What happened
Shares of the healthcare services company R1 RCM (NASDAQ: RCM) were up by a healthy 10.1% on higher-than-normal volume, as of 11:35 a.m. ET Thursday morning. The company's shares are marching higher in response to a better-than-expected 2022 fourth-quarter earnings report released ahead of today's opening bell.
Specifically, R1 RCM's 2022 fourth-quarter revenue topped Wall Street's consensus figure by 2.5%. Despite this modest top-line beat, however, the company still posted a GAAP net loss of $37.1 million for the three-month period.
So what
As part of today's Q4 earnings report, R1 RCM also rolled out its 2023 revenue guidance. The company expects revenue of between $2.28 billion and $2.33 billion for the whole of 2023. The company's low-end revenue guidance exceeds Wall Street's street forecast by approximately $70 million. The top end of this revenue guidance is essentially in line with analysts' forecasts.
Why are investors cheering this meager top-line beat and mildly better-than-expected revenue forecast? R1 RCM's Q4 earnings report probably isn't the core reason behind this uptick in its share price today.
The long and short of it is that healthcare technology companies -- especially those offering end-to-end revenue cycle management services -- have been a hotbed of merger and acquisition activity over the past year.
Bigger players in the field are clearly on the hunt for ways to increase efficiency and boost profits. R1 RCM's business model, which is clearly trending in a positive direction in light of today's Q4 earnings report, might prove an attractive target.
Now what
Is R1 RCM stock worth buying right now? I think so. The company's improving fundamentals provide a clear path toward organic share price appreciation. What's more, its platform could fetch a decent premium in a buyout scenario.
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George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
