The first oncology expert goes public through SPAC
After merging with a special purpose acquisition company, the first publicly traded oncology expert made his debut on the stock market this week.
The Oncology Institute is a provider with 50 offices in four states and headquartered in the Los Angeles area. It ended its merger with DFP Healthcare Acquisitions Corp. and is now traded on the Nasdaq under the ticker symbol “TOI” And “TOIIW”. The company’s stock is currently valued at approximately US$8.50, a drop of more than 18% from its initial value on Monday.
TOI was established in 2007 to tout its leaders that the current cancer treatment industry lacks value-based oncology care brands, which are mainly provided on a fee-for-service basis. The company’s CEO Brad Hively stated that TOI manages more than 1.5 million patients under value-based contracts, which accounts for a little over half of its revenue. 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 revenue is charged for services.
Hively said that TOI has reached agreements with UnitedHealth Group’s Optum, CareMore Health, and P3 Health Partners and other primary care providers to bear the risk of patient tumor care costs. These providers have signed per-person contracts with health plans. None of the three companies commented on their agreement with TOI.
He said: “Then they shared us with us to provide and pay for all oncology care under it.”
Hively said that this is a model that he believes should be expanded to more communities, and the funds he raised through the listing will help accelerate this growth. He said that in value-based oncology, he believes that TOI is the market leader.
“There is a lot of scarcity value,” Hively said. “Not many people do what we do.”
RSM director and senior healthcare analyst Matt Wolf said that TOI’s value-based focus on care may help it stand out in the currently crowded field of oncology. He said that in any case, listing through SPAC will definitely increase its popularity.
Wolf said he was not surprised to see the first pure oncology practice debut in this way. He said that the COVID-19 pandemic will only accelerate the demand for oncology, but the aging population and rising costs of anti-cancer drugs have long driven opportunities to add value to the system.
“There is a lot of money for oncology,” Wolfe said. “It’s been several years.”
Hively said that TOI employs approximately 80 clinicians, including slightly more than 50 doctors, as well as nurses and physician assistants. The company’s revenue in 2019 was US$155 million and is expected to increase to US$345 million by 2022. According to the slide presentationThe SPAC transaction valued TOI at US$842 million.
This marks the third SPAC transaction sponsored by an affiliate of Deerfield Management Company, said Richard Barasch, who is in charge of the transaction and is now a member of the TOI board of directors. Barasch is also responsible for overseeing the SPAC and Adaptation health in 2019 with CareMax in June.
“It’s not just about controlling costs,” Balasch said of the TOI transaction. “This is a game that improves quality at a lower cost. Taking it a step further…a large part of the business is to make people with lower income levels better access to cancer treatment.”