The first specialist in oncology goes public via SPAC

The first publicly traded oncology specialist made his public debut this week following its merger with a special purpose acquisition company.

The Oncology Institute, a supplier with 50 offices in four states headquartered in the Los Angeles area, has completed its combination with DFP Healthcare Acquisitions Corp. and now trades on the NASDAQ under the symbols “TOI” and “TOIIW”. The company’s shares are currently valued at around $ 8.50, down more than 18% from their initial value on Monday.

Founded in 2007, TOI boasts a brand of value-based cancer care that its executives say lacks in today’s cancer treatment industry, which is primarily delivered on a fee-for-service basis. Brad Hively, CEO of the company, said TOI manages more than 1.5 million patients on value-based contracts, which represents just over half of its revenue. Of the 1.5 million patients, about half are covered by managed Medicaid, followed by commercial insurance, and then by Medicare Advantage. About the other half of TOI’s income is fee-for-service.

Hively said TOI bears the risk for the cost of patient cancer care through agreements with primary care providers like Optum, CareMore Health and P3 Health Partners of UnitedHealth Group, which have funded contracts with health plans. . None of the three companies have commented on their agreements with TOI.

“Then they subcapitulate us to provide and pay for all the cancer care below that,” he said.

It’s a model, Hively said, that should be extended to more communities, and the capital it will raise through its IPO will help accelerate that growth. He said he sees TOI as a market leader in value-based oncology.

“There’s a lot of rarity value,” Hively said. “There just aren’t a lot of people doing what we’re doing.”

It’s possible that TOI’s value-based care focus will help it differentiate itself in what is currently a crowded field of oncology players, said Matt Wolf, director and senior healthcare analyst at RSM. . Either way, making a PSPC public will certainly increase awareness of its name, he said.

Wolf said he was not surprised to see the first pure-play oncology practice debut in this fashion. The COVID-19 pandemic has only accelerated the demand for oncology, but an aging population and rising cost of cancer drugs have long served to add value to the system, he said. he declares.

“There’s just a lot of money going into oncology,” Wolf said. ” Years ago.

TOI employs around 80 clinicians, including just over 50 physicians and a mix of nurse practitioners and medical assistants, Hively said. The company achieved $ 155 million in revenue in 2019 and projects that will reach $ 345 million in 2022, from a slideshow. The PSPC deal valued TOI at $ 842 million.

This is the third PSPC agreement sponsored by subsidiaries of Deerfield Management Company, said Richard Barasch, who led the agreements and is now a member of the TOI board of directors. Barasch also oversaw the mergers of PSPC with AdaptHealth in 2019 and CareMax in June.

“It’s not just about controlling costs,” Barasch said of the TOI deal. “This is a game aimed at improving quality at a better cost. And taking it one step further … a good part of the business is about improving access to cancer treatment for people in the lower half of the income scale. “

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