R1 RCM Inc., a healthcare technology company based in Murray, Utah, has been acquired by private equity firms TowerBrook Capital Partners and Clayton, Dubilier & Rice (CD&R) for approximately $8.9 billion in cash. TowerBrook, which already holds about 36% of R1’s shares, will purchase the remaining shares at $14.30 each.

The acquisition price represents a 29% premium over R1’s closing stock price on February 23, 2024, just before New Mountain Capital made its initial nonbinding acquisition proposal. The deal has received unanimous approval from a special committee of R1’s board, which consists solely of independent directors. This committee led the negotiations with the assistance of independent legal and financial advisors.

R1 CEO Lee Rivas expressed confidence in the deal, stating that TowerBrook has been a valuable long-term partner and shares R1's vision of becoming the leading automation platform for the provider industry. Ian Sacks, managing director at TowerBrook, noted the firm’s commitment to R1 since 2016 and emphasized their intention to continue investing in the company’s core operations to enhance customer performance and value.

However, the private equity sector in healthcare faces scrutiny. A recent report from a nonprofit financial watchdog revealed that nearly a quarter of healthcare companies that declared bankruptcy in 2023 were owned by private equity firms, marking a record year for such bankruptcies. This has prompted a cross-government public inquiry into the effects of private equity mergers and acquisitions on healthcare consolidation, quality of care, worker safety, and access to affordable healthcare.

Following the acquisition, R1 will transition to a private entity and will be delisted from NASDAQ. The transaction is expected to close by the end of the year, subject to customary closing conditions, including stockholder and regulatory approvals. The financing for the deal will involve a mix of committed debt and equity from TowerBrook and CD&R-affiliated investment funds.