Healthcare IT-R1 RCM's Shareholder Says $13.75/Share Deal Offer Significantly Undervalues The Company

Tuesday, Coliseum Capital Management, one of the largest shareholders of R1 RCM Inc RCM, issued an open letter to the company’s Board of Directors.

In its letter, Coliseum states that it believes the offer by New Mountain Capital to acquire the company for a cash consideration of $13.75 per share significantly undervalues the company. 

The letter also expresses support for R1 RCM’s Board of Directors, management team, and strategy for shareholder value creation. 

Coliseum encourages the Board of Directors to stand firm and require a higher price or reject the offer and stay the course as a public company.

Concurrently, R1 RCM reported fourth quarter 2023 revenue of $575.1 million, up 7.8% Y/Y, missing the consensus of $578.69 million.

The company reported GAAP net income of $1.4 million, compared to a net loss of $36.6 million a year ago.

The company reported a break-even for the fourth quarter compared to the EPS loss of $(0.09) a year ago. The adjusted EBITDA is $167.7 million, up 33.5% Y/Y.

“R1 executed on its key objectives in 2023. We established a stronger foundation for growth, stabilized key metrics for several clients, and delivered approximately $30 million in synergies from the Cloudmed integration,” stated Lee Rivas, R1’s CEO. “In addition, we strengthened our technology platform by driving innovation through generative AI and enhanced our global infrastructure to improve our performance and competitive position in the market.”

Guidance: For 2024, R1 expects to generate revenue of $2.625 billion-$2.675 billion compared to the consensus of $2.69 billion, with GAAP operating income of $105 million-$135 million and adjusted EBITDA of $650 million-$670 million.

Price Action: RCM shares are up 4% at $14.45 on the last check Tuesday.