The health care SPAC boom continues.
On Friday, Deerfield Healthcare Technology Acquisitions Corp. (Nasdaq: DFHT) announced it is acquiring CareMax Medical Group and IMC Medical Group Holdings for $364 million and $250 million, respectively.
The New York-based Deerfield — a special purpose acquisition company — says it plans on merging the two senior care organizations and taking the combined enterprise public.
After doing so, the combined entity will be renamed “CareMax Inc.,” with a Nasdaq ticker symbol to come later.
“CareMax’s differentiated health care delivery model, focused on care coordination with vertically integrated ambulatory care and community-centric services, ensures that members receive the right care at the right time in the most efficient setting,” Deerfield noted in a press release. “The goal of CareMax is to intercede as early as possible to manage chronic conditions for its patients in a proactive, holistic and tailored manner.”
As currently structured, CareMax and IMC Medical Group are each technology-enabled providers of value-based care to seniors. Both companies are headquartered in Miami.
Following the combination, CareMax will oversee 26 wholly owned medical centers in Florida, serving roughly 16,000 Medicare Advantage (MA) members in value-based contracts, in addition to thousands of others in managed care.
Overall, CareMax will have partnerships with 19 different payers, including affiliates of Anthem (NYSE: ANTM), Humana (NYSE: HUM), United Healthcare (NYSE: UNH), Centene (NYSE: CNC) and Florida Blue.
On top of its brick-and-mortar medical centers, CareMax will own CareOptimize, a technology platform that is used by health care providers across the U.S.
Approximately 64% of CareMax patients are dually eligible for Medicare and Medicaid, according to Deerfield.
“Our patients live in medically underserved communities where the hospital has become the first, and often only, option for health care,” the blank-check company highlighted in an investor presentation. “We specifically focus on access and quality for underserved communities.”
Ultimately, Deerfield hopes to create a vertically integrated “one-stop shop” for its patients.
Although a chunk of the business will be focused on center-based care, CareMax’s whole-person approach to health will also tie in home health visits and house calls. Other wrap-around services for seniors will include primary care, transportation and healthy meals, plus other offerings focused on social determinants of health.
CareMax will likewise leverage virtual care tools, which have grown exponentially more popular during the COVID-19 pandemic.
Upon closing, CareMax will be led by CEO Carlos de Solo, who founded CareMax Medical Centers in 2011 and CareOptimize in 2015. Bill Lamoreaux, the current CEO of IMC Medical Group, will become executive vice president of CareMax.
Richard Barasch, the veteran health care executive at the helm of Deerfield, will serve as executive chairman of the combined company upon closing. Barasch also has ties to home health equipment company AdaptHealth Corp. (Nasdaq: AHCO), which went public last year.
“Value-based care, built upon the premise of providing extensive primary care, is recognized as an effective way to lower health care costs and improve patient outcomes in Medicare Advantage, especially for dual-eligible beneficiaries and those with chronic conditions,” he said in a statement. “We believe that CareMax operates a best-in-class delivery model supported by a highly scalable technology backbone.”
The $364 million price tag for CareMax Medical Center and CareOptimize will be a mix of cash and stock. Current equity holders of CareMax Medical Centers are primarily the founders and executives of the company.
The $250 million purchase of IMC Medical Group will also be a mix of cash and stock. The company’s current equity holders include private equity firms Comvest Partners and Athyrium Capital Management.
To finance the acquisitions and merger, Deerfield will sell $400 million in stock to multiple investors, including Fidelity Management & Research, Maverick and Eminence Capital, as well as funds and accounts managed by BlackRock. RBC Capital Markets will provide debt financing.
Assuming no redemptions of Deerfield public shares, the current owners of CareMax Medical Centers and IMC Medical Group will collectively own 27% of the combined enterprise.
“We are excited to invest and partner with [Deerfield] as part of the combination of these two best-in-class, value-based primary care organizations,” Roger Marrero, a senior partner at Comvest Partners, said in a statement. “Primary care has always been the gatekeeper for most health care spend, and we believe this model represents the best way to improve quality outcomes and manage costs across the health care continuum.”
Moving forward, CareMax will pursue a dual strategy of organic growth and acquisitions. The company projects organic revenue growth of 15% over the next few years, noting that figure could be higher depending on future transactions.
Deerfield estimates that CareMax will have an initial market capitalization of about $800 million, with approximately $233 million of cash on its balance sheet. The combined company’s total pro forma enterprise value will be $692 million at closing.
“CareMax plays a significant role in the lives of our members by providing accessible, quality medical care and comprehensive social activities and services,” de Solo said in a statement. “Seniors represent the most significant opportunity to lower the national health care spend, and we believe that CareMax possesses the technology, knowledge and know-how to continue to bend this cost curve.”