Accretive Health, Inc. (OTC Pink: ACHI) and Ascension, the nation’s largest Catholic and non-profit health system, today announced a long-term strategic partnership to renew, revise and expand their existing services agreement for a 10-year term. Ascension has selected Accretive Health (“Accretive”) to be its sole revenue cycle provider and has negotiated with Accretive the terms for an amended and restated Master Professional Services Agreement (“MPSA”) to cover all of Ascension’s net patient revenue (NPR). In addition, a newly formed investment vehicle owned by Ascension and TowerBrook Capital Partners has entered into a definitive agreement under which Ascension and TowerBrook will invest $200 million in Accretive to purchase convertible preferred stock and receive warrants. The transaction is expected to be completed in the first quarter of 2016.
At the closing of the transaction, Ascension and Accretive will amend and restate their existing MPSA, and Ascension will transition more than $8 billion in new NPR to Accretive over the next several years. The new NPR represents an increase of approximately 50% over Accretive’s existing NPR base under management. Ascension and Accretive anticipate transitioning the new NPR beginning in the middle of 2016. Additionally, as part of the amended MPSA, Ascension will transition all PAS needs of its hospitals to Accretive’s PAS business.
Emad Rizk, M.D., President and Chief Executive Officer of Accretive Health, said, “Ascension has been a valued partner of Accretive Health for many years, and we are very excited to have the opportunity to deepen and extend our strategic alliance and expand Accretive’s business substantially. Over the last eighteen months, we have strengthened our infrastructure and operations, and we believe Ascension chose Accretive for its differentiated software and services model, scalable infrastructure and performance. We look forward to deepening our investments in our technology and service capabilities to further position Accretive to meet the needs of all healthcare providers as they adapt to the rapidly evolving healthcare landscape.” Dr. Rizk also stated, “We are confident that we can appropriately scale our model for the significant growth our agreement with Ascension provides.”
Anthony Tersigni, President and Chief Executive Officer of Ascension, stated, “We look forward to expanding our relationship with Accretive Health and working even more closely with its leadership team to implement a single revenue cycle solution and develop a sustainable, longterm business platform for our organization. This new partnership will support our strategy of creating clinically integrated systems of care in the communities we serve across the country, strengthening our ability to provide compassionate, personalized care to all, especially persons in poverty and struggling the most.”
Steve Shulman, Chairman of Accretive Health’s board of directors, said, “Our Board of Directors, together with our advisors, have conducted a thorough and rigorous review of strategic alternatives. Our review included a wide range of options, as well as discussions with a large and diverse group of potential strategic acquirers and financial investors. One of the many factors the Board considered in approving this transaction was the ability of our existing stockholders to participate in any increases in the value of Accretive Health following the transaction. Following the transition of Ascension’s new NPR, along with organic growth, Accretive Health expects to grow revenue to approximately three to four times the current level and produce operating margins in the mid to high teens. The Board is unanimous in its view that this transaction is the best path forward to drive shareholder value.”
