R1 RCM Inc., a leading provider of technology-driven revenue cycle management solutions for healthcare providers, announced today that it has entered into an agreement to acquire Acclara, a revenue cycle management company. Acclara is owned by Providence, a national not-for-profit health system that primarily operates in the western US. Consideration consists of $675 million in cash and warrants to purchase 12.2 million shares of R1 RCM stock at a strike price of $10.52 per share.
Revenue Cycle Management (RCM) EBITDA Multiples
R1's stock price was approximately equal to the $10.52 strike price at the time of the announcement. Using a 3-year expiry and 50% assumed price volatility results in an estimated value of approximately $4 per warrant, or $48.8 million, which we have utilized as an estimate pending more information from the purchase price allocation (total consideration of $723.8m). According to the investor presentation published by R1, Acclara generated revenue and adjusted EBITDA of approximately $300m and $25m, respectively, over the twelve months ended June 30, 2023, implying multiples of 2.4x revenue and 29.0x EBITDA.
The EBITDA multiple is a massive outlier on the high side compared to the other billing / revenue cycle deals in the outsourced services and digital / healthtech segments of our database, likely due to the immense potential for cost synergies ($50m annually according to the investor presentation) and growth from the related 10-year agreement with Providence (projected revenue and EBITDA of $625m and $185m by year 5 post-close, implying a year 5 multiple of 3.9x EBITDA).
Other RCM / Billing Deals
Read Scope Research's take on other revenue cycle and billing M&A transactions:
About Scope Research
The Scope Research Healthcare M&A Valuation Database currently has financial details for 51 revenue cycle management (RCM) and healthcare billing deals going back to 2010, 38 of which include reported EBITDA multiples. The revenue cycle data can be purchased individually, while our affordable annual subscriptions provide access to all of our healthcare M&A databases and segments, updated continuously.
Don't hesitate to reach out to Will Hamilton at will@scoperesearch.co with questions about your specific situation.