Oncology institute plans $ 1 billion PSPC offer

Brad hively

Cerritos-based cancer treatment company Oncology Institute of Hope & Innovation on June 29 announced plans to go public through a PSPC affiliated with New Healthcare-focused investment firm. York Deerfield Management Co.

The deal is valued at $ 1.06 billion, with a valuation of $ 842 million attributed to the Institute of Oncology.

Approximately $ 230 million will be held in a trust account managed by PSPC, known as DFP Healthcare Acquisitions Corp. And a group of healthcare investors, including Deerfield and Fidelity Management & Research Co., have pledged to buy a $ 275 million private placement in a public entity, or PIPE.
The deal is expected to close at the end of the third or fourth quarter with the issuance of approximately 106 million common shares valued at $ 10 per share. DFP expects to be renamed Oncology Institute and will be listed on the Nasdaq Stock Exchange under the symbol TOI.

At this point, the current shareholders of the Institute of Oncology are expected to collectively own 48% of the new publicly traded entity. DFP shareholders (including PIPE investors) will own approximately 33%; Deerfield will have about 14%; and an individual investor sponsor of PSPC, Richard Barasch, will hold approximately 5%.

The Institute of Oncology was founded in 2007 in Cerritos as a for-profit cancer treatment practice focused on patients from neighboring communities. The idea is to provide a “one stop shop” for cancer treatment through acquisitions and affiliations with existing cancer treatment practices.

The institute uses a for-profit “value-based” business model, reducing the incentives to prescribe expensive chemotherapy drugs through the use of cheaper generics from an on-site dispensary and the delivery of treatment sessions. outpatient cancer therapy when possible.

“By focusing on individualized care plans, evidence-based medicine and excellent symptom control, TOI patients can achieve better outcomes with a reduced financial burden,” CEO Brad Hively said in the announcement .

“Traditional fee-for-service models focus on quantity rather than quality of care, without considering patient well-being and satisfaction as indicators of success,” Hively added. “We are committed to applying the principles of value-based care to simultaneously improve quality and manage costs. “

Over the past decade, the institute has grown primarily through the acquisition of other cancer treatment practices in a multi-state operation. Today, it has more than 80 specialist oncology practitioners, including doctors and nurses, and approximately 600 employees in more than 50 clinics in California, Nevada, Arizona and Florida.

The institute posted around $ 188 million in revenue last year, according to a spokesperson for the company.

Through the SPAC transaction, the Institute of Oncology is expected to receive approximately $ 225 million to use for future growth initiatives.

“Our proposed combination with DFP brings us significantly closer to expanding our presence across the United States and advancing our efforts to rebuild the nation’s healthcare system,” Hively said.

Speaking from an investor’s perspective, Barash called the Institute of Oncology disrupting the status quo in cancer care.

“Brad (Hively) and his team have created a scalable and repeatable model with
duplicated capabilities that facilitate rapid expansion, ”said Barash. “We believe their data-driven, data-driven approach to cancer care is the model of the future. This business combination will create a well-capitalized company that is poised to grow organically, through accretive M&A activity and through strategic relationships with payers.

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