Revenue cycle management company R1 RCM said on Monday that it plans to acquire Cloudmed as part of a stock deal that values Cloudmed at approximately $ 4.1 billion.
Cloudmed uses artificial intelligence and automation to analyze medical records, payment data, and health insurance models to manage the revenue cycle. The company has over 3,100 clients of healthcare providers.
“This deal accelerates our strategy to create the most scalable, flexible and integrated platform for the healthcare revenue cycle and customer experience,” said Joe Flanagan, president and CEO of R1, in an interview. news release…
Upon completion of the transaction, R1 shareholders will own approximately 70% of the combined company. Cloudmed shareholders will own approximately 30%.
Cloudmed is a privately held portfolio company of New Mountain Capital.
R1 officials expect the deal to increase R1’s earnings per share in the first full year after the deal closes, with a synergistic effect of $ 85 million by the end of the third year. Flanagan will remain CEO of the combined company, and Lee Rivas, CEO of Cloudmed, will become president of the company.
R1 will expand its board of directors following the acquisition to include three new members appointed by New Mountain Capital.
The deal is expected to close in the second quarter of 2022.
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The acquisition will expand the capabilities of R1’s artificial intelligence and automation. Flanagan previously stated that R1 aims to differentiate itself from other revenue cycle service providers through its automation technologies and efforts that use robotic process automation, machine learning, and natural language processing.
The deal follows the acquisition of R1 VisitPay, a company that sells patient billing tools, last year and SCI Solutions, a developer of scheduling and other patient engagement tools, in 2020. This is part of a growing number of digital health mergers and acquisitions. with 203 deals reported in the first three quarters of 2021, according to Digital Health Business & Technology. This is more than 132 mergers and acquisitions in the same period in 2020.
R1 reported revenue of $ 379.7 million in November for the third quarter of 2021 – the most recent quarter for which financial results were released – up 23.6% from the same period a year earlier, and 31 , $ 1 million operating profit, up 193.4% over last year. …