R1 RCM has completed its acquisition of Acclara from Providence, initiating a 10-year partnership with the health system for comprehensive revenue cycle services. The deal positions R1 as a trusted partner in revenue cycle management, leveraging advanced technology solutions. The acquisition, along with the partnership with Providence, is expected to contribute over $625 million in revenue and approximately $185 million in Adjusted EBITDA by year five, excluding potential revenue synergies. The transaction was valued at $675 million in cash, with financing through new Term B Loans and existing revolver borrowings.
R1 RCM Inc. (NASDAQ: RCM) (“R1”), a leading provider of technology-driven solutions that transform the patient experience and financial performance of healthcare providers, today announced that it has completed its previously announced acquisition of Acclara from Providence, one of the nation’s largest health systems. In addition, the Company announced that it expects to release financial results for the fourth quarter and full year ended December 31, 2023, and its 2024 outlook and will host a conference call at 8:00 a.m. ET on Tuesday, February 27, 2024, to discuss the results and business outlook.
Upon closing, R1 begins its 10-year partnership with Providence for comprehensive revenue cycle services that leverage the breadth of integrated technology and services capabilities of both R1 and Acclara. Providence is among the top 10 U.S. integrated delivery networks (IDNs), recognized for leadership in developing innovative delivery models and a commitment to technology.
“We are pleased to complete the acquisition of Acclara and enter into our long-term partnership with Providence, and we look forward to the significant value we believe this transaction will create for customers and shareholders. Acclara strengthens our position as the trusted partner of choice in revenue cycle management and extends our ability to deploy advanced technology solutions and drive execution to improve customer and patient outcomes,” said Lee Rivas, chief executive officer of R1. “We warmly welcome the Acclara team to R1 and look forward to new growth opportunities together and to leveraging our technology and automation capabilities across our expanded portfolio.”
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R1 expects the acquisition of Acclara, together with the new partnership with Providence, to contribute more than $625 million in revenue and approximately $185 million to Adjusted EBITDA by year five of the partnership, not including potential revenue synergies.
Transaction Details
Under the terms of the securities purchase agreement governing the terms of the acquisition, R1 acquired Acclara for $675 million in cash and a warrant to purchase up to 12.2 million shares of R1 stock at a strike price of $10.52, subject to a three-year lock-up. R1 financed the cash consideration of the transaction and associated fees and expenses with $575 million in new Term B Loans, and the remainder with borrowings under R1’s existing revolver and cash on hand.
Conference Call
To participate in the conference call on February 27, 2024, please dial 888-330-2022 (646-960-0690 outside the U.S. and Canada) using conference code number 5681952. A live webcast and replay of the call will be available at the Investor Relations section of the Company’s website at ir.r1rcm.com.
Advisors
Centerview Partners LLC and J.P. Morgan acted as financial advisors to R1, and Perkins Coie LLP, Kirkland & Ellis LLP, and Baker Donelson acted as legal counsel. BDT & MSD Partners acted as financial advisor to Providence, and McDermott Will & Emery and ArentFox Schiff LLP acted as legal counsel.
Source: Bio Space