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While the rest of us spent Fourth of July grilling, two investor groups were finalizing dueling bids to take R1 RCM (Nasdaq:RCM) private.

Why it matters: The standoff is a tangled web featuring America's largest Catholic hospital system, Ascension Health.

The latest: In a July 5 filing, TowerBrook-Ascension (TCP-ASC) said it's finalizing a proposal to acquire R1 at a higher price than New Mountain Capital's July 2 offer of $13.25 per share.

New Mountain's offer values the company at nearly $6 billion, though the whole company's value is closer to $9 billion with debt, a source familiar says.

Yes, but: TCP-ASC hasn't yet specified how much it's willing to bid.

And while TCP-ASC's offer dangles the potential return of former R1 CEO Joe Flanagan as a "senior executive following a potential transaction," the source says Flanagan hasn't committed to anything.

Context: R1 provides revenue cycle management services for health systems across the U.S.

TCP-ASC — the investment vehicle jointly owned by TowerBrook Capital Partners and nonprofit health system Ascension — and New Mountain each own about a third of the company.

Catch up quick: New Mountain was previously working with a group of R1 investors in February to take the company private for a proposed $13.75 per share.

That group was also in discussions with TCP-ASC for the deal. Both New Mountain and TCP-ASC confirmed last week they're no longer planning to pursue a joint transaction.

The intrigue: In early 2023, Wisconsin Sen. Tammy Baldwin, a Democrat, accused St. Louis-based Ascension of "operating like a private equity fund," specifically criticizing its partnership with R1 being incongruent with a nonprofit ethos.

Formed in 2015, TCP-ASC is reportedly worth in excess of $1 billion, though it doesn't have a formal website.

In April 2021, minority shareholders in R1 filed a lawsuit accusing Ascension and TowerBrook of teaming up to extract $105 million years before they were meant to.

Follow the money: While its PE investments have been lucrative, Ascension has been steadily shedding hospitals as it contends with a nearly $4 billion operating loss from fiscal 2020 through fiscal 2023.

What they're saying: TCP-ASC's most recent filing "should serve as an upside catalyst for RCM shares given the potential of competitive bids," says Leerink analyst Michael Cherny.

Reality check: R1 has been in play for about six months with no attractive rival bids incoming thus far.

New Mountain and TowerBrook declined to comment. Ascension did not respond to a request for comment.

R1 RCM's dueling bidders

Illustration of two fountain pens facing off against an abstract pop of color.

Hospital operator Ardent Health is targeting a $3.15 billion valuation in its IPO, per its updated S1.

Why it's the BFD: Ardent will debut on the heels of several successful health care IPOs.

Zoom in: Ardent intends to sell 14.3 million shares at $20 to $22 per share.

At the midpoint of the price range, the expected offering amount is $300.3 million.

How it works: Founded in 1993, Nashville-based Ardent operates hospitals and provides both general and specialty services within inpatient and ambulatory care settings.

Ardent has 30 acute care hospitals and more than 200 sites of care across Texas, Oklahoma, New Mexico, New Jersey, Idaho and Kansas.

It's the fourth largest privately held, for-profit operator of hospitals and care services provider in the U.S., per the filing.

Flashback: Ardent, owned by health care REIT Ventas, filed in 2018 to go public but withdrew that plan in 2020.

State of play: The IPO market for health care has picked up considerably in 2024.

Tempus AI, a Chicago-based provider of data and analytics tools for precision medicine, raised $411 million in its IPO, pricing at the top of its range in June.

Post-acute care provider PACS Group (NYSE: PACS) debuted on NYSE at $23 after pricing at $21 per share in April.

Health payments software company Waystar's raised a nearly a $1 billion IPO — the best showing the health tech sector has seen since 2022.

Publicly traded hospital operator HCA, currently trading at about $316 per share, saw a 52-week high of $344.20 and a 52-week low of $215.96. Tenet Healthcare's 52-week high stock price was $142.35.

What we're watching: Frothy public markets may inspire more listings in the coming months, but the IPO window will start to narrow closer to the election.

Ardent Health seeks $3.15B valuation in IPO

an illustration of a caduceus surrounded by cutouts of money and colorful shapes 

Want more health tech deals? Check out the Axios Pro Deals Tracker.

• NowDiagnostics, a Springdale, Ark., maker of equipment for home lab tests, raised a $22.5m Series B led by DigitalDx Ventures with participation from Labcorp Venture Fund and Kompass Kapital Management. axios.link/3S1G4xt

• Courier Health, a NYC life sciences CRM, raised a $16.5m Series A led by Norwest Venture Partners with participation from insider Work-Bench. axios.link/4eP000x

• Thrive AI Health, an SF AI-based health coaching startup, raised launch funding from the OpenAI Startup Fund and Ariana Huffington's Thrive Global. axios.link/3Lffzkn

• Parthenon Capital acquired Medical Review Institute of America (MRIoA), a Salt Lake City provider of payer-facing utilization management and clinical review tools, from Summit Partners, which retains an ownership stake. mrioa.com

• UpSwell, a Marietta, Ga., portfolio company of Clearview Capital, acquired Dental Marketing, a Utah provider of direct mail services to dental practices. upswellmarketing.com

• InTandem Capital-backed Vivo Infusion, a Lakewood, Colo., provider of ambulatory infusion services, acquired Infusion Associates, a Grand Rapids, Mich., intravenous infusion center. axios.link/3LjUo0J

• Cressey & Company made a growth investment in Heartbeat Health, an NYC cardiovascular care company. axios.link/4cVNSJ5

• SaiGroup, a private AI investment group, acquired GetWell, a Bethesda, Md., digital patient engagement company. axios.link/3W02aBI

• Accuhealth, a Tampa remote patient monitoring company, and Signallamp, a Scranton, Pa., provider of remote chronic care management, will merge, funded by an investment from Sunstone Partners. axios.link/3So7oqb

• Elanco Animal Health (NYSE:ELAN) completed the divestiture of its aqua business to Merck Animal Health (NYSE: MRK) for approximately $1.3b in cash. axios.link/3LiCQCg

Deals o' the day

• DeCarlos Love, former Google product management leader, joined Thrive AI Health as CEO. Also at Thrive, Gbenga Ogedegbe, director of NYU Langone's Institute for Excellence in Health Equity, will serve as health equity adviser. axios.link/4cQuZYc

• David Cohen, former VP at LinkedIn, joined Sword Health as chief revenue officer. axios.link/3W4ogTU

• Eric Epstein, former partner at Santé Ventures, joined Healthier Capital as partner. healthiercapital.com

• Nate Pearl, former head of CEO talent at Redesign Health, joined True as partner within its consumer and health care practice division. axios.link/3WfuXDK

It's Personnel

📉 Amwell implementing reverse stock split to avoid delisting — Health Care Dive

🏥 When hospital cyber attacks compromise care, not just data  — WaPo

🤖 Can AI really fix a care system in crisis? — The Guardian

💊 FTC report adds to scrutiny of drug middlemen — Axios

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🌦️ Despite the heat wave and rain, Aaron topped off an epic wedding with a poolside afterparty, staying up till 4am celebrating with friends. 

🍾 Thanks for reading, and extra thanks to newsletter editor Claire Rychlewski and copy editor Jay Bennett. Please ask your colleagues, friends and family to sign up.

July 09, 2024

1 big thing: R1 RCM's dueling bidders