Benzinga | Jun 28, 2021 09:08AM EDT

DFP Healthcare Acquisitions Corp. Announces Proposed Business Combination With The Oncology Institute; Transaction Values Combined Co. At Pro Forma Enterprise Value Of $842M

The Oncology Institute is the U.S. Market Leader in Value-Based Oncology Care

DFP Healthcare Acquisitions Corp ("DFP") (NASDAQ:DFPH, DFPHW))))), a special purpose acquisition company sponsored by an affiliate of Deerfield Management Company, L.P. ("Deerfield") and Richard Barasch, a veteran healthcare public company executive and investor, announced today that it has entered into a definitive agreement for a business combination with The Oncology Institute ( "TOI" or "The Company"), the U.S. market leader in providing value-based oncology care. Following the business combination, DFP expects to be renamed The Oncology Institute and will remain listed on the NASDAQ stock market under new ticker symbol "TOI".

The Oncology Institute Investment Highlights

* Leading Value-Based Care Provider in Oncology -- A Huge Addressable Market: The Oncology Institute is leading the shift to value-based oncology care by utilizing a highly scalable and replicable operating model to disrupt the $200 billion U.S. oncology market. Believing that every patient deserves access to world-class care close to home, The Oncology Institute currently manages over 50 community-based practice locations in California, Nevada, Arizona, and Florida. TOI serves approximately 1.3 million lives under value-based contracts and treats over 46,000 patients each year through relationships with leading payors and at-risk physician groups.

* Highly Differentiated, Technology Enabled Care Model: TOI's data-driven model provides patients with comprehensive care and symptom management, which improves patient experience, minimizes unnecessary hospitalizations, and supports adherence to treatment regimens. Staffed by a clinical team that speaks more than 20 languages, The Oncology Institute offers patient navigators, in-house labs, transfusions, and dispensary services as well as cutting-edge treatments including an outpatient stem cell transplant program and access to more than 130 clinical trials.

* Well Positioned for Long Term Growth: After generating a 30% revenue CAGR from 2016-2020, The Oncology Institute will pursue a strategy of organic growth and selected acquisitions to accelerate growth trajectory in collaboration with payor and at- risk providers. TOI's pipeline of organic growth initiatives in new and existing markets exceeds 3.5 million patient lives, and the company is also pursuing an actionable acquisition pipeline in new and existing markets.

* Highly Experienced Management Team: The Oncology Institute's management team will be comprised of seasoned healthcare industry professionals, led by Chief Executive Officer Brad Hively, Chief Operating Officer Daniel Virnich, M.D., Chief Medical Officer Yale Podnos, M.D., Chief Administrative Officer Matt Miller, M.D., and Chief Financial Officer Scott Dalgleish. Richard Barasch will become Executive Chairman of The Oncology Institute upon closing of the business combination. Mr. Barasch was formerly Chairman and CEO of Universal American Corp., a publicly traded health insurance and services company from 1995 until Universal American's acquisition by WellCare Health Plans in May 2017. Mr. Barasch has led the successful business combinations of AdaptHealth Corp. (NASDAQ:AHCO), which came public in 2019 via a business combination with DFB Healthcare Acquisitions Corp. and CareMax (NASDAQ:CMAX), which came public in 2021 via a business combination with Deerfield Healthcare Technology Acquisitions Corp.

Summary of the Transaction

The transaction values the combined company at a pro forma enterprise value of approximately $842 million and implies a multiple of 2.4x estimated 2022 revenue. The current equity holders of The Oncology Institute, which include Management, Havencrest Capital Management, M33 Growth, and ROCA Partners, will be entitled to receive an additional earn out payment of up to 12.5 million shares of The Oncology Institute common stock.

In addition to the approximately $230 million held in the DFP Trust Account, premier healthcare investors, including Fidelity Management & Research Company LLC, Deerfield Management Company, L.P. and Redmile Group, LLC have committed to purchase $275 million of shares of common stock of the Company at $10.00 per share through a private placement in public entity (a "PIPE").

Assuming no redemptions of DFP public shares, the current equity holders of The Oncology Institute will collectively own 48%, Deerfield will own approximately 14%, other DFP stockholders (including other PIPE investors) will own 33%, and DFP's sponsor will own 5% respectively of the approximately 106 million issued and outstanding shares of common stock of The Oncology Institute immediately following the closing.

DFP estimates that, assuming no redemptions of DFP shares, the Company will have an initial market capitalization of approximately $1.06 billion, with approximately $225 million of cash on the balance sheet and a strong growth trajectory. The Oncology Institute expects to use this capital to accelerate its de novo and acquisition-driven growth initiatives.