R1 RCM May Go Private After $5.8B Private Equity Offer

R1 RCM has received an offer from private equity firm New Mountain Capital that would prompt the revenue cycle management vendor to go private, according to a regulatory filing.

New Mountain Capital has submitted a draft proposal to acquire R1’s outstanding shares not currently owned by investors, Reuters reported. The private equity firm would pay $13.75 per share in cash, equating to about $5.8 billion. It is R1’s second-largest investor, currently owning almost one-third of the company’s shares.

New Mountain Capital made the offer in January, but R1 has requested the private equity firm to “engage in good faith discussions” with TCP-ASC, an investment vehicle jointly owned by Ascension Health Alliance and TowerBrook Capital Partners LP. TowerBrook has about a 30 percent stake in R1, Reuters said.

The filing stated representatives of TCP-ASC and affiliates of New Mountain Capital have met in person and had several discussions over the last several weeks to address valuation and relative capital contribution, transaction sources, potential governance constructs, and opportunities for going private with the company.

Some of R1’s shareholders have gone on record to say New Mountain Capital’s offer “significantly undervalues” the company. The shareholders said the board should either ask for a higher price or reject the firm’s offer and stay public.

The filing said the discussions around going private remain ongoing, and there is no final agreement on the terms of the deal. However, “there is active dialogue to enable alignment.”

R1 is based in Utah and provides technology-driven solutions to improve the patient experience and financial performance of healthcare providers. The vendor recently ranked first in Best in KLAS’ ambulatory revenue cycle management services (EHR-agnostic) category. It also topped the rankings for government reimbursement services and underpayment recovery services.

R1 has more than 1,000 clients across the country, including over 27,000 providers. The vendor manages about 60 million patient and clinician engagements annually.