Accretive Health is searching for “strategic alternatives” following an offer from client Ascension Health to buy the Chicago company for half of today’s closing stock price of $5.42 per share.
The revenue cycle management company is exploring all options, including accepting Ascension’s offer, selling to another company or remaining a stand-alone firm, said Accretive spokesman Atif Rahim.
In a letter, which Accretive executives received in the last few days, the health system proposed discussions about taking Accretive private, either alone or with investment partners. Since Ascension’s offer was unsolicited and undervalues the company, the board has a fiduciary duty to examine alternatives, Rahim said.
Accretive generated about half its cash in 2014 from contracts with hospitals connected with St. Louis-based Ascension, according to a statement. In the letter, Ascension also said it did not plan to renew its contract with the company when it expires in August 2017.
It’s not the first time the health system has roughed up its bill collector: In 2012 Ascension agreed to a five-year contract renewal only after Accretive agreed to comply with its billing practices and refer patients to charity care when appropriate. The company had faced aninvestigation in Minnesota by the attorney general’s office for overly aggressive collecting tactics. Accretive also has struggled amid fallout from a restatement of its financial results.
Analyst Matthew Gillmor of Robert W. Baird wrote in a June 24 report that the company’s “improving (revenue cycle management) performance will support future contract wins over time.” But “client attrition from legacy 2012-2013 issues and physician advisory services pressures continue to weigh on (Accretive), and it remains unclear when these headwinds will abate.”
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