TowerBrook and CD&R Complete Acquisition of R1 RCM

Rhea-AI Summary

R1 RCM has completed its previously announced acquisition by TowerBrook Capital Partners and Clayton, Dubilier & Rice in a transaction valued at approximately $8.9 billion. The deal, which was first announced on August 1, 2024, involved purchasing all outstanding shares at $14.30 per share in cash. Following the acquisition, R1 RCM has become a private company and ceased trading on Nasdaq. Joe Flanagan has been reappointed as CEO, replacing Lee Rivas. Flanagan, who previously served as CEO from 2016 to 2023, brings over 20 years of management experience and will focus on driving operational excellence and technology leadership.

Positive

• Acquisition completed at $8.9 billion valuation
• Premium price of $14.30 per share offered to shareholders
• Strategic investment from major private equity firms could accelerate innovation and growth
• Experienced CEO Joe Flanagan returns to lead the company

Negative

• Delisting from Nasdaq reduces liquidity for remaining shareholders
• Suspension of periodic reporting obligations decreases transparency

Insights

Financial Analyst

The $8.9 billion take-private acquisition of R1 RCM by TowerBrook and CD&R marks a significant shift in the healthcare revenue management sector. At $14.30 per share, the deal represents a strategic move to accelerate R1's automation capabilities without public market pressures. The return of Joe Flanagan as CEO suggests a focus on operational continuity and technology advancement. The extensive financing consortium, including major banks and alternative lenders, indicates strong institutional confidence in R1's business model and growth potential. Private ownership could enable more aggressive investments in AI and automation technologies, potentially strengthening R1's market position in healthcare revenue cycle management.

Healthcare Tech Analyst

This acquisition positions R1 RCM for accelerated innovation in healthcare revenue automation. The private equity backing from TowerBrook and CD&R provides R1 with substantial resources to expand its intelligent automation platform. Joe Flanagan's return as CEO, with his proven track record from 2016-2023, suggests a renewed focus on technological advancement and operational excellence. The transaction could catalyze R1's ability to develop more sophisticated revenue management solutions, particularly important as healthcare providers seek to optimize financial performance through automation. This strategic move could strengthen R1's competitive position against other healthcare tech players.

R1 RCM Becomes Privately Held Company; Joe Flanagan Reappointed as CEO

MURRAY, Utah, Nov. 19, 2024 (GLOBE NEWSWIRE) -- R1 RCM Inc. (“R1”), a leader in automating revenue management for healthcare providers, today announced that investment funds affiliated with TowerBrook Capital Partners (“TowerBrook”) and Clayton, Dubilier & Rice (“CD&R”) have completed their previously announced acquisition of R1.

On August 1, 2024, TowerBrook, CD&R and R1 announced that they had entered into a definitive merger agreement under which all outstanding shares of R1 common stock that TowerBrook did not own would be acquired for $14.30 per share in cash, valuing R1 at approximately $8.9 billion.

With the completion of the transaction, R1’s common stock has ceased trading and will no longer be listed on Nasdaq. R1 also intends to make the applicable filings with the U.S. Securities and Exchange Commission to suspend its periodic reporting obligations.

In connection with the closing of the transaction, Joe Flanagan became Chief Executive Officer of R1, replacing Lee Rivas. Mr. Flanagan first joined R1 in April 2013, has served on the R1 Board of Directors since May 2016 and served as CEO of R1 from May 2016 through January 2023. Mr. Flanagan will continue to serve on the R1 Board of Directors in addition to leading the organization as its new CEO. Mr. Flanagan brings more than 20 years of management experience and will drive continued operational excellence, technology leadership and value creation for R1's client partners. 

“R1 stands apart as the premier revenue management platform, leveraging advanced automation to set new standards in healthcare revenue performance,” said Mr. Flanagan. “TowerBrook and CD&R's investment will propel our innovation as we expand our intelligent automation capabilities and drive customer value. On behalf of the Board, I thank Lee for his invaluable contributions and wish him continued success. I'm enthusiastic about our strengths and opportunities to serve the broader market and maintain our steadfast commitment to customers' success.”

Advisors

Qatalyst Partners LP and Barclays Capital Inc. served as financial advisors and Skadden, Arps, Slate, Meagher & Flom LLP acted as legal counsel to the special committee of the R1 Board of Directors. Kirkland & Ellis LLP acted as legal counsel to R1.

Centerview Partners LLC served as lead financial advisor to TowerBrook and CD&R. In addition, Deutsche Bank AG New York Branch, Royal Bank of Canada, The Toronto-Dominion Bank, New York Branch, UBS AG, Stamford Branch, Wells Fargo Bank, National Association, BNP Paribas, Banco Santander, S.A., New York Branch, Mizuho Bank, Ltd., Natixis, New York Branch, Sumitomo Mitsui Banking Corporation, Citizens Bank, N.A., Apollo Capital Management, L.P., Ares Capital Management LLC and Golub Capital LLC provided financing for the transaction.

About TowerBrook

TowerBrook Capital Partners is a purpose-driven, transatlantic investment management firm with assets under management in excess of $21.5 billion. As a disciplined investor with a commitment to fundamental value, TowerBrook seeks to deliver superior, risk-adjusted returns to investors on a consistent basis, guided by TowerBrook Responsible Ownership™ principles which are central to the firm’s value creation strategy. TowerBrook partners with talented, experienced managers and senior advisors who share the firm’s values and support its investment objectives, providing capital and resources to transform the capabilities and prospects of the businesses in which it invests, driving better outcomes for all stakeholders. TowerBrook takes an entrepreneurial, multinational, single-team approach and since inception in 2001 has invested in more than 90 companies on both sides of the Atlantic. TowerBrook is the first mainstream private equity firm to be certified as a B Corporation, demonstrating leadership in its commitment to environmental, social and governance (ESG) standards and responsible business practices. For more information, please visit www.towerbrook.com.

About Clayton, Dubilier & Rice

Founded in 1978, Clayton, Dubilier & Rice (CD&R) is a leading private investment firm with a strategy of generating strong investment returns by building more robust and sustainable businesses through the combination of skilled investment experience and deep operating capabilities. In partnership with the management teams of its portfolio companies, CD&R takes a long-term view of value creation and emphasizes positive stewardship and impact. The firm invests in businesses that span a broad range of industries, including industrial, healthcare, consumer, technology and financial services end markets. CD&R is privately owned by its partners and has offices in New York and London. For more information, please visit www.cdr.com and follow the firm’s activities through LinkedIn and @CDRBuilds on X/Twitter.

About R1 RCM

R1 is a leading provider of technology-driven solutions that transform the financial performance and patient experience for health systems, hospitals, and physician 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 driving revenue yield, reducing operating costs, and enhancing the patient experience. To learn more, visit: r1rcm.com.

Contacts

Investor Relations:
Evan Smith, CFA
(516) 743-5184
investorrelations@r1rcm.com

Media Contact for R1:
Josh Blumenthal
(323) 449-4380
media@r1rcm.com

Media Contact for TowerBrook:
Alex Yankus
Brunswick Group
(917) 818-5204
towerbrookcapital@brunswickgroup.com

Media Contact for CD&R:
Jon Selib
(212) 407-5200
JSelib@cdr.com

FAQ

What is the acquisition price for R1 RCM (RCM) in the TowerBrook and CD&R deal?

R1 RCM was acquired for $14.30 per share in cash, valuing the company at approximately $8.9 billion.

When did R1 RCM (RCM) complete its privatization?

R1 RCM completed its privatization on November 19, 2024, following the acquisition by TowerBrook and CD&R.

Who is the new CEO of R1 RCM (RCM) following the acquisition?

Joe Flanagan was reappointed as CEO of R1 RCM, replacing Lee Rivas. Flanagan previously served as CEO from May 2016 through January 2023.

Will R1 RCM (RCM) continue trading on Nasdaq after the acquisition?

No, R1 RCM's common stock has ceased trading and will no longer be listed on Nasdaq following the completion of the acquisition.