CareMax, Inc. Completes Acquisition of Steward Health Care System’s Medicare Value-Based Care Business
MIAMI–(BUSINESS WIRE)–CareMax, Inc. (NASDAQ: CMAX; CMAXW) (“CareMax” or the “Company”), a leading technology provider of value-driven care for seniors, today announced that it has completed its acquisition of Medicare’s value-based care business from Steward Health Care System (“Steward”), establishing CareMax as one of the largest independent seniors-focused value-based care platforms in the United States . Steward’s Medicare value-based care business includes a Medicare Direct Contracting Entity (“DCE”) and two Medicare Shared Savings Program (“MSSP”) Accountable Care Organizations (“ACOs”), including is one of the largest ACOs in the country.
This transaction expands CareMax’s network to approximately 2,000 providers and more than 200,000 value-based senior care patients in 10 states in 30 markets. CareMax now serves as the exclusive value-based management services organization (“MSO”) for Steward’s Medicare Advantage Network. Steward’s network also includes approximately 380,000 other paying Medicare Advantage beneficiaries and approximately 480,000 traditional Medicare beneficiaries, for whom CareMax and Steward will seek opportunities to provide value-based services.
“The completion of the acquisition is transformative for CareMax and represents another important step that CareMax has taken to redefine healthcare for seniors across the United States,” said Carlos de Solo, CEO of CareMax. “Our hybrid model of a low-capital MSO combined with high-performing medical centers sets our foundation for industry leadership as we expand value-based care across the country.”
Mr. de Solo continues: “This transaction is expected to be immediately accretive to revenue and Adjusted EBITDA. As the planning for the integration progresses, we are even more confident that this transaction is in the best interest of our patients, our company and our shareholders.
Dr. Ralph de la Torre, President and CEO of Steward, said, “CareMax and Steward believe in a future where primary and specialty care come together to redefine healthcare delivery and drive value-based success. By bringing together Steward’s rich history of value-based excellence dating back to 2010 and CareMax’s modernized approach to the value-based marketplace and senior care in particular, we believe we are all well positioned to defining the next generation of caregiving and the future of health care for older adults.
As previously announced, under the terms of the merger agreement, CareMax paid $25 million in cash and issued 23.5 million Class A common shares of CareMax to Steward shareholders at closing, subject to usual adjustments. In addition, CareMax paid approximately $36 million in cash to Steward to advance an MSSP claim covering accounts receivable related to the pre-closing period, which CareMax funded through an accounts receivable credit facility, the costs of which are paid by Steward.
Steward will have the option to receive additional shares of the Class A common stock of CareMax which, together with the initial issuance of Class A common stock issued to Steward on the initial closing, would give Steward stockholders ownership of a aggregate of 41% of the Class A common stock of CareMax. common stock at initial closing, subject to certain adjustments, on 100,000 Medicare lives from and/or attributable to Steward’s network of providers participating in risk and value-based care arrangements contracted through CareMax with an expense ratio less than 85% for two consecutive quarters. Steward shareholders have also entered into an investor rights agreement that provides certain restrictions on voting their CareMax Class A common stock, among other governance issues.
Additional information regarding the closing of the transaction will be included in a current report on Form 8-K that CareMax intends to file with the United States Securities and Exchange Commission prior to market open on Monday, November 14, 2022. .
Goldman Sachs acted as exclusive financial advisor to CareMax and DLA Piper LLP (USA) acted as legal advisor to CareMax.
SVB Securities acted as exclusive financial advisor to Steward and Sidley Austin LLP acted as legal advisor to Steward.
CareMax is a technology-driven care platform that provides value-based care and chronic disease management for older adults. CareMax operates medical centers that offer a full suite of health and social services, as well as a proprietary software and services platform that provides rules-based and workflow-based data, analytics and decision tools for physicians across the United States. Learn more at www.caremax.com.
About the Steward Healthcare System
Steward is one of the nation’s largest and most successful Responsible Care Organizations (ACOs), with more than 6,800 providers and 43,000 healthcare professionals caring for 12.3 million patients annually through a network tightly integrated of hospitals, multi-specialty medical groups, urgent care centers, skilled nursing facilities and behavioral health centers.
Based in Dallas, Steward currently operates 39 hospitals in Arizona, Arkansas, Florida, Louisiana, Massachusetts, Ohio, Pennsylvania, Texas and Utah.
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements include statements regarding our future growth and strategy and our future financial results. Words such as “anticipate”, “believe”, “budget”, “consider”, “continue”, “could”, “consider”, “estimate”, “expect”, “advise”, ” indicate”, “intend”, “may”, “could”, “plan”, “may”, “potential”, “predict”, “probably”, “pro-forma”, “draft” , “seeks”, “should”, “target”, “or “will”, or negative or other variations thereof, and similar words or phrases or comparable terminology, are intended to identify forward-looking statements. Such forward-looking statements reflect the expectations , plans or forecasts of the Company regarding future events and views as of the date of this press release. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond our control of the Company, which could lead to actual earnings or results. differ materially from those discussed in the forward-looking statements.
The important risks and uncertainties that could cause the actual results and financial condition of the Company to differ materially from those indicated in the forward-looking statements include, among others, the Company’s ability to integrate acquired businesses, including the ability to implement business plans, forecasts and other expectations after the completion of the Steward Transaction, the failure to realize the anticipated benefits of the Steward Transaction or to realize the estimated pro forma results and assumptions under -underlying, the impact of COVID-19 or any variant thereof on the Company’s business and results of operations; the availability of sites for de novo centers and the costs of opening such de novo centers; changes in market or industry conditions, regulatory environment, competitive conditions and receptivity to Company services; the Company’s ability to continue to grow, including in new markets; changes in laws and regulations applicable to the Company’s business, particularly with respect to Medicare Advantage and Medicaid; the Company’s ability to maintain its relationships with health plans and other major payers; any delay, modification or cancellation of government contracts; the Company’s future capital requirements and sources and uses of cash, including funds to meet its liquidity needs and the Company’s ability to meet covenants under its credit agreement; the Company’s ability to recruit and retain qualified team members and independent physicians; and risks related to future acquisitions. For a detailed discussion of risk factors that could affect the Company’s actual results, please see the risk factors identified in the Company’s reports filed with the SEC. All information provided in this press release is as of the date hereof, and the Company undertakes no obligation to update or revise such information except as required by law, and forward-looking statements should not be considered to represent the Company’s valuations at any date. after the date of this press release.