The Miami-based Cano Health, which has developed a value-based primary care delivery platform for seniors, has acquired Miami-based University Health Care for $600 million.
University’s services align with the Cano Health model, which aims to provide members access, quality, and wellness through a high-touch and high-tech model of care, according to officials in a June 14 announcement. The transaction includes $540 million in cash and $60 million in equity. It was financed through cash on hand, incremental borrowings under its existing credit facilities and common equity issued to University’s shareholders, they added.
Cano Health operates value-based primary care centers and supports affiliated medical practices that specialize in primary care for seniors in Florida, Texas, Nevada, and Puerto Rico. It says it provides services to Medicare Advantage members, particularly in underserved communities where it can make the greatest impact. Indeed, 80 percent of Cano’s patients are Latino or African American, and many are considered low-income; 50 percent of its members are dual eligible for Medicare and Medicaid.
Cano partners with health plans such as Humana, UnitedHealthcare, Anthem, Aetna, and Centene. As part of its care coordination strategy, it provides population health management tools including telehealth, prescription home delivery, wellness programs, transition of care, and high-risk and complex care management.
In a recent peer-reviewed study published in the American Journal of Managed Care , it was revealed that the company's population health management program helped reduced COVID-19 mortality by 60 percent, compared to a mirror group of Florida patients.
As part of the strategy, Cano Heath used data to stratify its managed care population–including Medicare patients and Medicaid patients in historically underserved areas–to identify higher risk individuals by age and comorbidities. The organization then assigned these higher risk individuals to the care of a COVID-19 Task Force composed of specialized clinicians and healthcare professionals.
With this new acquisition, Cano Health leaders believe the bolt-on acquisition to Cano Health’s proprietary population health management platform leverages the company’s “operational and clinical care services to improve health outcomes for University patients while strengthening the company’s position in the fragmented Florida market.”
With this combination, Cano Health expects to continue to grow by serving its combined approximately 143,000 members in 88 medical centers, with over 1,000 staff and affiliate providers across the country.
What’s more, combining with University will add approximately 24,000 Medicare Advantage members. The deal will also increase Cano Health’s capitated Medicare organic membership and revenue growth due to a significant increase in clinical capacity and leveraging of Cano Health’s brand in the markets in which University operates, company executives said.
The merger will also “deliver on Cano Health’s strategic objective to build, buy, and manage medical practices. Cano Health continues to pursue three key initiatives to realize the massive opportunity in value-based primary care: 1) organic growth, 2) new market entry and 3) targeted acquisitions,” officials stated.
Cano Health also now estimates full year 2021 adjusted EBITDA between $100 million and $110 million and reaffirms its full year 2021 membership guidance of 154,000 to 162,000 members and revenue guidance of between $1.4 billion and $1.5 billion, according to the announcement. In November, the company announced it was entering into a merger agreement Jaws Acquisition Corp., a publicly traded special purpose acquisition company (SPAC).
“This transaction is a significant step forward for Cano Health and our patients, as it will allow us to bring our brand of affordable, high quality primary care to more patients in the Florida market and accelerate Cano Health’s profitable growth,” Marlow Hernandez, D.O., co-founder, chairman and CEO of Cano Health. “University is a premier provider of value-based care, and we are thrilled to welcome the world-class University team to the Cano Health family. Our model has proven effective at providing industry-leading outcomes while controlling costs, and we look forward to delivering care at a larger scale than ever before.”
