PE Firms to Acquire Healthtech Company R1 RCM in $8.9 Bn Deal

The transaction is expected to close by the end of this year, with TowerBrook and CD&R planning to fund it through a combination of debt and equity.

US-basedHealthtech company R1 RCM has recently announced that private-equity firms TowerBrook Capital Partners and Clayton, Dubilier & Rice (CD&R) will acquire the healthcare technology company in a deal valued at $8.9 billion.

R1 RCM, a leading provider of technology-driven solutions for healthcare providers, is headquartered in Murray, Utah.

Sharing thoughts, Lee Rivas, CEO, R1 RCM, said, "TowerBrook has been an outstanding long-term investor and partner to R1 RCM and shares our vision of being the automation platform of choice for the provider industry.”

The transaction is expected to close by the end of this year, with TowerBrook and CD&R planning to fund it through a combination of debt and equity.

The Financial Roadmap

The acquisition move follows a previous buyout proposal from New Mountain, R1 RCM's largest shareholder, which valued the company at nearly $6 billion last month.

However, it is not clear if New Mountain, which holds a third of R1 RCM, agreed to the latest deal.

TowerBrook Capital, owning 29.50% of the company's outstanding shares, is the second-largest shareholder according to LSEG data.

Reportedly, the private equity firms will acquire the remaining shares of R1 RCM that TowerBrook does not already own for $14.30 per share, representing an 11% premium to the stock's last closing price.

Following this announcement, R1 RCM's shares rose 9.2% to $14.06 in premarket trading.

R1 RCM provides billing and revenue collection services to hospitals, physician groups, and other healthcare organizations.

Ascension Health, which operates around 180 hospitals and senior living facilities in the United States, is one of R1 RCM's top customers. For 2023, R1 RCM reported a core income of $614.3 million on revenue of $2.25 billion.

A special committee, formed by R1 RCM earlier this year to evaluate strategic alternatives, unanimously approved the deal. This committee includes independent directors of the company.