Steward health care network6/5/2023 Importantly, the Steward EBITDA projections also reflect additional operating expenses to professionalize membership and, therefore, will fully accrue to CMAX. As such, using the base case medium-term projection would imply an undemanding c. From $10-13 million in fiscal 2022 and $15-20 million in fiscal 2023, the acquired assets are guided to generate an impressive $100-115 million of EBITDA by fiscal 2025 (implying a 100+% CAGR). But Steward's EBITDA projections are guided to ramp up further. $135 million consideration amounts to a 7-9x EV/EBITDA multiple. Relative to the projected fiscal 2023 EBITDA of $15-20 million, the initial c. As things stand, the transaction is expected to close in H2 '22. While the incremental revenue contribution stands at only $35-40 million/year under the current shared-savings accounting, the targeted conversion of 100+k lives to MA capitation would produce a considerably larger $1.6-1.7 billion revenue opportunity by fiscal 2025. At close, this would imply a total of over 200k beneficiaries and over 2k providers across ten states for CMAX, with new states reached including Arizona, Pennsylvania, and Texas, among others. The patient breakdown is as follows - 112k from MSSP ("Multipurpose Senior Services Program"), 50k from MA ("Medicare Advantage"), and 9k from DCE ("Direct Contracting"). Post-acquisition, CMAX will be the exclusive value-based MSO for Steward's Medicare Network, comprising 170k VBC beneficiaries and 1.8k providers to Steward's healthcare programs. The earnout would, however, be dependent on the conversion of 100k Medicare lives to value-based risk arrangements while maintaining an 85% MLR ratio for consecutive quarters. Steward shareholders also have the option of an earnout of additional CMAX Class A shares - a scenario that could see its current shareholders owning a sizeable c. 21% of Class A shares outstanding pre-deal), which implies a c. $25 million cash consideration and 23.5 million Class A shares (equivalent to c. As part of the deal, CMAX will provide a c. A Closer Look at the Steward Health Care System AcquisitionĬMAX recently announced the acquisition of the Medicare VBC business of Steward Health Care System. With growth funding needs also accounted for with a new credit line and CMAX's industry-leading MLR ("medical loss ratio") intact, I see plenty of upside to the shares at the current c. Strategically, acquiring Steward also widens CMAX's MSO ("Managed Services Organization") membership, significantly accelerating the path to profitability via operating leverage as the company expands its revenue base. $135 million purchase price and steady EBITDA generation ($110-115 million projected by fiscal 2025), as well as the aligned incentives (performance-linked earnout), make this a compelling deal for shareholders. CareMax ( NASDAQ: CMAX), a value-based care provider to seniors, looks set to further capitalize on secular tailwinds in the Medicare Advantage global capitation primary care space with the addition of the Medicare VBC ("value-based care") business of Steward Health Care System.
0 Comments
Leave a Reply. |