Expectations Growing for a Post-Pandemic Boom In Healthcare Consolidations
Palm Beach, FL – October 28, 2020 – Strained finances are set to accelerate mergers and acquisitions in the healthcare industry in the wake of global pandemic. Providers have been consolidating over the last decade as organizations pursue economies of scale and expand vertically and horizontally. Post–Covid-19, it is expected that larger healthcare groups and investors will accelerate their acquisitions of smaller hospitals, physician practices and alternative sites of care. Strained finances and a sharp drop in procedure volumes have pushed organizations hard hit by the pandemic to entertain acquisition offers. Bain’s 2020 US Front Line of Healthcare Survey showed 70% of physicians in independent practices were amenable to acquisition (see Figure 1). The findings were consistent across surgical specialties (74%), primary care physicians (69%) and other office-based practices (67%). Both surgeons and office-based physicians were willing to consider an acquisition. Active companies in the markets this week include: Teladoc Health (NYSE: TDOC), CB2 Insights, Inc. (CSE:CBII) (OTCQB: CBIIF), Ontrak, Inc. (NASDAQ: OTRK), OncoCyte Corporation (NYSE: OCX), HCA Healthcare, Inc. (NYSE: HCA).
In 2019, 30% of physicians who owned practices reported that they would sell their practice in the next two years, according to Bain research. Today, physicians favor acquisition by organizations that would provide increased financial stability but still offer physician autonomy, namely by other physician practices. Nearly 30% of respondents were open to acquisition by a health system, and nearly 20% said they would agree to a private equity buyout. The Bain article added: “Large healthcare organizations, including hospital groups, expect to do more mergers and acquisitions. Fifty percent of hospital administrators said their organizations were highly likely to make one or more acquisitions over the next two years to pursue greater scale. Administrators considering M&A were most interested in alternative care sites, including ambulatory surgery centers, urgent care clinics and pharmacy in-store clinics. The next most popular target was independent physician practices, followed by standalone hospitals. Home health businesses that provide care services in the home have continued to gain market share over the last few years, fueled by lower costs and patient convenience, and investors have taken advantage of this trend.”
CB2 Insights, Inc. (CSE:CBII) (OTCQB: CBIIF) BREAKING NEWS: CB2 Insights enters Washington with acquisition of Primary Care Medical Clinic with $0.7 million in Revenue and Positive EBITDA – CB2 Insights (“CB2” or the “Company”), one of the largest multi-specialty healthcare systems in the United States, is pleased to announce that it has completed the asset acquisition of Tacoma-based medical clinic owned by Dr. Jackson (“JMC”) in University Place, Washington. The acquisition of JMC expands the Company’s bricks and mortar and telemedicine services to 15 States.
JMC has been operating in Washington for over 20 years and has a growing patient base of over 10,000 from its operations. Services to patients include primary care and urgent care. Services provided by JMC are primarily reimbursed through insurance carriers including Medicare, Medicaid and other commercial payors. The Company can expect to leverage the expertise of management and operations across its network of existing clinics to further optimize organic growth activities.
The Company anticipates continued growth in patient registrations and visits as JMC continues to thrive among the challenges most clinics have faced due to the recent COVID-19 pandemic. Further, the Company will work quickly to expand on the current offering of services by leveraging its existing telemedicine infrastructure to provide access to patients across the state of Washington. The Company will also evaluate the current services offered to determine growth in new and complimentary medical services, add new lines of revenue from insurable services, and expand overall patient care. The Company will also launch its subscription-based telemedicine offering at $199/year designed to support the needs of uninsured American with urgent and acute care needs.
“Our goal remains committed to establishing a national network of healthcare clinics to help millions of American gain access to affordable and accessible quality care,” said Prad Sekar, CEO, CB2 Insights. “With the expansion into Washington by way of acquisition, we welcome the opportunity to leverage our multi-disciplinary model to expand quickly on the services delivered by JMC to include telemedicine, sub-specialty, allied health and other complementary services for current and new patients of the practice.”
JMC represents the second acquisition by the Company since its recently announced oversubscribed private placement of CAD 5.13 million in September 2020. The acquisition is also part of a 3-pronged growth model which includes growth from the current infrastructure, new services and acquisitions. The Company’s experienced management team continues to develop a robust pipeline of accretive and strategic acquisition targets that are revenue generating, profitable and offer significant opportunities for growth. The Company paid a total cash consideration of CAD 0.37 million for JMC. Terms of the transaction include a customary transition by the previous owners for a period of up to 1 year to ensure successful continuity of care for patients in the practice. JMC reported revenues in 2019 of CAD 0.7 million and net income of CAD 0.1 million. Read more news for CB2 Insights at: https://www.cb2insights.com/news
Other recent developments in the healthcare industry include:
Teladoc Health, Inc. (NYSE: TDOC), the global leader in virtual care, has received the endorsed partner distinction from the National Labor Alliance of Health Care Coalitions (NLA), the largest alliance of labor unions and labor management coalitions, to provide an expanded suite of virtual care services. Teladoc general medical, dermatology, and mental health services, along with additional expert medical services inclusive of surgical decision support, will now be available as part of the exclusive partnership to the NLAHCC’s Coalitions, their member Funds and their six million members across all 50 states, as they fully embrace the value of virtual care to help reduce costs, expedite access and improve quality of care.
“This endorsement enables our plan sponsors to know that Teladoc Health is a trusted brand that will support them in constructing virtual care programs to meet the unique needs of their members with proven results,” said Lou Malzone, managing director, NLA. “In our initial partnership and rollout, we were impressed with the advanced capabilities of Teladoc to both drive high member utilization and support members when faced with critical and high cost claims such as those for cancer, cardiac, musculoskeletal, and other complex medical conditions. This current expansion of services supports our healthcare strategy and gives us the confidence of knowing that the NLA is working with the number one provider of virtual care.”
Ontrak, Inc. (NASDAQ: OTRK), a leading AI-powered and telehealth-enabled, virtualized outpatient healthcare treatment company, recently announced the launch of its Ontrak-CI solution for Medicare Advantage members of this National Health Plan in a simultaneous 13-state expansion.
The strong results delivered by Ontrak in successful pilots, which demonstrated an ROI and Net Promoter Score (NPS) above expectations, led to the subsequent signing of a contract in June 2020 to serve this National Health Plan’s Medicare Advantage members. The Ontrak go-live date was originally targeted for early July, 2020, however, changes in data management and delivery across all external vendors for this health plan forced an Ontrak launch delay until October, 2020.
OncoCyte Corporation (NYSE American: OCX) recently provided an update on DetermaRx’s global growth and adoption. DetermaRx is a treatment stratification test that identifies stage I-IIA non-small cell lung cancer (NSCLC) patients at high risk of recurrence, despite ostensibly curative surgery, who may benefit from the addition of chemotherapy. Since DetermaRx was commercially launched in the U.S. in January, it has begun to be reimbursed by Medicare and multiple private payers. It has seen rapid adoption in its first year of launch across 67 hospitals, including the National Comprehensive Cancer Network (NCCN) and National Cancer Institute (NCI) cancer centers.
HCA Healthcare, Inc. (NYSE: HCA) recently announced that it has collaborated with EVERFI, an international technology company driving social change through education, to launch an interactive, mental health and wellness digital education course for middle and high school students in conjunction with Mental Illness Awareness Week.
With more than 2,000 sites of care, including 186 hospitals, in communities across 21 states, HCA Healthcare is a leader in behavioral health with the knowledge and data from nearly 200,000 annual behavioral health patient encounters that enable the organization to make positive advances in educating the community about mental illness.
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