On Friday, TD Cowen maintained a positive stance on R1 RCM Inc (NASDAQ:RCM), reiterating a Buy rating with a price target of $20.00. The firm's outlook is based on recent developments where TCP-ASC/NMC has requested an extension of the waiver period until July 12, 2024. This move suggests that a formal bid for R1 RCM is likely on the horizon, which could potentially exceed the current expectations.
The request for an extension, submitted to R1 RCM's Special Committee, is seen as an indicator of serious interest in acquiring the company. According to the analyst, the likelihood of the Board approving this extension is high. The anticipation of a formal bid is viewed as a positive sign, especially as it quells previous uncertainties regarding whether an offer would be presented.
R1 RCM is currently navigating near-term headwinds in 2024, but the outlook for 2025 remains optimistic. The analyst believes that the company's positive trajectory for the following year should provide a solid foundation for the expected bid to be substantially higher than $13.75.
The healthcare revenue cycle management services provider has been the subject of acquisition interest, and the unfolding events suggest that the potential bid could significantly value the company above recent trading levels. The analyst's reiterated price target reflects confidence in R1 RCM's future performance and its appeal to potential acquirers.
In other recent news, R1 RCM Inc. reported first-quarter 2024 revenues of $604 million and an adjusted EBITDA of $152 million, despite facing a cyberattack and a customer bankruptcy. The company's updated outlook for 2024 includes expected revenue between $2.6 billion to $2.64 billion and adjusted EBITDA of $625 million to $650 million.
RBC Capital Markets reaffirmed an "Outperform" rating for R1 RCM, while KeyBanc Capital Markets downgraded the company to "Sector Weight" from "Overweight". Citi Research upgraded R1 RCM to a "Buy" rating, suggesting an acquisition is likely.
The Change Healthcare (NASDAQ:CHNG) cyberattack had a $9.5 million impact on R1 RCM's Q1 earnings and is estimated to have a $25 million full-year effect. Despite these challenges, R1 RCM's long-term outlook remains strong, with confidence in the company's ability to sustain commercial momentum and unlock earnings potential.
These are the recent developments for R1 RCM Inc.
InvestingPro Insights
As R1 RCM Inc (NASDAQ:RCM) garners attention with the potential of an acquisition bid, recent data and analysis from InvestingPro provide further insights into the company's financial health and outlook. The company's market capitalization stands at $5.06 billion, reflecting its substantial presence in the healthcare revenue cycle management sector. Despite not being profitable in the last twelve months, analysts have a positive outlook, with net income expected to grow this year and two analysts having revised their earnings upwards for the upcoming period.
InvestingPro Tips highlight that R1 RCM's stock typically exhibits low price volatility, which may offer some stability to investors amidst the current acquisition talks. Additionally, while the company does not pay dividends, the focus for investors may be on capital gains, especially with the anticipated growth in profitability. For those considering further research, there are additional InvestingPro Tips available, which can be accessed alongside more in-depth metrics and forecasts for R1 RCM. Interested investors can utilize the exclusive coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription, enhancing their investment strategy with valuable insights.
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