BY Fraser Tennant
In a purchase that takes the technology-driven solutions provider private, R1 RCM is to be acquired by investment funds affiliated with TowerBrook Capital Partners and Clayton, Dubilier & Rice (CD&R), in an all-cash transaction valued at approximately $8.9bn.
Under the terms of the definitive agreement, TowerBrook and CD&R will acquire all the outstanding common stock that TowerBrook does not currently own for $14.30 per share. The transaction is expected to be financed with a combination of committed debt financing and equity from investment funds affiliated with TowerBrook and CD&R.
Upon completion of the transaction, Utah-based R1, which provides services for billing and revenue collection to hospitals, physician groups and other healthcare organisations, will become a private company and its shares will no longer trade on Nasdaq.
The acquisition comes a month after R1 had received a buyout proposal from New Mountain, its largest shareholder, that valued the company at nearly $6bn.
“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,” said Lee Rivas, chief executive of R1. “We believe the transaction represents the best path forward for R1 at an attractive valuation to our stockholders that reflects the company’s position as a leading provider of technology-driven solutions for its customers.”
The transaction has been unanimously approved by a special committee of the R1 board of directors comprised solely of independent directors which was formed to evaluate strategic alternatives.
“As a long-term, responsible investor in R1, TowerBrook has supported the development of R1 as a leader in healthcare provider revenue management since 2016,” said Ian Sacks, managing director at TowerBrook. “Together with CD&R, we look forward to continuing to invest in the R1’s core operations to drive customer performance and value while also continuing to build the company as a leader in intelligent automation and in the use of guaranteed annual income in revenue management.”
The transaction is expected to close by the end of 2024, subject to customary closing conditions, including receipt of stockholder approval and regulatory approvals.
Ravi Sachdev, a partner at CD&R, concluded: “R1 is a trusted partner in healthcare technology and automation, and we are excited to work alongside TowerBrook and the talented team at R1 to continue setting the standard for healthcare performance.”
News: Health tech company R1 RCM to be taken private in $8.9 bln deal