Buy Rating Affirmed for R1 RCM Amidst Strong Performance and Positive Demand Outlook

Analyst Richard Close of Canaccord Genuity maintained a Buy rating on R1 RCM (RCM – Research Report), reducing the price target to $15.00.

Richard Close has given his Buy rating due to a combination of factors including R1 RCM’s strong performance excluding the impacts from the Change Healthcare hack and a solid demand environment. Despite a first-quarter miss and a slight downward revision for 2024 guidance, Close noted that the core business of R1 RCM performed well, with adjusted EBITDA likely surpassing estimates after accounting for delayed investments. He also highlighted the positive demand for R1 RCM’s offerings and a successful integration of the Acclara acquisition, which he believes will contribute significantly to future revenues.
Close’s optimism is further bolstered by the expectation that Providence onboarding will align with previous guidance and that the acquisition of Acclara will integrate smoothly without affecting margins. Additionally, he points out that the potential deal discussions facilitated by the waiver granted to New Mountain and TCP-ASC could lead to favorable outcomes for the stock. Close also justifies a premium valuation for R1 RCM compared to its peers, based on its strong EBITDA growth potential and more favorable long-term margin profile, leading to his price target of $15.

In another report released yesterday, Citi also maintained a Buy rating on the stock with a $16.00 price target.

Based on the recent corporate insider activity of 24 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of RCM in relation to earlier this year.

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R1 RCM (RCM) Company Description:

R1 RCM, Inc. engages in the provision of revenue cycle management to healthcare providers. It offers end-to-end, modular revenue cycle, and physician advisory services. The company was founded by Mary Ann Tolan and J. Michael Cline in July 2003 and is headquartered in Chicago, IL.