S&P assigns R1 RCM, loan B+

S&P said it rated R1 RCM Inc. and its planned $540 million new senior secured term loan B+. The loan’s recovery rating is 3, indicating meaningful (rounded estimate: 60%) recovery in default.

“The ratings on R1 RCM reflects the company's narrow market focus in the fragmented and highly competitive health care information technology (HCIT) industry, its customer concentration, and its relatively short operating track record with many of its customers,” the agency said in a press release.

R1 RCM is acquiring Cloudmed for about $4.1 billion and plans to fund the deal with $3.232 billion in equity issued to Cloudmed's financial sponsor New Mountain, a $500 million incremental senior secured term loan A, and a $540 million new senior secured term loan B. The company will also add an incremental $150 million to its revolving credit facility.

S&P said it forecasts R1 RCM's adjusted leverage to be about 4.5x in 2022 (3.7x on pro forma basis) decreasing to about 3x in 2023.

The outlook is stable.

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