Nasdaq-listed R1 RCM has agreed to acquire New Mountain Capital-backed Cloudmed in an all stock transaction which valued the company at $4.1bn, including $857m of net debt.
Current R1 shareholders will own approximately 70% of the combined company and Cloudmed equity holders will own approximately 30% upon closing of the transaction.
Cloudmed serves more than 400 health systems in the US including 47 of the top 50 hospital systems. It combines cloud-based data architecture and domain expertise with automation to analyze large volumes of medical records, payment data and medical insurance models to identify opportunities for additional revenue.
It recovered more than $1.5bn underpaid or unidentified revenue for customers last year, delivering an average client ROI of 3-5x.
Matt Holt, managing director and president, private equity of New Mountain Capital, said, “We believe the combination of Cloudmed and R1 creates a clear market leader for technology and data powered revenue management for healthcare providers.
“We are excited to support the long-term vision of the combined company to modernize the U.S. healthcare sector. We look forward to working with Joe, Lee, and the management teams to fulfill this mission.”
New Mountain Capital has raised about $1.15bn for the final close of its latest direct lending fund in October.
The new vehicle, New Mountain Guardian III, is almost 50% larger than the $850m Fund II the firm close in 2017.
New Mountain Capital hauled in $9.6bn for the final close of its sixth flagship private equity fund in January. The vehicle is about 50% bigger than the $6.2bn predecessor vehicle New Mountain closed in 2017 and beat its own hard cap.
The firm also reached a $640m final close for its first non-control private equity fund, Strategic Equity Fund I in January.
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