Skylight Health Executes Definitive Agreement to Acquire NeighborMD to Expand in Florida and Enters Medicare Advantage Global Risk
May 03 2022 - 8:00AM
Skylight Health Group Inc. (NASDAQ: SLHG; TSXV: SLHG) (“Skylight
Health” or the “Company”), a multi-state primary care management
group in the United States, today announces the execution of a
definitive agreement to acquire NeighborMD (NMD) which will close
concurrently with a debt facility of US $20 million that the
Company has arranged with a New York-based lender.
Based in central and southern Florida, NMD
operates 9 owned practices offering primary care services to over
5,000 lives. Within these, NMD has over 1,100 MA lives in full-risk
contracts with two leading healthcare payors in Florida, Humana,
and CarePlus. In addition, NMD provides complete management
services for over 1,400 additional MA lives through its affiliated
providers and practices. NMD’s existing contracts offer competitive
capitation fee schedules and allow for broad geographic coverage,
with over 30 Florida counties covered, including all counties in
which Company currently operates. Of the Medicare Advantage lives
at full risk, NMD currently sees an average reimbursement of
$10,000 to $12,000, per member/per year, and Skylight expects to
receive the same, thereby providing the capital to focus on the
patient needs and leading to improved patient health outcomes.
At the expected close of the acquisition, all
key leadership and operational teams will continue with Skylight.
With over 5 years of experience in leading and growing a successful
delivery against the MA risk contracts, the Company is excited to
welcome all NMD employees, providers, and support teams to its
growing organization.
Total consideration for NMD will be US $8
million paid in cash at closing. In conjunction with the closing of
NMD, the Company has also arranged a US $20 million debt line
facility with a New York based credit lender that will close at the
same time as the closing of the acquisition. Terms of the facility
will allow for the Company to draw down US $10 million to fund the
NMD acquisition including working capital to support integration
costs and operating expenses. The Company will still have US $10
million and working capital available to fund additional
acquisitions. The term of the facility is 3 years, with an annual
coupon of SOFR plus 11% paid in cash. The principal will be
amortized on a quarterly basis and subject to certain cash sweep
triggers and a final balloon payment. Cash payments including
interest will begin in July. The Company may, at its discretion,
pay back the lender in part or in full at any time during the term,
without premium or penalty. In addition, the Lender will also
receive total consideration of approximately 4.5 million warrants
which will be priced and have their expiry details determined at
the date of close. Half (50%) of the warrants will be held in
escrow and released in proportion to the pro-rata percentage of the
amount of any future drawdowns.
Following the acquisition, the Company will also
be strongly positioned with risk contracts to begin focusing on its
pipeline of acquisitions in Florida that will present strong
Medicare and MA growth. This is in addition to the existing
Medicare lives within its practices in Jacksonville, Florida.
“We are excited to be able to soon welcome NMD
and its team to Skylight and bring significant growth and
opportunities to our organization and shareholders in less than a
year of our NASDAQ debut,” said Prad Sekar, CEO of Skylight Health.
“With the recent announcement of our JV with CHS, this acquisition
will significantly accelerate our entry into full risk in 2022, as
originally planned for 3-5 years out. The experience, knowledge,
and capabilities that will join Skylight from the team at NMD and
our JV, allow us to see a pathway for significant growth
organically, and validation for our disciplined acquisition
strategy.”
TTM revenues from primary care including MA
contracts were approximately US $35 million on an unaudited basis.
While NMD has not yet generated profitability, with its scale in
combination with Skylight and planned initiatives, it is expected
to become profitable this year. The expected expansion of the risk
contracts to existing Skylight practices in Florida represents a
significant organic growth opportunity. The Company expects to
close the transaction in short order following customary closing
procedures, including required board and exchange approvals. The
Company will issue a release upon closing of the transaction.
Conference Call Details:
Skylight will be hosting a conference call for
investors and analysts to discuss this announcement. Please see the
details below to participate:
Date: |
Date: Tuesday, May 3, 2022 |
Time: |
10am EST |
Dial-in: |
416-915-3227 |
Canada/USA TF: |
1-800-319-8560 |
When prompted, callers should enter passcode
572646 followed by the pound key (#)
About Skylight Health
Group
Skylight Health Group (NASDAQ: SLHG; TSXV: SLHG)
is a healthcare services and technology company, working to
positively impact patient health outcomes. The Company operates a
US multi-state primary care health network comprised of physical
practices providing a range of services from primary care,
sub-specialty, allied health, and laboratory/diagnostic testing.
The Company is focused on helping small and independent practices
shift from a traditional fee-for-service (FFS) model to value-based
care (VBC) through tools including proprietary technology, data
analytics, and infrastructure. In an FFS model, payors (commercial
and government insurers) reimburse on an encounter-based approach.
This puts a focus on the volume of patients per day. In a VBC
model, the providers offer care that is aimed at keeping patients
healthy and minimizing unnecessary health expenditures that are not
proven to maintain the patient’s well-being. This places an
emphasis on quality over volume. VBC will lead to improved patient
outcomes, reduced cost of delivery, and drive stronger financial
performance from existing practices.
Forward Looking Statements
This press release may include predictions,
estimates, or other information that might be considered
forward-looking within the meaning of applicable securities laws.
While these forward-looking statements represent our current
judgments, they are subject to risks and uncertainties that could
cause actual results to differ materially. You are cautioned not to
place undue reliance on these forward-looking statements, which
reflect our opinions only as of the date of this release. Please
keep in mind that we are not obligating ourselves to revise or
publicly release the results of any revision to these
forward-looking statements in light of new information or future
events. When used herein, words such as "look forward," "believe,"
"continue," and "building," or variations of such words and similar
expressions are intended to identify forward-looking statements.
Factors that could cause actual results to differ materially from
those contemplated in any forward-looking statements made by us
herein are often discussed in filings we make with the Canadian and
United States securities regulators, including the Securities and
Exchange Commission, available at: www.sec.gov, and Canadian
Securities Administrators, available at www.sedar.com, and on
our website, at skylighthealthgroup.com.
For more information, please visit our website or contact:
Investor Relations:Jackie
Kellyinvestors@skylighthealthgroup.com416-301-2949
Neither the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
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