R1 RCM to acquire Acclara

R1 RCM has entered into a definitive agreement to acquire Acclara, a 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. 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. As part of the partnership, R1 has entered into a definitive agreement to acquire the Acclara business for $675M 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. 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 is expected to contribute more than $625M in revenue and approximately $185M to Adjusted EBITDA by year five of the partnership, not including potential revenue synergies. As a result of the acquisition, R1 estimates that it could realize approximately $30M in run-rate cost synergies by the third year following the closing and run-rate cost synergies of approximately $50M by year five. The transaction, which is expected to be completed in early 2024, is subject to customary closing conditions, 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.