One of R1 RCM's largest shareholders is asking the revenue cycle management company's board to reject a potential offer to take the firm private.
Private equity firm Coliseum Capital Management, one of R1's five largest shareholders, said in a Feb. 26 open letter that the proposed transaction "meaningfully undervalues the company and is not in the best interest of shareholders."
Private equity firm New Mountain Capital and TCP-ASC — an investment vehicle jointly owned by TowerBrook Capital Partners and Ascension Health Alliance — have been in talks regarding a number of options for R1 RCM, including a potential cash offer of $13.75 per share for R1's outstanding stock. New Mountain owns 32.4% of R1 and TowerBrook owns 29.6%.
Coliseum said in the letter that it is excited about R1's current strategy, longer term prospects and leadership team. It said it is encouraging the company's board of directors to "stand firm and require a materially higher price, or reject the offer and stay the course as a public company."
"To be clear, given the strength of R1’s business prospects, we believe remaining public and driving forward the existing strategy will result in greater value for all shareholders than accepting a price at or near the current offer," Coliseum said.
An R1 RCM spokesperson told Becker's in a Feb. 27 statement: "We confirm we received a letter from New Mountain Capital requesting a waiver of the standstill restrictions contained in the investor rights agreement, which attached a form of proposal to acquire all of the outstanding shares of common stock of the company. R1 is committed to doing what is best for our shareholders, customers,and associates. We remain focused on providing our customers with world-class revenue cycle solutions to help providers improve their financial performance and deliver an exceptional patient experience."