R1 RCM buys Cloudmed in $4.1B deal

R1 RCM Inc., a Murray-based provider of patient experience and financial performance softwarefor the healthcare industry, has announced that it has entered into a definitive agreement to acquire Cloudmed, a revenue intelligence solutions provider. Cloudmed is based in Atlanta.

The all-stock transaction values Cloudmed at approximately $4.1 billion, including $857 million of net debt, based on R1’s closing stock price on Jan. 7.

Cloudmed is a New Mountain Capital portfolio company and serves more than 400 of the largest health systems in the United States, including 47 of the top 50 hospital systems. Cloudmed’s revenue intelligence platform combines cloud-based data architecture and deep-domain expertise with intelligent automation to analyze large volumes of medical records, payment data and complex medical insurance models to identify opportunities to deliver additional revenue to customers. In 2021, Cloudmed recovered more than $1.5 billion of underpaid or unidentified revenue for customers.

“This transaction accelerates our strategy to build the most scalable, flexible and integrated platform for the revenue cycle and consumer engagement in healthcare,” said Joe Flanagan, president and chief executive officer of R1. “Our combined solutions, including enhanced automation capabilities, will further transform the patient experience and drive continued improvement in our customers’ financial results. I look forward to working with Cloudmed CEO Lee Rivas and the entire Cloudmed team, whose additive talent and expertise will help us continue to optimize outcomes for healthcare systems and create value for all our stakeholders.”

“Cloudmed solves a critical problem in the healthcare system by helping healthcare providers get paid for the services they deliver,” said Rivas. “By combining with R1, we will be creating a best-in-class platform with market-leading capabilities to drive improved outcomes for our customers, among the leading healthcare providers in the country. R1 shares our values and focus on innovation, which is why we are so excited about joining them to drive value for healthcare providers.”

Upon closing of the transaction, current R1 shareholders will own approximately 70 percent of the combined company on a fully diluted basis and Cloudmed equity holders will own approximately 30 percent, according to a release from R1. The transaction, which has been unanimously approved by the boards of directors of both companies, is expected to close in the second quarter of 2022.

Flanagan will serve as CEO and Rivas will serve as president of the combined company.