On August 1, TowerBrook Capital Partners and Clayton, Dubilier & Rice (CD&R) announced that they entered into an agreement to acquire R1 RCM Inc. for $8.9 billion.
R1 RCM Inc. is a leading provider of technology-driven solutions that transform the patient experience and financial performance of healthcare providers. The revenue cycle management (RCM) company operates models seamlessly to complement a healthcare organization’s infrastructure, quickly driving sustainable improvements to net patient revenue and cash while driving revenue yield, reducing operating costs and enhancing the patient experience.
With offices in London and New York, TowerBrook is a private equity firm with more than $2.5 billion under management. TowerBrook spun out of Soros Fund Management in 2005.
Founded in 1978, CD&R is an American private equity firm that has managed the investment of more than $30 billion in approximately 90 businesses, representing a broad range of industries with an aggregate transaction value in excess of $140 billion. It is one of the oldest private equity investment firms in the world.
Qatalyst Partners and Barclays are serving as financial advisors to the Special Committee and Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel to the Special Committee for R1 RCM. Kirkland & Ellis LLP is acting as legal counsel to R1 RCM.
In addition, Deutsche Bank and Royal Bank of Canada have committed to provide financing for the transaction. Deutsche Bank Securities, Inc. and RBC Capital Markets, LLC are serving as financial advisors to TowerBrook and CD&R. Centerview Partners LLC is serving as lead financial advisor to TowerBrook and CD&R. Wachtell, Lipton, Rosen & Katz is acting as legal counsel to TowerBrook, and Debevoise & Plimpton LLP is acting as legal counsel to CD&R.
According to data captured in the LevinPro HC database, this acquisition represents the 145th eHealth transaction of 2024, and the 18th in the RCM specialty. Upon completion of the transaction, R1 RCM will become a private company and its shares will no longer trade on NASDAQ.
“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 Lee Rivas, R1’s CEO. “Our agreement reflects TowerBrook’s and CD&R’s confidence in our team and the unmatched scale, technology and value we provide. We believe the transaction represents the best path forward for R1 at an attractive valuation to our stockholders that reflects the Company’s position as a leading provider of technology-driven solutions for its customers.”
An investment vehicle controlled by TowerBrook is currently the beneficial owner of approximately 36% of R1 RCM’s outstanding shares of common stock, including the warrant held by TowerBrook. Under the terms of the agreement, TowerBrook and CD&R will acquire all the outstanding common stock that TowerBrook does not currently own for $14.30 per share. The consideration represents a premium of approximately 29% to R1 RCM’s unaffected closing price on February 23, 2024.
