R1 RCM, a provider of technology-driven solutions, has agreed to be acquired by investment funds affiliated with private-equity firms TowerBrook Capital Partners and Clayton, Dubilier & Rice (CD&R) for an enterprise value of around $8.9bn.
An investment vehicle controlled by TowerBrook currently owns about 36% of R1 RCM’s outstanding shares of common stock, including the warrant held by TowerBrook.
According to the terms of the deal, both private equity firms will buy all the remaining common stock for $14.30 per share.
The share offer for R1 RCM stockholders represents a premium of about 29% over the company’s closing price on 23 February 2024, the last trading day before New Mountain Capital publicly announced its proposal.
The latest announcement follows a buyout proposal from New Mountain, R1 RCM’s largest shareholder, received just a month ago.
New Mountain’s offer valued the healthcare technology company at nearly $6bn.
It is currently unclear whether New Mountain, which holds a one-third stake in the company, has agreed to the new deal.
R1 RCM CEO Lee Rivas said: “TowerBrook has been an outstanding long-term investor and partner to R1 and shares our vision of being the automation platform of choice for the provider industry.
“Our agreement reflects TowerBrook’s and CD&R’s confidence in our team and the unmatched scale, technology and value we provide.”
Utah-based R1 RCM provides services for billing and revenue collection that enhance financial performance and patient experience for health systems, hospitals, and physician groups.
Its scalable operating models integrate with healthcare organisations’ infrastructures to deliver rapid and sustainable improvements in revenue and cash flow.
Additionally, the firm’s solutions are intended to boost revenue yield, lower operating costs, and improve the overall patient experience.
TowerBrook managing director Ian Sacks said: “Together with CD&R, we look forward to continuing to invest in the Company’s core operations to drive customer performance and value while also continuing to build R1 as a leader in intelligent automation and in the use of GAI in revenue management.”
Upon completion of the transaction, R1 RCM will become a private company, and its shares will no longer be traded on Nasdaq.
The deal is anticipated to close by the end of the year, pending customary closing conditions such as stockholder and regulatory approvals.
Both the equity firms expect to fund the transaction with a combination of debt and equity.
