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 entered into a definitive agreement to acquire Acclara,
a leading technology-driven revenue cycle management company, from
Providence, one of the nation's largest health systems; and the
Company has been selected by Providence as its long-term revenue
cycle management partner. The partnership lays the foundation for
R1 to continue to automate revenue management and to extend its
scale and diversification to build long-term value for providers,
patients and shareholders.
Providence serves the western U.S., with 51 hospitals, more than
1,000 physician clinics, senior services, supportive housing, and
many other health and educational services. The health system and
its partners employ more than 120,000 caregivers serving
communities across seven states, including Alaska, California,
Montana, New Mexico, Oregon, Texas and Washington. 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.
As part of the partnership, R1 has entered into a definitive
agreement to acquire the Acclara business for $675 million in cash
and warrants to purchase 12.2 million shares of R1 stock. At the
closing of the acquisition, Acclara and Providence will enter into
a 10-year agreement for comprehensive revenue cycle services,
leveraging the breadth of integrated technology and services
capabilities of R1 to serve Providence. The selection of R1 as
Providence’s RCM partner for R1’s comprehensive solution suite was
the outcome of a competitive process and represents the first major
cross-sell of a strategic partnership from the Cloudmed customer
base, which includes 95 of the top 100 U.S. health systems.
The addition of Acclara strengthens R1’s value proposition as
the trusted partner of choice in comprehensive revenue cycle
management. Acclara delivers cost-effective, innovative solutions
to help healthcare providers across the United States improve the
patient experience, minimize administrative burdens and maintain
regulatory compliance. With a team of experienced professionals and
advanced technology platforms, Acclara supports patients and
providers through streamlined billing and payment processes,
improves financial performance and enhances patient experience.
Acclara’s comprehensive suite of services includes patient access,
coding, billing, denial management, payment posting and analytics
focused on both health systems and physician practices.
“This strategic partnership with Providence demonstrates the
confidence of one of our country’s largest and most innovative
health systems in the full suite of R1’s technology and service
solutions, at a moment when providers need our solutions more than
ever,” said Lee Rivas, chief executive officer of R1. “Providence
is a pioneer of quality and compassionate faith-based care, and we
are proud to work with Providence to be their trusted long-term
partner to drive operational excellence and provide patients with
affordable, high-quality care. We look forward to welcoming Acclara
to R1.”
“Over the past few years, as part of our journey to support our
patient-care mission, we have significantly enhanced our own
revenue cycle management assets and capabilities,” said Providence
Chief Financial Officer Greg Hoffman. “After a careful evaluation,
we are confident that R1 is the right partner to accelerate our
vision, helping Providence ensure a best-in-class, compassionate
revenue cycle experience for our patients. We are also proud of
what the team at Acclara has built and are confident that they are
positioned for continued success as part of R1.”
Strategic and Financial Benefits:
- Positions R1 as the Provider Platform of
Choice: The proposed acquisition of Acclara and 10-year
Providence partnership demonstrate the strength and flexibility of
the R1 business model, and R1’s ability to deploy advanced
technology solutions and drive execution across revenue cycle
management processes to improve customer and patient outcomes. R1
expects the transaction to provide a foundation for additional
growth opportunities by expanding the end-to-end relationship with
Providence and other Acclara customers. In addition, Acclara’s
capabilities will further extend the breadth and scale of R1’s
physician and modular businesses and are anticipated to further
leverage technology and automation capabilities and drive future
innovation fueled by an even larger real-time structured and
unstructured data footprint.
- Strong Financial Profile with Embedded Long-term
Growth: The proposed 10-year agreement between Acclara and
Providence combined with Acclara’s complementary capabilities are
expected to expand R1’s scope of operations and drive revenue and
Adjusted EBITDA growth. The combination of performance solutions
and full-suite contracts is expected 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.
- Significant Cost Synergy
Opportunities: As a result of the acquisition, R1
estimates that it could realize approximately $30
million in run-rate cost synergies by the third year following
the closing and run-rate cost synergies of approximately $50
million by year five.
Transaction Details
Under the terms of the acquisition agreement, R1 will acquire
Acclara for $675 million in cash and warrants to purchase 12.2
million shares of R1 stock at a strike price of $10.52, including a
3-year lock-up.
The transaction, which is expected to be completed in early
2024, is subject to customary closing conditions, including the
receipt of regulatory approvals, as well as the entry of Providence
and Acclara into the 10-year revenue cycle management
agreement.
R1 expects to finance the transaction with a new Term Loan B
issued prior to close as well as its existing revolver.
Conference Call
R1 will host a conference call today at 8:00 a.m. ET to discuss
details of the technology and revenue cycle partnership with
Providence. To participate, please dial 888-330-2478 (240-789-2731
outside the U.S. and Canada) using conference code number 42942. A
live webcast and replay of the call will be available in 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.
About R1 RCMR1 is a leading provider of
technology-driven solutions that transform the patient experience
and financial performance of hospitals, health systems, and medical
groups. R1’s proven and scalable operating models seamlessly
complement a healthcare organization’s infrastructure, quickly
driving sustainable improvements to net patient revenue and cash
flows while reducing operating costs and enhancing the patient
experience. To learn more, visit: r1rcm.com.
About Acclara Acclara, a for-profit subsidiary
of Providence, is dedicated to transforming the healthcare industry
by providing cost-effective, high-quality revenue cycle management
solutions that empower healthcare providers to focus on their
primary mission—patient care. With a workforce of over 2,600
employees spanning all 50 states, Acclara leverages extensive
industry expertise and best practices to assist health systems and
providers in enhancing cash flow, reducing administrative
complexities, and ensuring compliance. For more information about
Acclara, please visit Acclara.com.
About Providence Providence is a national,
not-for-profit Catholic health system comprising a diverse family
of organizations and driven by a belief that health is a human
right. With 51 hospitals, over 1,000 physician clinics, senior
services, supportive housing, and many other health and educational
services, the health system and its partners employ more than
120,000 caregivers serving communities across seven states –
Alaska, California, Montana, New Mexico, Oregon, Texas, and
Washington, with system offices in Renton, Wash., and Irvine,
Calif. Learn about our vision of health for a better world at
Providence.org.
Forward-Looking Statements
This presentation contains “forward-looking statements” made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, as amended, and Section 21E of the
Exchange Act. Forward-looking statements generally relate to future
events and relationships, plans, future growth and future
performance, including, but not limited to, statements about the
expected timing, completion and effects of the acquisition and
related transactions, the Company's strategic initiatives, the
Company's capital plans, the Company's costs, the Company's ability
to successfully implement new technologies, the Company's future
financial and operational performance and the Company's liquidity.
These statements are often identified by the use of words such as
“anticipate,” “believe,” “contemplate,” “designed,” “estimate,”
“expect,” “forecast,” “goal,” “intend,” “may,” “outlook,” “plan,”
“predict,” “project,” “see,” “seek,” “target,” “would,” "should"
and similar expressions or variations or negatives of these words,
although not all forward-looking statements contain these
identifying words. These statements are based on various
assumptions, whether or not identified in this presentation, and on
the current expectations of the Company's and Providence's
management and are not predictions of actual performance.
These forward-looking statements are provided for illustrative
purposes only and are not intended to serve as, and must not be
relied on by any investor as, a guarantee, assurance, prediction or
definitive statement of fact or probability. Actual outcomes and
results may differ materially from those contemplated by these
forward-looking statements as a result of uncertainties, risks and
changes in circumstances, including but not limited to risks and
uncertainties related to: (i) the ability of the parties to
consummate the acquisition and related transactions in a timely
manner or at all; (ii) satisfaction of the conditions precedent to
the consummation of the acquisition and related transactions,
including the receipt of required regulatory approvals; (iii) the
Company's ability to timely and successfully achieve the
anticipated benefits and potential synergies of the acquisition and
related transactions; (iv) the Company's failure to promptly
restate the financial statements for non-reliance periods and file
the required reports with the Securities and Exchange Commission
(the “SEC”); and (v) the impact of the restatements of the
financial statements for non-reliance periods, and the listing
deficiency notice from Nasdaq, on the price of the Company's common
stock, reputation and relationships with investors, suppliers,
customers, employees and other parties. Additional risks and
uncertainties that could cause actual outcomes and results to
differ materially from those contemplated by the forward-looking
statements are included under the heading “Risk Factors” in the
Company's annual report on Form 10-K/A for the year ended December
31, 2022, quarterly reports on Form 10-Q and any other periodic
reports that the Company may file with the SEC. The foregoing list
of factors is not exhaustive.
All forward-looking statements included herein are expressly
qualified in their entirety by these cautionary statements as of
the date hereof and involve many risks and uncertainties that could
cause actual results to differ materially from those expressed or
implied in the forward-looking statements. Subsequent events and
developments, including actual results or changes in the Company's
assumptions, may cause the Company's views to change. The Company
assumes no obligation and does not intend to update these
forward-looking statements, except as required by law. You are
cautioned not to place undue reliance on such forward-looking
statements.
Estimated Financial Contribution
All data regarding estimated financial contribution in this
presentation are forward-looking statements that are based on
assumptions that are inherently subject to significant
uncertainties and contingencies, many of which are beyond the
Company's control. No independent registered public accounting firm
has audited, reviewed, compiled or performed any procedures with
respect to the combined financial information of the Company
contained herein. Such information may not be included, may be
adjusted or may be presented differently in other
documents.
Non-GAAP Financial Information
Some of the financial information and data contained in this
presentation, including Adjusted EBITDA (and related measures),
have not been prepared in accordance with U.S. generally accepted
accounting principles (“GAAP”). Adjusted EBITDA may be calculated
differently from, and therefore may not be comparable to, similarly
titled measures used by other companies. This non-GAAP financial
measure should not be considered in isolation or as a substitute
for analysis of our results of operations as reported under GAAP.
Please refer to the Appendix located at the end of this
presentation for a reconciliation of non-GAAP financial measures to
their most directly comparable GAAP financial measure.
Contacts
R1 RCM Inc.
Investor Relations:Evan Smith, CFA(516)
743-5184investorrelations@r1rcm.com
Media Relations:Allison + PartnersAmanda
CritelliR1PR@allisonpr.com
Providence
Melissa Tizon(206)
310-4358Melissa.tizon@providence.org
R1 RCM (NASDAQ:RCM)
Historical Stock Chart
From Apr 2024 to May 2024
R1 RCM (NASDAQ:RCM)
Historical Stock Chart
From May 2023 to May 2024