by
Gus Iversen, Editor in Chief | August 02, 2024
R1 RCM Inc., based in Murray, Utah, has been acquired by private equity firms TowerBrook Capital Partners and Clayton, Dubilier & Rice (CD&R) for approximately $8.9 billion in cash. TowerBrook, which already owns about 36% of R1’s shares, and CD&R will buy out the remaining shares for $14.30 each.
The acquisition price marks a 29% premium over R1’s closing stock price on February 23, 2024, prior to New Mountain Capital’s initial nonbinding acquisition proposal. The deal has received unanimous approval from a special committee of R1’s board of directors, composed solely of independent directors. The committee led the negotiations, advised by independent legal and financial advisors.
“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 R1 CEO Lee Rivas. He emphasized that the agreement reflects confidence in R1's team and its capabilities.
Ian Sacks, managing director at TowerBrook, highlighted the firm’s long-term investment in R1 since 2016. “Together with CD&R, we look forward to continuing to invest in the company’s core operations to drive customer performance and value,” he stated.
Private equity in healthcare has long been under scrutiny. Nearly a quarter of the healthcare companies that declared bankruptcy in 2023, a record year for healthcare bankruptcies,
were owned by private equity firms, according to a new report from a nonprofit financial watchdog group.
A cross-government public inquiry
has been launched into how private equity mergers and acquisitions further consolidation and impact quality of care and outcomes for patients, worker safety, affordable healthcare access, and taxpayers.
Post-acquisition, R1 will become a private entity, delisting from NASDAQ. The transaction is anticipated to close by the end of the year, pending customary closing conditions, including stockholder and regulatory approvals. Financing will involve a combination of committed debt and equity from TowerBrook and CD&R-affiliated investment funds.
