Accretive Health, Inc. (OTCMKTS:ACHI) was a notable outperformer during Tuesday’s trading session, surging by 40% on heavy volumes, which were 20 times the 30 day average turnover. Accretive Health has been in a strong downtrend but the price volume action seen on Tuesday helped the stock break above the resistance zone near $2.50, which is being seen as a huge positive. The stock currently trades below its 200-day moving average.The oscillator measuring momentum are showing first signs of a reversal. The RSI oscillator has surged higher indicative of bullish momentum. Traders see the stock retesting support at levels of $3.25.
The largest non-profit catholic health system, Accretive Health, Inc. (OTCMKTS:ACHI), announced a long-term partnership with Ascension. As per the reports, the primary objective of this renewal is to revise, renew and expand the existing service agreement between both the companies up to 10 years.
Insights of The Matter
Ascension doesn’t want to indulge with multiple parties to generate revenues. Reports claim that it had decided to keep Accretive Health as the only source through which revenues can be generated. The company has negotiated all the terms and conditions with Accretive for a restated and amended Master Professional Services Agreement that can cover its net patient revenue.
In addition to this, a recently formed investment vehicle that’s co-owned by TowerBrook Capital Partners and Ascension has signed an agreement. According to this agreement, TowerBrook and Ascension will invest a whopping amount of $200 million in Accretive Health to receive warrants and buy convertible preferred stock. If everything goes as per plans, this transaction will be completed latest by 1Q2016.
As soon as the transaction gets over, Accretive and Ascension will restate and amend their MPSA, and the latter will look forward to transitioning over $8 billion in new NPR to Accretive over the next many years. If the new NPR is taken into consideration closely, one can see that it has increased 47% over the existing NPR base under the management of Accretive.
Both Accretive and Ascension believe that the transition procedure of new NPR will start in the mid-2016. Before that happens, Ascension will try to transition all the PAS needs that currently belong to its hospitals to the PAS business of Accretive. The senior management teams of both the companies are delighted to make this announcement and hope that this decision will help them in the long term. They will keep all the shareholders abreast of the future initiatives.