Primary care companies, like Oak Street Health, One Medical, and Skylight Health Group are seeing the benefits of bigger. In fact, Canaccord Genuity, as highlighted by Fierce Healthcare, notes, “Studies have shown the value of primary care through lower healthcare spending and improved health outcomes. But there has been an underinvestment in primary care in the U.S. compared to other developed countries.” In addition, “Given the vast size of the primary care market, it's no surprise that private equity and venture capital have rushed into the market. Regulatory and reimbursement changes are paving the way for new primary care models and alignment with payers, according to Close's analysis. And the insurance market creates a sizeable opportunity for employer-focused and elderly-focused primary care.” Some of the top companies that stand to benefit include Skylight Health Group Inc. (TSXV:SHG)(OTCQB:CBIIF), Oak Street Health Inc. (NYSE:OSH), WELL Health Technologies Corp. (TSX:WELL)(OTC:WLYYF), 1Life Healthcare Inc. (NASDAQ:ONEM), and Amazon.com Inc. (NASDAQ:AMZN).
Skylight Health Group Inc. (TSXV:SHG)(OTCQB:CBIIF) BREAKING NEWS: Skylight Health Group Inc., one of the largest multi-specialty healthcare systems in the United States, is pleased to announce that it has entered into a Binding Letter of Intent (LOI) to purchase 100% of the shares of a US Primary and Urgent Care clinic group. For confidentiality reasons, the name and location of the group will remain undisclosed until the closing of the Transaction before the end of Q1 2021. The planned acquisition of the Clinic expands the Company’s bricks and mortar and telemedicine services within one of the existing Skylight states.
The Clinic has been operating an established and fast growing network of primary care clinics. The group is actively credentialed with major carriers. Aligned with SHG’s multi-disciplinary platform, the Clinic employs a multi-disciplinary approach to patient care management. The Clinic has been successful in servicing Regional Health Systems with pre & post acute care reducing emergency room visits and readmissions. The Clinic’s clinical staff mix includes physicians, nurse practitioners, and physician assistants.
The Clinic is immediately accretive to SHG as it strengthens its market share within an existing state, as well as bolstering the infrastructure to support SHG’s national network of clinics and further growth. The Clinic has built a sustainable and scalable corporate infrastructure including in-house revenue cycle management, credentialing, centralized scheduling, compliance and medical leadership. SHG expects continuity of its leadership team and clinical staff post acquisition.
Prad Sekar, CEO, Skylight Health said “This is a transformative acquisition for SHG. Not only does this further strengthen our position in the US market to bring a one-stop shop approach to care for patients, but significantly bolsters our corporate infrastructure to further scale across other US markets. We have highlighted several transactions of material size in 2020 and we are glad to begin executing against this pipeline. With each acquisition, we enhance and strengthen our team to continue to build value for patients and drive fundamental business growth.”
As per terms of the binding LOI, the Company will purchase 100% of the shares of the Clinic for CAD 14.3 million, representing a 4.7x EBITDA multiple. The structure of the deal will include 40% cash (CAD 5.7 million) from the Company and a 3- years sellers note for the remaining 60% (CAD 8.58 million) at an 8% interest rate. SHG at its option may at any time repay the Note in part or in full prior to the end of the Term without any penalty. If SHG retires the Note earlier than the Term, no further payments will be required or incurred by SHG. On an unaudited basis, the Clinic is expected to generate CAD 20 million and EBITDA of CAD 3 million. This transaction is subject to a satisfactory due diligence period by the Company and mutual agreement to a Share Purchase Agreement and Closing Conditions and subject to regulatory and board approval. The transaction is expected to close by the end of Q1 2021.
Other related developments from around the markets include:
Oak Street Health Inc. (NYSE:OSH), a network of value-based primary care centers for adults on Medicare, is expanding access to more older adults in Michigan with opening of its newest center at 1663 S. Westnedge Avenue in Kalamazoo. The new center brings the number of Oak Street Health centers in Michigan to 11. “We are excited to expand access to our high-quality, value-based care to members of the Kalamazoo community with the opening of this new center,” said Tamara Jurgenson, Chief Growth Officer of Oak Street Health.“We care for the most vulnerable patients, the majority having two or more chronic conditions. As our organization continues its mission to rebuild healthcare as it should be, we look forward to improving patient outcomes in Michigan and helping older adults live their healthiest lives.”
WELL Health Technologies Corp. (TSX:WELL)(OTC:WLYYF), a company focused on consolidating and modernizing clinical and digital assets within the healthcare sector, is pleased to announce: WELL has completed its previously announced acquisition of all the issued and outstanding shares of Adracare Inc., a comprehensive omni-channel practice management platform serving over 6,800 allied healthcare practitioners in five countries. The Adracare platform was built to support providers of all sizes from SMB to large enterprises, including some of the largest physiotherapy and medicinal cannabis companies in Canada who use and private label the Adracare platform to support their customers. Adracare is expected to be immediately accretive to WELL as it is expected to generate annualized revenue of close to $2 million[1]and be profitable on an EBITDA basis.
1Life Healthcare Inc. (NASDAQ:ONEM), a leading human-centered and technology-powered primary care organization, announced it has begun administering vaccinations for Phase 1a populations who work or live in San Francisco, as defined by the San Francisco Department of Public Health, and in alignment with California Department of Public Health and Center for Disease Control vaccine guidelines. Efforts to begin vaccinations in other markets are proceeding as well. One Medical is amongst the first primary care organizations in the nation to announce vaccination services. One Medical will vaccinate healthcare workers and other Phase 1a groups, as defined by the San Francisco Department of Public Health, and will also provide these individuals with complimentary 60-day One Medical memberships. An initial supply of hundreds of doses of vaccines is expected to grow significantly in the coming weeks.
Amazon.com Inc. (NASDAQ:AMZN) announced its first-ever purchase of eleven Boeing 767-300 aircraft, expanding its fleet to continue to serve customers. The purchases include seven aircraft from Delta and four aircraft from WestJet, which will join the network by 2022. AmazonAir’s fleet expansion comes at a time when customers are relying on fast, free shipping more than ever. “Our goal is to continue delivering for customers across the U.S. in the way that they expect from Amazon, and purchasing our own aircraft is a natural next step toward that goal,” said Sarah Rhoads, Vice President of Amazon Global Air. “Having a mix of both leased and owned aircraft in our growing fleet allows us to better manage our operations, which in turn helps us to keep pace in meeting our customer promises.”
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