R1 RCM ‘on PE radar screens,’ says Jefferies

Jefferies analyst Glen Santangelo argues that the inherent volatility of R1 RCM‘s business “has rattled investor confidence” and believes a business like RCM – with growth, attractive margins, and cash flows – “may be better off” in the near-term as a private company. With shares trading about 25% below the historical average, the analyst adds that the firm’s leveraged buyout, or LBO, analysis “suggests an acquisition could generate 20%+ IRR over a 5-year period for an acquirer” and contends that “this level of growth, cash flow, and valuation put the company on PE radar screens.” The firm maintains a Buy rating and $18 price target on the shares.