonable. The Participant further agrees that any breach of any of the restrictive covenants in this Agreement would cause the Company substantial,continuing and irrevocable harm for which money damages would be inadequate and therefore, in the event of any such breach or any threatened breach, inaddition to such other remedies as may be available, the Company shall be entitled to specific performance and injunctive relief. This Agreement shall not inany way limit the remedies in law or equity otherwise available to the Company or its Affiliates. The Participant further agrees that to the extent anyprovision or portion of the restrictive covenants of this Agreement shall be held, found or deemed to be unreasonable, unlawful or unenforceable by a court ofcompetent jurisdiction, then any such provision or portion thereof shall be deemed to be modified to the extent necessary in order that any such provision orportion thereof shall be legally enforceable to the fullest extent permitted by applicable law. Without limitation to any other remedies available hereunder orat law, in the event of any breach of any of the restrictive covenants in this Agreement by the Participant, the Participant agrees that any vested shares ofRestricted Stock issued by the Company to the Participant pursuant to this Agreement shall be forfeited for no consideration. In the event that the Participantsold the shares issued to the Participant pursuant to this Agreement, then the Participant shall be required to pay to the Company in cash, within thirty (30)days of a request by the Company for such payment, the price at which the Participant sold the Shares.(i)Severability; Modification. It is expressly agreed by Participant that:(i)Modification. If, at the time of enforcement of this Agreement, a court holds that the duration, geographical area or scope ofactivity restrictions stated herein are unreasonable under circumstances then existing or impose a greater restraint than is necessary to protect the goodwilland other business interests of the Company, Participant agrees that the maximum duration, scope or area reasonable under such circumstances will besubstituted for the stated duration, scope or area and that the court will be allowed to revise the restrictions contained herein to cover the maximum duration,scope and area permitted by law, in all cases giving effect to the intent of the parties that the restrictions contained herein be given effect to the broadestextent possible.(ii)Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective andvalid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under applicable law, suchinvalidity, illegality or unenforceability will not affect any other provision, but this Agreement will be reformed, construed and enforced as if such invalid,illegal or unenforceable provision had never been contained herein.(iii)Non-Disparagement. Participant understands and agrees that Participant will not disparage the Company, its officers, directors,administrators, representatives, employees, contractors, consultants or customers and will not engage in any communications or other conduct which mightinterfere with the relationship between the Company and its current, former, or prospective employees, contractors, consultants, customers, suppliers,regulatory entities, and/or any other persons or entities.6(j)Definitions.(i)Affiliate. “Affiliate” means any entity controlling or controlled by or under common control with the Company or anotherAffiliate, at the time of execution of the Agreement and any time thereafter, where “control” is defined as the ownership of at least fifty percent (50%) of theequity or beneficial interest of such entity, and any other entity with respect to which the Company has significant management or operational responsibility(even though the Company may own less than fifty percent (50%) of the equity of such entity).(ii)Cause. “Cause” shall have the meaning set forth in the Offer Letter.(iii)Confidential Information. “Confidential Information” as used in this Agreement shall include the Company’s trade secrets asdefined under Illinois law, as well as any other information or material which is not generally known to the public, and which:a)is generated, collected by or utilized in the operations of the Company’s business and relates to the actual or anticipatedbusiness, research or development of the Company; orb)is suggested by or results from any task assigned to Participant by the Company or work performed by Participant for oron behalf of the Company.Confidential Information shall not be considered generally known to the public if Participant or others improperly reveal such information to the publicwithout the Company’s express written consent and/or in violation of an obligation of confidentiality to the Company. Examples of ConfidentialInformation include, but are not limited to, all customer, client, supplier and vendor lists, budget information, contents of any database, contracts, productdesigns, technical know-how, engineering data, pricing and cost information, research and development work, software, business plans, proprietary data,projections, market research, perceptual studies, strategic plans, marketing information, financial information (including financial statements), salesinformation, training manuals, employee lists and compensation of employees, and all other competitively sensitive information with respect to theCompany, whether or not it is in tangible form, and including, without limitation, any of the foregoing contained or described on paper or in computersoftware or other storage devices, as the same may exist from time to time.(iv)Disability. “Disability” shall have the meaning set forth in the Offer Letter.(v)Good Reason. “Good Reason” shall have the meaning set forth in the Offer Letter.(vi)Offer Letter. “Offer Letter” means that certain offer letter entered into by and between the Participant and the Company datedApril 27, 2013 and as amended on April 29, 2014.(vii)Restricted Area. For purposes of this Agreement, the term “Restricted Area” shall mean the United States of America.10.Miscellaneous.(a)Authority of Compensation Committee. In making any decisions or taking any actions with respect to the matters covered by thisAgreement, the Compensation Committee shall have all of the authority and discretion, and shall be subject to all of the protections, provided for in the Plan.All decisions and actions by the Compensation Committee with respect to this Agreement shall be made in the Compensation Committee’s discretion andshall be final and binding on the Participant.(b)No Right to Continued Service. The Participant acknowledges and agrees that, notwithstanding the fact that the vesting of the RestrictedStock is contingent upon his continued service to the Company, this Agreement does not constitute an express or implied promise of continued servicerelationship with the Participant or confer upon the Participant any rights with respect to a continued service relationship with the Company.7(c)Governing Law. This Agreement shall be construed, interpreted and enforced in accordance with the internal laws of the State ofDelaware without regard to any applicable conflicts of laws provisions.(d)Exclusive Jurisdiction/Venue. All disputes that arise from or relate to this Agreement shall be decided exclusively by binding arbitrationin Cook County, Illinois under the Commercial Arbitration Rules of the American Arbitration Association. The parties agree that the arbitrator’s award shallbe final, and may be filed with and enforced as a final judgment by any court of competent jurisdiction. Notwithstanding the foregoing, any disputes relatedto the enforcement of the restrictive covenants contained in Section 9 of this Agreement shall be subject to and determined under Delaware law andadjudicated in Illinois courts.(e)Company Representations. The Company acknowledges that, for the avoidance of doubt, this Agreement shall not supersede any rightsthe Participant may have under the Offer Letter as in existence prior to the execution of this Agreement with respect to any termination of employmentprotections set forth in Sections 8 and 9 of the Offer Letter.(f)Participant Representations. The Participant hereby acknowledges, represents and warrants the following: (a) the Participant is an“accredited investor” within the meaning of Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended, and is an experiencedand sophisticated investor and has such knowledge and experience in financial and business matters as are necessary to evaluate the merits and risks of aninvestment in the Company, (b) the Participant has been advised that the Participant may be an “affiliate” within the meaning of Rule 144 under theSecurities Act of 1933, as amended, and may be subject to the limitations of Rule 144, (c) the Participant has no intention of offering or selling any of theshares of Restricted Stock issued hereunder in a transaction that would violate the Securities Act of 1933, as amended, or the securities laws of any state of theUnited States of America or any other applicable jurisdiction, (d) the Participant has been furnished with, and has had access to, such information as theParticipant considers necessary or appropriate for deciding whether to accept the grant of the shares of Restricted Stock hereunder, and the Participant has hadan opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the issuance of such shares of Restricted Stock,and (e) the Participant is able, without impairing the Participant’s financial condition, to hold the shares of Restricted Stock to be issued hereunder for anindefinite period and to suffer a complete loss of the Participant’s investment in such shares of Restricted Stock.The Participant hereby acknowledges that he has read this Agreement, has received and read the Plan, and understand and agree to comply with theterms and conditions of this Agreement and the Plan.PARTICIPANT ACCEPTANCE Dated: December 31, 2015 /s/ Joseph Flanagan Joseph Flanagan8Execution VersionEXHIBIT AELECTION TO INCLUDE VALUE OF PROPERTY IN GROSSINCOME PURSUANT TO SECTION 83(b) OF THEINTERNAL REVENUE CODEOn December 31, 2015 (the “Issue Date”), the undersigned was issued shares of common stock (collectively, the “Shares”) of Accretive Health, Inc.(the “Company”). The Shares are subject to a substantial risk of forfeiture that may not be avoided by a transfer of the Shares to another person. Theundersigned desires to make an election to have the Shares taxed under the provisions of Section 83(b) of the Code.Therefore, pursuant to Section 83(b) of the Code and Treasury Regulation §1.83-2 promulgated thereunder, the undersigned hereby makes anelection, with respect to the Shares (described below), to report as taxable income for the calendar year 2015 the excess (if any) of the fair market value of theShares on the Issue Date over the purchase price thereof.The following information is supplied in accordance with Treasury Regulation §1.83‑2(e):1.The name, address and social security number of the undersigned is as follows:Joseph Flanagan Social Security No.: 2.A description of the property with respect to which the election is being made: [ ] shares of common stock of Accretive Health, Inc., par value $0.01.3.The date on which the property was transferred: December 31, 2015. The taxable year for which the election is made: calendar year 2015.4.The restrictions to which the property is subject: Time-based vesting restrictions.5.The fair market value on the Issue Date of the property with respect to which the election is being made, determined without regard to any lapserestrictions: $[ ] per share.6.The amount paid for such property: zero ($0).7.A copy of this election has been furnished to the Company and each other person to whom a copy is required to be furnished pursuant to TreasuryRegulation 1.83‑2(d).Signature: Dated: 9Exhibit 10.49Execution Version Accretive Health, Inc.Restricted Stock Award AgreementRECITALSWHEREAS, TowerBrook Capital Partners, L.P. (“TowerBrook”) and Ascension Health Alliance d/b/a Ascension (“Ascension Health”) have entered into anagreement, dated December 7, 2015, with the Company with respect to a transaction in which an entity to be formed by TowerBrook and Ascension Health(the “Investor”) will make a cash investment in the Company in exchange for shares of convertible preferred stock of the Company (the “Investment” and theagreement through which the Investment is effected, the “SPA”);WHEREAS, in connection with the proposed Investment, the Company and the Participant entered into that certain letter agreement dated December 2,2015, 2015 (the “Letter Agreement”), pursuant to which the Company committed to grant the Participant this Restricted Stock Award subject to thecompletion of the Investment; andWHEREAS, the Company desires to fulfill its obligation to the Participant under the Letter Agreement.GENERAL TERMS AND CONDITIONSThis Restricted Stock Award is granted to the Participant under the Amended and Restated Accretive Health, Inc. 2010 Stock Incentive Plan (the “Plan”).Terms that are not defined herein shall have the meaning ascribed to such terms under the Plan (except as otherwise expressly provided herein).For valuable consideration, receipt of which is acknowledged, the parties hereto agree as follows:1.Issuance of Restricted Shares.(a)In consideration of services rendered and to be rendered to the Company by the Participant, the Company has granted to the Participanton December 31, 2015 (the “Grant Date”), subject to the terms and conditions set forth in this Restricted Stock Award Agreement (this “Agreement”) and thePlan, an award of 1,500,000 restricted shares of common stock, $0.01 par value per share, of the Company (the “Restricted Stock”).(b)The Restricted Stock will initially be issued by the Company in book entry form only, in the name of the Participant. Following thevesting of any Restricted Stock pursuant to Section 2 below, the Company shall, if requested by the Participant, issue and deliver to the Participant acertificate representing the vested shares of Restricted Stock. The Participant agrees that the Restricted Stock shall be subject to the forfeiture provisions setforth in Section 3 of this Agreement and the restrictions on transfer set forth in Section 4 of this Agreement.2.Vesting.(a)General. Subject to the provisions of Sections 2(b) and 8 hereof, so long as the Participant is employed by the Company, the shares ofRestricted Stock subject to this award shall become vested as follows:(i)Initial Vesting Tranche. One-third (1/3rd) of the shares of Restricted Stock subject to this award shall become vested on the first(1st) anniversary of the “Closing Date” of the Investment (as defined in the SPA), subject to the Participant’s continued employment with the Companythrough such vesting date.1(ii)Second Vesting Tranche. One-third (1/3rd) of the shares of Restricted Stock subject to this award shall become vested on thesecond (2nd) anniversary of the Closing Date, subject to the Participant’s continued employment with the Company through such vesting date.(iii)Third Vesting Tranche. One-third (1/3rd) of the shares of Restricted Stock subject to this award shall become vested on the third(3rd) anniversary of the Closing Date, subject to the Participant’s continued employment with the Company through such vesting date.(iv)Any fractional shares resulting from the application of the vesting provisions contained in this Section 2 shall be roundeddown to the nearest whole number of shares.(b)Termination by the Company Without Cause, Resignation by the Participant For Good Reason, or Upon Death or Disability.Notwithstanding the provisions of Section 2(a) hereof, in the event of the Participant’s termination of employment by the Company without “Cause” or bythe Participant for “Good Reason”, or due to the Participant’s death or “Disability”, any unvested portion of the Restricted Stock shall become fully vested asof the date of such termination.3.Forfeiture of Unvested Restricted Stock Upon Cessation of Service or Failure to Consummate the Investment.Except as otherwise expressly provided in Section 2 hereof, in the event that the Participant ceases to perform services to the Company for anyreason or no reason, with or without cause, all of the shares of Restricted Stock that are unvested as of the time of such cessation shall be forfeitedimmediately and automatically to the Company, without the payment of any consideration to the Participant, effective as of such cessation. The Participantshall have no further rights with respect to any shares of Restricted Stock that are so forfeited. If the Participant provides services to a subsidiary of theCompany, any references in this Agreement to provision of services to the Company shall instead be deemed to refer to service with such subsidiary. If, forany reason, the Investment is not ultimately consummated, this Agreement and the Restricted Stock granted hereunder, shall automatically be cancelled andforfeited for no consideration. In addition, the Participant, in his sole discretion shall have the right to forfeit all or any portion of the Restricted Stock prior tothe applicable vesting date for such Restricted Stock.4.Restrictions on Transfer.The Participant shall not sell, assign, transfer, pledge, hypothecate or otherwise dispose of, by operation of law or otherwise (collectively “transfer”)any shares of Restricted Stock, or any interest therein, until such shares of Restricted Stock have vested, except that the Participant may transfer such shares ofRestricted Stock: (a) to or for the benefit of any spouse, children, parents, uncles, aunts, siblings, grandchildren and any other relatives approved by theCompensation Committee (collectively, “Approved Relatives”) or to a trust established solely for the benefit of the Participant and/or Approved Relatives,provided that such Restricted Stock shall remain subject to this Agreement (including, without limitation, the forfeiture provisions set forth in Section 3hereof and the restrictions on transfer set forth in this Section 4) and the Plan, and such permitted transferee shall, as a condition to such transfer, deliver to theCompany a written instrument confirming that such transferee shall be bound by all of the terms and conditions of this Agreement; or (b) as part of the sale ofall or substantially all of the shares of capital stock of the Company (including pursuant to a merger or consolidation). The Company shall not be required (i)to transfer on its books any of the shares of Restricted Stock which have been transferred in violation of any of the provisions of this Agreement, or (ii) to treatas owner of such shares of Restricted Stock or to pay dividends to any transferee to whom such shares of Restricted Stock have been transferred in violation ofany of the provisions of this Agreement.5.Restrictive Legends.The book entry account reflecting the issuance of the shares of Restricted Stock in the name of the Participant shall bear a legend or other notationupon substantially the following terms:2“These shares of stock are subject to forfeiture provisions and restrictions on transfer set forth in a certain Restricted Stock Award Agreementbetween the corporation and the registered owner of these shares (or his predecessor in interest), and such Agreement is available for inspection withoutcharge at the office of the Secretary of the corporation.”6.Rights as a Shareholder.Except as otherwise provided in this Agreement, for so long as the Participant is the registered owner of the Restricted Stock, the Participant shallhave all rights as a shareholder with respect to the Restricted Stock, whether vested or unvested, including, without limitation, rights to vote the RestrictedStock and act in respect of the Restricted Stock at any meeting of shareholders; provided, however, that the payment of dividends on unvested RestrictedStock shall be deferred until after such shares vest and shall be paid to the Participant within thirty (30) days following the applicable vesting date of suchshares of Restricted Stock.7.Provisions of the Plan.This Agreement is subject to the provisions of the Plan, a copy of which is furnished to the Participant with this Agreement.8.Tax Matters.(a)Acknowledgments. The Participant acknowledges that he is responsible for obtaining the advice of the Participant’s own tax advisorswith respect to the acquisition of the Restricted Stock and the Participant is relying solely on such advisors and not on any statements or representations ofthe Company or any of its agents with respect to the tax consequences relating to the Restricted Stock. The Participant understands that the Participant (andnot the Company) shall be responsible for the Participant’s tax liability that may arise in connection with the acquisition, vesting and/or disposition of theRestricted Stock.(b)Withholding. The Participant acknowledges and agrees that the Company has the right to deduct from payments of any kind otherwisedue to the Participant any federal, state, local or other taxes of any kind required by law to be withheld with respect to the vesting of the shares of RestrictedStock. On each date on which shares of Restricted Stock vest, the Company shall deliver written notice to the Participant of the amount of withholding taxesdue with respect to the vesting of the shares of Restricted Stock that vest on such date; provided, however, that the total tax withholding cannot exceed theCompany’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payrolltaxes, that are applicable to such supplemental taxable income). The Participant shall satisfy such tax withholding obligations by transferring to theCompany, on each date on which shares of Restricted Stock vest under this Agreement, such number of shares of Restricted Stock that vest on such date ashave a fair market value (calculated using the last reported sale price of the common stock of the Company on the New York Stock Exchange (or if not thentraded on such exchange, on the principal national securities exchange in the United States on which it is then traded) on the trading date immediately priorto such vesting date) equal to the amount of the Company’s tax withholding obligation in connection with the vesting of such Restricted Stock (suchwithholding method a “Surrender”) unless, prior to any vesting date, (x) the Compensation Committee determines that a Surrender shall not be available tothe Participant or (y) the Participant elects to forego a Surrender, in which case, the Participant shall be required to satisfy his tax obligations hereunder in amanner permitted by the Plan upon the relevant vesting date; provided, however, that, notwithstanding the foregoing, in the event that a vesting date occursduring a “blackout period” during which the Participant is prohibited from selling shares of Company common stock, the Compensation Committee shall,unless prohibited by law, securities or exchange regulations, make a Surrender available to the Participant.(c)Section 83(b) Election. The Participant acknowledges (i) that he has been informed of the availability of making an election underSection 83(b) of the Internal Revenue Code, as amended, with respect to the issuance of the Restricted Stock (a “Section 83(b) Election”) and (ii) that, to theextent the Participant chooses to make a Section 83(b) Election, he may make such Section 83(b) Election with respect to all or a portion of the3Restricted Stock. The Company acknowledges (i) that the Participant’s choice to make (or not make) a Section 83(b) Election is a voluntary choice by theParticipant and (ii) the Participant is under no duty (fiduciary, contractual or otherwise) to the Company to make such Section 83(b) Election. For theavoidance of doubt, the Participant shall, consistent with the terms and conditions of the Plan and Section 8(b) of this Agreement, be responsible forsatisfying any and all of the Participant’s tax liabilities in connection with any Section 83(b) Election the Participant chooses to make.(d)Section 280G. If the Participant’s receipt of (or vesting in) the Restricted Stock, along with the aggregate amount of any other paymentsor benefits that could be paid, provided, or delivered to the Participant by the Company or its affiliates are considered “parachute payments” (as defined inSection 280G of the Code) (such payments and benefits, the “Parachute Payments”), then the aggregate amount of Parachute Payments to which theParticipant will be entitled will equal the amount that produces the greatest after-tax benefit to the Participant after taking into account any excise taxpayable by the Participant under Section 4999 of the Code (the “Excise Tax”). The Participant acknowledges and agrees that application of this Section 8(d)will reduce the amount of Parachute Payments otherwise payable to the Participant, only if doing so would place the Participant in a better net after-taxeconomic position as compared with not doing so (taking into account the Excise Tax payable in respect of such Parachute Payments). In such event, theCompany will reduce or eliminate the Parachute Payments by first reducing or eliminating the portion of the Parachute Payments that are payable in cash andthen by reducing or eliminating the non-cash portion of the Parachute Payments, in each case, in reverse order beginning with payments or benefits that are tobe paid the furthest in the future. All determinations to be made under this Section 8(d) will be made, at the Company’s expense, by a nationally recognizedcertified public accounting firm selected by the Company.9.Restrictive Covenants.(a)General. This award represents a substantial economic benefit to the Participant. The Participant, by virtue of such Participant’s role withthe Company, has access to, and is involved in the formulation of, certain confidential and secret information of the Company regarding its operations andeach Participant could materially harm the business of the Company by competing with the Company or soliciting employees or customers of the Company.(b)Non-Solicitation. During the time in which Participant performs services for the Company and for a period of twenty-four (24) monthsafter the Participant ceases to perform services for the Company, regardless of the reason, Participant shall not, directly or indirectly, either alone or inconjunction with any person, firm, association, company or corporation:(i)Hire, recruit, solicit or otherwise attempt to employ or retain or enter into any business relationship with, any person who is orwas an employee of the Company within the twelve (12)-month period immediately preceding the cessation of Participant’s service with the Company; or(ii)Solicit the sale of any products or services that are similar to or competitive with products or services offered by, manufacturedby, designed by, or distributed by the Company, to any person, company or entity which was or is a customer or potential customer of the Company for suchproducts or services.(iii)For the avoidance of doubt, the Participant shall not be considered to have solicited away any business or customer of theCompany if that business or customer contacts the Participant without any solicitation by the Participant or any other person who is acting in concert with, orat the direction of, the Participant. Further, for the avoidance of doubt, the Participant shall not be considered to have solicited, diverted or taken away anyemployee of the Company if that employee contacts the Participant without any solicitation by the Participant or any other person who is acting in concertwith, or at the direction of, the Participant, it being the parties’ intention that the Participant will not be prohibited from accepting solicitations from anyemployee when neither the Participant nor any other person acting in concert with, or at the direction of, the Participant contacted or otherwise solicited theemployee, provided that the foregoing shall in no way limit the application of the restriction on hiring employees contemplated by Section 9(b)(i) hereof.4(c)Non-Disclosure.(i)Participant will not, without the Company’s prior written permission, directly or indirectly, utilize for any purpose other than fora legitimate business purpose solely on behalf of the Company, or directly or indirectly, disclose to anyone outside of the Company, either during or afterParticipant’s relationship with the Company ends, the Company’s Confidential Information, as long as such matters remain Confidential Information.(ii)This Agreement shall not prevent Participant from revealing evidence of criminal wrongdoing to law enforcement or prohibitParticipant from divulging the Company’s Confidential Information by order of a court or agency of competent jurisdiction. However, Participant shallpromptly inform the Company of any such situations and shall take such reasonable steps to prevent disclosure of the Company’s Confidential Informationuntil the Company has been informed of such requested disclosure and the Company has had an opportunity to respond to the court or agency.(d)Return of Company Property. Participant agrees that, in the event that Participant’s service to the Company is terminated for any reason,Participant shall immediately return all of the Company’s property, including, without limitation, (i) tools, pagers, computers, printers, key cards, documentsor other tangible property of the Company, and (ii) the Company’s Confidential Information in any media, including paper or electronic form, and Participantshall not retain in Participant’s possession any copies of such information.(e)Ownership of Software and Inventions. All discoveries, designs, improvements, ideas, inventions, software, whether patentable orcopyrightable or not, shall be works-made-for-hire and the Company shall be deemed the sole owner throughout the universe of any and all rights ofwhatsoever nature therein, with the rights to use the same in perpetuity in any manner the Company determines in its sole discretion without any furtherpayment after the term of this Agreement to Participant whatsoever. If, for any reason, any of such results and proceeds which relate to the business shall notlegally be a work-for-hire and/or there are any rights which do not accrue to the Company under the preceding sentence, then Participant hereby irrevocablyassigns and agrees to quitclaim any and all of Participant’s right, title and interest thereto including, without limitation, any and all copyrights, patents, tradesecrets, trademarks and/or other rights of whatsoever nature therein, whether or not now or hereafter known, existing, contemplated, recognized or developedto the Company, and the Company shall have the right to use the same in perpetuity throughout the universe in any manner the Company determines withoutany further payment to Participant whatsoever. Participant shall, from time to time, as may be reasonably requested by the Company, at the Company’sexpense, do any and all things which the Company may deem useful or desirable to establish or document the Company’s exclusive ownership of any and allrights in any such results and proceeds, including, without limitation, the execution of appropriate copyright and/or patent applications or assignments. Tothe extent Participant has any rights in the results and proceeds of Participant’s services that cannot be assigned in the manner described above, Participantunconditionally and irrevocably waives the enforcement of such rights. Notwithstanding anything to the contrary set forth herein, works developed by theParticipant (i) which are developed independently from the work developed for the Company regardless of whether such work was developed before or afterthe Participant performed services for the Company; or (ii) applications independently developed which are unrelated to the business and which Participantdevelops during non-business hours using non-business property shall not be deemed work for hire and shall not be the exclusive property of the Company.(f)Non-Competition.(i)During the time in which Participant performs services for the Company and for a period of twenty-four (24) months after thecessation of Participant’s service to the Company, regardless of the reason, Participant shall not, directly or indirectly, either alone or in conjunction with anyperson, firm, association, company or corporation, within the Restricted Area, own, manage, operate, or participate in the ownership, management, operation,or control of, or be employed by or provide services to, a “Competing Business”. For the purposes of this Agreement, the term “Competing Business” shallmean any entity or business: (1) engaged in the business of offering finance-related services to health care systems and hospitals, including, but not limitedto, the collection of medical debt, hospital billings and revenue management; or (2) engaged in any other business or5activity in which the Company has been engaged prior to the date hereof or in which the Company is engaged during the term of the Participant’semployment.(ii)Notwithstanding anything to the contrary, nothing in this paragraph (f) prohibits Participant from being a passive owner of notmore than one percent (1%) of the outstanding stock of any class of a corporation which is publicly traded, so long as Participant has no active participationin the business of such corporation.(g)Acknowledgments. The Participant acknowledges and agrees that the restrictions contained in this Agreement with respect to time,geographical area and scope of activity are reasonable and do not impose a greater restraint than is necessary to protect the goodwill and other legitimatebusiness interests of the Company and that the Participant has had the opportunity to review the provisions of this Agreement with his legal counsel.(h)Enforcement. The Participant agrees that the restrictions contained in this Agreement are necessary for the protection of the business, theConfidential Information, customer relationships and goodwill of the Company and are considered by the Participant to be reasonable for that purpose andthat the scope of restricted activities, the geographic scope and the duration of the restrictions set forth in this Agreement are considered by the Participant tobe reasonable. The Participant further agrees that any breach of any of the restrictive covenants in this Agreement would cause the Company substantial,continuing and irrevocable harm for which money damages would be inadequate and therefore, in the event of any such breach or any threatened breach, inaddition to such other remedies as may be available, the Company shall be entitled to specific performance and injunctive relief. This Agreement shall not inany way limit the remedies in law or equity otherwise available to the Company or its Affiliates. The Participant further agrees that to the extent anyprovision or portion of the restrictive covenants of this Agreement shall be held, found or deemed to be unreasonable, unlawful or unenforceable by a court ofcompetent jurisdiction, then any such provision or portion thereof shall be deemed to be modified to the extent necessary in order that any such provision orportion thereof shall be legally enforceable to the fullest extent permitted by applicable law. Without limitation to any other remedies available hereunder orat law, in the event of any breach of any of the restrictive covenants in this Agreement by the Participant, the Participant agrees that any vested shares ofRestricted Stock issued by the Company to the Participant pursuant to this Agreement shall be forfeited for no consideration. In the event that the Participantsold the shares issued to the Participant pursuant to this Agreement, then the Participant shall be required to pay to the Company in cash, within thirty (30)days of a request by the Company for such payment, the price at which the Participant sold the Shares.(i)Severability; Modification. It is expressly agreed by Participant that:(i)Modification. If, at the time of enforcement of this Agreement, a court holds that the duration, geographical area or scope ofactivity restrictions stated herein are unreasonable under circumstances then existing or impose a greater restraint than is necessary to protect the goodwilland other business interests of the Company, Participant agrees that the maximum duration, scope or area reasonable under such circumstances will besubstituted for the stated duration, scope or area and that the court will be allowed to revise the restrictions contained herein to cover the maximum duration,scope and area permitted by law, in all cases giving effect to the intent of the parties that the restrictions contained herein be given effect to the broadestextent possible.(ii)Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective andvalid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under applicable law, suchinvalidity, illegality or unenforceability will not affect any other provision, but this Agreement will be reformed, construed and enforced as if such invalid,illegal or unenforceable provision had never been contained herein.(iii)Non-Disparagement. Participant understands and agrees that Participant will not disparage the Company, its officers, directors,administrators, representatives, employees, contractors, consultants or customers and will not engage in any communications or other conduct which mightinterfere with the relationship between the Company and its current, former, or prospective employees, contractors, consultants, customers, suppliers,regulatory entities, and/or any other persons or entities.6(j)Definitions.(i)Affiliate. “Affiliate” means any entity controlling or controlled by or under common control with the Company or anotherAffiliate, at the time of execution of the Agreement and any time thereafter, where “control” is defined as the ownership of at least fifty percent (50%) of theequity or beneficial interest of such entity, and any other entity with respect to which the Company has significant management or operational responsibility(even though the Company may own less than fifty percent (50%) of the equity of such entity).(ii)Cause. “Cause” shall have the meaning set forth in the Offer Letter.(iii)Confidential Information. “Confidential Information” as used in this Agreement shall include the Company’s trade secrets asdefined under Illinois law, as well as any other information or material which is not generally known to the public, and which:a)is generated, collected by or utilized in the operations of the Company’s business and relates to the actual or anticipatedbusiness, research or development of the Company; orb)is suggested by or results from any task assigned to Participant by the Company or work performed by Participant for oron behalf of the Company.Confidential Information shall not be considered generally known to the public if Participant or others improperly reveal such information to the publicwithout the Company’s express written consent and/or in violation of an obligation of confidentiality to the Company. Examples of ConfidentialInformation include, but are not limited to, all customer, client, supplier and vendor lists, budget information, contents of any database, contracts, productdesigns, technical know-how, engineering data, pricing and cost information, research and development work, software, business plans, proprietary data,projections, market research, perceptual studies, strategic plans, marketing information, financial information (including financial statements), salesinformation, training manuals, employee lists and compensation of employees, and all other competitively sensitive information with respect to theCompany, whether or not it is in tangible form, and including, without limitation, any of the foregoing contained or described on paper or in computersoftware or other storage devices, as the same may exist from time to time.(iv)Disability. “Disability” shall have the meaning set forth in the Offer Letter.(v)Good Reason. “Good Reason” shall have the meaning set forth in the Offer Letter.(vi)Offer Letter. “Offer Letter” means that certain offer letter by and between the Participant and the Company dated July 10, 2014.(vii)Restricted Area. For purposes of this Agreement, the term “Restricted Area” shall mean the United States of America.10.Miscellaneous.(a)Authority of Compensation Committee. In making any decisions or taking any actions with respect to the matters covered by thisAgreement, the Compensation Committee shall have all of the authority and discretion, and shall be subject to all of the protections, provided for in the Plan.All decisions and actions by the Compensation Committee with respect to this Agreement shall be made in the Compensation Committee’s discretion andshall be final and binding on the Participant.(b)No Right to Continued Service. The Participant acknowledges and agrees that, notwithstanding the fact that the vesting of the RestrictedStock is contingent upon his continued service to the Company, this Agreement does not constitute an express or implied promise of continued servicerelationship with the Participant or confer upon the Participant any rights with respect to a continued service relationship with the Company.7(c)Governing Law. This Agreement shall be construed, interpreted and enforced in accordance with the internal laws of the State ofDelaware without regard to any applicable conflicts of laws provisions.(d)Exclusive Jurisdiction/Venue. All disputes that arise from or relate to this Agreement shall be decided exclusively by binding arbitrationin Cook County, Illinois under the Commercial Arbitration Rules of the American Arbitration Association. The parties agree that the arbitrator’s award shallbe final, and may be filed with and enforced as a final judgment by any court of competent jurisdiction. Notwithstanding the foregoing, any disputes relatedto the enforcement of the restrictive covenants contained in Section 9 of this Agreement shall be subject to and determined under Delaware law andadjudicated in Illinois courts.(e)Company Representations. The Company acknowledges that, for the avoidance of doubt, this Agreement shall not supersede any rightsthe Participant may have under the Offer Letter as in existence prior to the execution of this Agreement with respect to any termination of employmentprotections set forth in Sections 8 and 9 of the Offer Letter.(f)Participant Representations. The Participant hereby acknowledges, represents and warrants the following: (a) the Participant is an“accredited investor” within the meaning of Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended, and is an experiencedand sophisticated investor and has such knowledge and experience in financial and business matters as are necessary to evaluate the merits and risks of aninvestment in the Company, (b) the Participant has been advised that the Participant may be an “affiliate” within the meaning of Rule 144 under theSecurities Act of 1933, as amended, and may be subject to the limitations of Rule 144, (c) the Participant has no intention of offering or selling any of theshares of Restricted Stock issued hereunder in a transaction that would violate the Securities Act of 1933, as amended, or the securities laws of any state of theUnited States of America or any other applicable jurisdiction, (d) the Participant has been furnished with, and has had access to, such information as theParticipant considers necessary or appropriate for deciding whether to accept the grant of the shares of Restricted Stock hereunder, and the Participant has hadan opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the issuance of such shares of Restricted Stock,and (e) the Participant is able, without impairing the Participant’s financial condition, to hold the shares of Restricted Stock to be issued hereunder for anindefinite period and to suffer a complete loss of the Participant’s investment in such shares of Restricted Stock.The Participant hereby acknowledges that he has read this Agreement, has received and read the Plan, and understand and agree to comply with theterms and conditions of this Agreement and the Plan.PARTICIPANT ACCEPTANCE Dated: December 31, 2015 /s/ Emad Rizk Emad Rizk8Execution VersionEXHIBIT AELECTION TO INCLUDE VALUE OF PROPERTY IN GROSSINCOME PURSUANT TO SECTION 83(b) OF THEINTERNAL REVENUE CODEOn December 31, 2015 (the “Issue Date”), the undersigned was issued shares of common stock (collectively, the “Shares”) of Accretive Health, Inc.(the “Company”). The Shares are subject to a substantial risk of forfeiture that may not be avoided by a transfer of the Shares to another person. Theundersigned desires to make an election to have the Shares taxed under the provisions of Section 83(b) of the Code.Therefore, pursuant to Section 83(b) of the Code and Treasury Regulation §1.83-2 promulgated thereunder, the undersigned hereby makes anelection, with respect to the Shares (described below), to report as taxable income for the calendar year 2015 the excess (if any) of the fair market value of theShares on the Issue Date over the purchase price thereof.The following information is supplied in accordance with Treasury Regulation §1.83‑2(e):1.The name, address and social security number of the undersigned is as follows:Emad Rizk Social Security No.: 2.A description of the property with respect to which the election is being made: [ ] shares of common stock of Accretive Health, Inc., par value $0.01.3.The date on which the property was transferred: December 31, 2015. The taxable year for which the election is made: calendar year 2015.4.The restrictions to which the property is subject: Time-based vesting restrictions.5.The fair market value on the Issue Date of the property with respect to which the election is being made, determined without regard to any lapserestrictions: $[ ] per share.6.The amount paid for such property: zero ($0).7.A copy of this election has been furnished to the Company and each other person to whom a copy is required to be furnished pursuant to TreasuryRegulation 1.83‑2(d).Signature: Dated: 9Exhibit 23.1Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in the following Registration Statements:1.Registration Statement (Form S-8 No. 333-170718) pertaining to the Amended and Restated Stock Option Plan, as amended and the 2010 StockIncentive Plan of Accretive Health, Inc., and2.Registration Statement (Form S-8 No. 333-206482) pertaining to the Amended and Restated 2010 Stock Incentive Plan and Inducement StockOption Awards of Accretive Health, Inc.of our reports dated March 10, 2016, with respect to the consolidated financial statements of Accretive Health, Inc., and the effectiveness of internalcontrol over financial reporting of Accretive Health, Inc., included in this Annual Report (Form 10-K) of Accretive Health, Inc. for the year endedDecember 31, 2015./s/ Ernst & Young LLPChicago, IllinoisMarch 10, 2016Exhibit 31.1Certification 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 of2002I, Emad Rizk, certify that:1. I have reviewed this Annual Report on Form 10-K of Accretive Health, Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrantand have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles;(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recentfiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materiallyaffect, the registrant's internal control over financial reporting; and5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant's ability to record, process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controlover financial reporting.Date: March 10, 2016/s/ Emad Rizk Emad RizkPresident and Chief Executive Officer(Principal Executive Officer)Exhibit 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 of2002I, Peter Csapo, certify that:1. I have reviewed this Annual Report on Form 10-K of Accretive Health, Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrantand have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles;(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recentfiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materiallyaffect, the registrant's internal control over financial reporting; and5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant's ability to record, process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controlover financial reporting.Date: March 10, 2016/s/ Peter Csapo Peter CsapoTreasurer and Chief Financial Officer(Principal Financial Officer)Exhibit 32.1Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of2002In connection with the Annual Report on Form 10-K of Accretive Health, Inc. (the “Company”) for the period ended December 31, 2015 as filed withthe Securities and Exchange Commission on or about the date hereof (the “Report”), the undersigned, Emad Rizk, President and Chief Executive Officer ofthe Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that:1.the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany.Date: March 10, 2016/s/ Emad Rizk Emad RizkPresident and Chief Executive Officer(Principal Executive Officer)Exhibit 32.2Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of2002In connection with the Annual Report on Form 10-K of Accretive Health, Inc. (the “Company”) for the period ended December 31, 2015 as filed withthe Securities and Exchange Commission on or about the date hereof (the “Report”), the undersigned, Peter Csapo, Chief Financial Officer and Treasurer ofthe Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that:1.the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany.Date: March 10, 2016/s/ Peter Csapo Peter CsapoTreasurer and Chief Financial Officer(Principal Financial Officer)

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