Clinic and Telemedicine Mergers & Acquisitions Proving to be Lucrative Opportunities Heading into 2021
Financialnewsmedia.com News Commentary
Dec 10, 2020, 08:45 ET
PALM BEACH, Fla., Dec. 10, 2020 /PRNewswire/ -- An overview of recent reports and articles shows that the telemedicine market is rapidly growing in all ways there are more patients, practitioners, revenues and M&As, such as the blockbuster deal where Teladoc Health (NYSE: TDOC) is absorbing chronic care company, Livongo, in what was the biggest digital health M&A deal in 2020. In August, digital health titans Teladoc Health and Livongo announced plans to merge under the Teladoc name. The deal valued Livongo at about $18.5 billion, with Teladoc primarily purchasing the chronic care company with shares. The deal is expected to close by the end of 2020, and see Teladoc shareholders owning 58% of the combined company. The companies said that their combined annual revenue would be coming in at $1.3 billion, and that their platforms and services would be integrated in an effort to provide new "whole person care" offerings. While the $18.5 billion acquisition commanded the most headlines, the quarter also had a couple deal announcements that we know to be in the range of hundreds of millions, or even over a billion. Telemedicine is witnessing an explosion that should continue into the future. In fact Grand View research predicts that the Telemedicine Market, emerging as an essential tool in the efforts to combat the novel coronavirus (COVID-19), are projected to be Worth $155.1 Billion By 2027 with a CAGR or 15.1%. Active companies in the markets this week include: Teladoc Health (NYSE: TDOC), Skylight Health Group Inc. (OTCQX: CBIIF) (CSE: SHG), WELL Health Technologies Corp. (OTCPK: WLYYF) (TSX: WELL), Oak Street Health (NYSE: OSH), 1Life Healthcare, Inc. (NASDAQ: ONEM).
The Healthcare Financial Management Association (HFMA) said: "As health systems raced to expand access, retain patients and deliver critical services virtually in response to the COVID-19 crisis, the growth of telemedicine was well documented. The combined effects of relaxed regulation, increased demand and ubiquitous accessibility of cloud-based technologies catalyzed what could be characterized as "digital health's crowning moment." The pandemic created the need for remote healthcare, enabling nascent telemedicine initiatives and companies to take advantage of the untapped receptivity among many patients and physicians to engaging in virtual encounters. In March and April of this year alone, 22 telehealth companies raised venture capital."
Skylight Health Group Inc. (CSE:SHG) (OTCQX: CBIIF) BREAKING NEWS: Skylight Health to Add 16th State with Acquisition of Florida Clinic Group with $5 million in Revenue and $1.2 million EBITDA - Skylight Health Group Inc. ("Skylight Health" or the "Company"), one of the largest multi-specialty healthcare systems in the United States, is pleased to announce that it has entered into a Letter of Intent (LOI) to purchase 100% of the shares of a Florida Primary and Urgent Care clinic group (the "Clinic"). The name of the group will remain undisclosed until the closing of the Transaction on or before January 31, 2021. The planned acquisition of the Clinic will expand the Company's bricks and mortar and telemedicine services to 16 States when including the previously announced pending acquisition of Tennessee-based Perimeter Pain and Primary Care Clinic.
The Clinic has been operating an established and fast growing multi-disciplinary network of clinics representing 6 locations across Florida. Services to patients include primary care, urgent care, allied health & wellness, laboratory procedures, drive up COVID-19 testing, and preventive screenings among others. Services provided by the Clinic are primarily reimbursed through insurance carriers including Medicare, Medicaid and other commercial payors. The Clinic also leverages telemedicine as a delivery model for its existing patient base.
The Company expects to see continued growth in patient registrations and visits as the Clinic continues to thrive notwithstanding the challenges most clinics have faced due to the recent COVID-19 pandemic. Over the past 3 years, management have demonstrated their ability to aggressively grow the business by xx% year on year. Management will remain with the Company to continue to accelerate growth across the state of Florida. Further, management will leverage their knowledge of developing a working and robust multi-disciplinary practice of allied health offerings to expand services within existing SHG clinics across other US markets. This will immediately drive new service opportunities for the current Skylight Health national base of 130,000 patients and add new insurable services revenues organically.
Prad Sekar, CEO, Skylight Health said "This acquisition is a critical component in building our multi-disciplinary model by the addition of a proven management team to help SHG build out its robust national platform. The Clinic has been innovative in its approach to bridge wellness and traditional healthcare together. This aligns with SHG's platform model and enables us to rapidly expand on services to the growing Florida market and simultaneously integrate these services across our other US markets improving the lives of our national roster of patients. Accretive acquisitions remain our number one focus and we are beyond excited to add the Clinic to our growing network of practices."
The Clinic represents the fifth announced acquisition by the Company in the last 60 days. This acquisition supports and strengthens the 3-prong growth model which includes growth from the current infrastructure, new services and acquisitions. The Company will pay as per the agreed upon terms of the LOI, a transaction value of CAD 4.8 million which will be comprised of 50% cash on closing and 50% in common shares of the Company released quarterly with 20% on closing and 10% per quarter over remaining 8 quarters from the date of Closing. Price of the shares will be calculated at a 10-day VWAP of each issue date over the 2-year period in accordance with the rules of the stock exchange on which the Company trades. In 2019, the Clinic generated CAD 5 million and EBITDA of CAD 1.2 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. The transaction is expected to close on or before January 31, 2020. Read the full release for Skylight Health Group at: https://skylighthealthgroup.com/press-releases/
Other recent developments in the healthcare industry include:
Oak Street Health (NYSE: OSH), a network of value-based primary care centers for adults on Medicare, recently announced growth plans for early 2021, including its entry into Louisiana and South Carolina. The company will open centers in New Orleans, Louisiana, as well as Columbia and Greenville / Spartanburg, South Carolina, marking its twelfth and thirteenth states. Oak Street Health will also enter new markets in existing states, with forthcoming centers in Akron, Ohio and Raleigh, North Carolina early in the New Year.
"Our mission to rebuild healthcare as it should be requires scale, and we are committed to expanding our innovative model of high-quality primary care to as many older adults across the country as possible," said Mike Pykosz, Chief Executive Officer of Oak Street Health. "While this was true long before COVID-19, the challenging and painful reality of this year only emphasizes the need for the value-based care we provide, especially for seniors with chronic conditions. We are proud to help keep our patients and communities safe and healthy in all of our existing markets, and look forward to caring for patients in Louisiana and South Carolina."
1Life Healthcare, Inc. (NASDAQ: ONEM) recently announced financial results for the third quarter ended September 30, 2020. "We are pleased to have reached new heights in performance this quarter--with our membership surpassing half of a million members and quarterly total net revenue exceeding $100 million for the first time," said Amir Dan Rubin, Chair & CEO of One Medical. "We are further seeing how One Medical's human-centered and technology-powered model is delivering impacts for multiple key stakeholders, advancing our efforts to transform healthcare at scale."
Financial Highlights for the Third Quarter 2020 are: Membership count as of quarter-end was 511,000 compared to 397,000, a 29% increase; Net Revenue was $101.7 million compared to $69.6 million, a 46% increase; Care Margin was $42.9 million, or 42% of total net revenue; Loss from Operations was $10.8 million, or 11% of total net revenue; Adjusted EBITDA was positive $3.5 million, or 3% of total net revenue; Net Loss was $16.4 million, or 16% of total net revenue; and Cash and Short-term Marketable Securities as of quarter-end were $682.3 million.
Teladoc Health (NYSE: TDOC), the global leader in whole person virtual care, recently announced that it has completed its merger with Livongo. The milestone marks completion of the most significant blending of capabilities and talent in the history of digital health. By joining the market leaders in virtual care and applied health signals, the combined company becomes the only consumer and healthcare provider partner to span a person's entire health journey.
WELL Health Technologies Corp. (OTCPK: WLYYF) (TSX: WELL), a company focused on consolidating and modernizing clinical and digital assets within the healthcare sector, recently announced: WELL completes the acquisition of all the issued and outstanding shares of ExcelleMD Inc. ("ExcelleMD") and its affiliate VirtuelMED Inc. ("VirtuelMED") following the closing of the share purchase agreement dated December 8, 2020 with the shareholders of ExcelleMD and VirtuelMED. - ExcelleMD is a Montréal based omni-channel healthcare company providing both virtual and in-person care via its five multi-disciplinary clinics and 38 healthcare practitioners. ExcelleMD offers an extensive menu of services including primary healthcare, executive health and aesthetic services. - ExcelleMD's current Annual Revenue Run-rate(1) is approximately $6M with operating EBITDA(2) margins that are greater than 20%.
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