R1 RCM ups term loan to $575 million, flexes to SOFR plus 300 bps

By Sara Rosenberg

New York, Dec. 13 – R1 RCM Inc. upsized its incremental senior secured first-lien term loan B due June 2029 (Ba3/B+/BBB-) to $575 million from $500 million and reduced pricing to SOFR plus 300 basis points from talk in the range of SOFR plus 325 bps to 350 bps, according to a market source.

In addition, the original issue discount on the incremental term loan was tightened to 98.79 from 98.5 and the debt was switched to fungible with the company’s existing $495 million term loan B due June 2029 from non-fungible originally, the source said.

The incremental term loan still has a 0% floor, 101 soft call protection for six months, and a ticking fee of half the margin from days 46 to 90 and the full margin thereafter.

The call protection will now apply to the existing term loan as well.

JPMorgan Chase Bank, BofA Securities Inc. and Barclays provided the debt commitment. BofA Securities is the administrative agent.

Recommitments were scheduled to be due at 2:30 p.m. ET on Wednesday, the source added.

Proceeds will be used to help fund the acquisition of Acclara from Providence for $675 million in cash and warrants to purchase 12.2 million shares of R1 RCM stock.

Other funds for the transaction will come from borrowings under the company’s existing revolving credit facility, the amount of which was reduced with the term loan upsizing, and cash on hand.

Closing is expected in early 2024, subject to customary conditions, including regulatory approvals, as well as the entry of Providence and Acclara into a 10-year revenue cycle management agreement.

Pro forma credit agreement net leverage is expected to be around 3.2x at close.

R1 RCM is a Murray, Utah-based provider of technology-driven solutions that transform the patient experience and financial performance of health care providers. Acclara is a provider of revenue cycle management solutions to the health care industry.

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