First Oncology Specialist Goes Public Through SPAC

The first publicly traded oncology specialist debuted in the stock market this week following a merger with a specialized acquisition company.

The Cancer Institute, a 50-office provider in four states headquartered in the Los Angeles area, has closed its merger with DFP Healthcare Acquisitions Corp. and is now listed on the NASDAQ under the tickers “TOI” and “TOIIW”. The company’s shares are currently priced at around $ 8.50, more than 18% below Monday’s original price.

Founded in 2007, TOI promotes a brand of value-based cancer care that its executives say is lacking in today’s largely paid-for cancer care industry. Brad Hively, CEO of the company, said TOI manages more than 1.5 million patients on value-based contracts, accounting for just over half of its revenues. Of the 1.5 million patients, about half are covered by managed Medicaid, followed by commercial insurance and then Medicare Advantage. The other half of TOI’s revenue comes from service fees.

Heavley said TOI is taking on the risk of the cost of treating cancer patients through agreements with primary care providers such as Optum UnitedHealth Group, CareMore Health, and P3 Health Partners who have contracts with health plans. None of the three companies have commented on their agreements with TOI.

“They then instruct us to provide and pay for all cancer related services,” he said.

The model should be extended to more communities, Heveley said, and the capital he raises through going public will help accelerate that growth. He said he considers TOI to be the market leader in value-based oncology.

“There is a lot of value associated with scarcity,” Heveley said. “There just aren’t many people doing what we do.”

According to Matt Wolfe, director and senior analyst at RSM in the healthcare industry, it is possible that TOI’s value-based assistance will help differentiate it among those currently overwhelmed with oncologists. In any case, the listing of SPAC on the exchange will certainly increase its name recognition, he said.

Wolf said he was not surprised to see the first pure oncology practice debut in this way. The COVID-19 pandemic has only increased the demand for cancer, he said, but an aging population and rising cost of cancer drugs have long created an opportunity to add value to the system.

“It’s just that oncology costs a lot of money,” Wolf said. “It has been like this for many years.”

There are about 80 doctors at TOI, including just over 50 doctors, as well as nurse practitioners and paramedics, Hiveli said. The company generated $ 155 million in revenue in 2019 and plans to grow to $ 345 million in 2022. by slide presentation… The deal with SPAC valued TOI at $ 842 million.

This is the third SPAC deal sponsored by Deerfield Management Company affiliates, said Richard Barash, who led the deal and now serves on TOI’s board of directors. Barash also oversaw the SPAC mergers with AdaptHealth in 2019 and CareMax in June

“This is not a game of simple cost control,” Barash said of the TOI deal. “This is a game aimed at improving quality at a better price. And one step further … a significant part of the business is improving access to cancer treatment for people on the bottom half of the income scale. ”

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