Revenue cycle management company R1 RCM on Tuesday announced plans to acquire VisitPay, a privately held company that sells patient billing tools.
Chicago-based R1 will pay roughly $300 million in cash for Boise, Idaho-based VisitPay, funded with a combination of cash from its balance sheet and debt.
The acquisition provides a tax benefit valued at approximately $40 million, according to R1.
R1's continued investment in technology is one of the "driving forces" behind the decision to buy VisitPay, said Joe Flanagan, president and chief executive officer of R1, on a call with investment analysts Tuesday, as well as R1's continued investment in building a patient experience platform.
R1 last year acquired SCI Solutions, a developer of scheduling and other patient engagement tools, for roughly $190 million in cash.
"The next logical capability to bring in-house is the technology to modernize the consumer payments ecosystem in healthcare," Flanagan said. R1 plans to launch its new patient experience toolset, which combines patient billing and payment tools from VisitPay with the company's existing online registration and scheduling tools, at HIMSS21 in August.
Flanagan said he expects VisitPay to contribute $41 million to $42 million in revenue in 2022.
VisitPay, which counts Intermountain Healthcare, Geisinger Health and Carilion Clinic among its customers, sells cloud-based payment tools to healthcare organizations that patients use to pay bills, including digital tools that consolidate billing statements and machine learning and analytics tools that recommend personalized payment options to patients.
Payment data that VisitPay has collected over the past decade will also help support R1's artificial intelligence and automation roadmap, Flanagan said. Flanagan said R1's technology and automation efforts, which use robotic process automation, machine learning and natural language processing, are a way the company works to differentiate itself from other RCM vendors in the market.
R1 expects to complete the VisitPay acquisition in 2021's third quarter.
R1 posted $342.6 million in revenue for 2021's first quarter, up 6.9% year-over-year, according to financial results released Tuesday, including $286.1 million in revenue from net operating fees and $29 million in revenue from incentive fees. Net operating fees growth was chiefly driven by revenue from new customers, R1 Chief Financial Officer Rachel Wilson said on Tuesday's call.
Also on Tuesday, R1 announced a 10-year expansion of its contract with St. Louis-based Ascension, under which Ascension will also deploy patient experience tools from R1 across its acute-care and ambulatory sites. Ascension has been outsourcing revenue cycle services to R1 over the past few years.
R1 reported $36.8 million in operating income for the first quarter, up 13.6% year-over-year, and $25.8 million in net income, up 41.8% year-over-year.
R1's stock dropped to $24.29 on Tuesday morning, down from $27.17 when markets closed Monday. The company stock was $23.77 at noon Eastern Daylight Time on Tuesday.