R1 RCM transaction ‘still possible,’ but path ‘bit more challenging,’ says Baird

After New Mountain filed an update regarding its discussions around a potential transaction with R1 RCM and said it is no longer interested in pursuing a joint proposal with TCP-ASC and referenced an updated price of $13.25, versus the prior proposal of $13.75, Baird analyst Vikram Kesavabhotla said a transaction “is still possible, but the lack of a joint proposal naturally makes the path a bit more challenging.” The lower bid price is “also likely to invite some scrutiny,” added the firm, which suspects the lower bid may be associated with the recent operational disruptions at Ascension. The firm, which thinks investors may be using the initial pre-transaction share price on February 23 of $11.10 as a near-term reference point with respect to scenarios that result in no transaction, maintains an Outperform rating and $18 price target on R1 RCM shares.