Digital Transformation Opportunities Corp. *
PROPOSED BUSINESS COMBINATION: American Oncology Network
ENTERPRISE VALUE: $497 million
ANTICIPATED SYMBOL: tbd
Digital Transformation Opportunities Corp. proposes to combine with American Oncology Network, a rapidly growing network of community-based oncology practices.
- The American Oncology Network, LLC (AON) is an alliance of physicians and seasoned healthcare leaders partnering to ensure the long-term success of community oncology.
- Launched in 2018, the rapidly expanding AON network represents 107 physicians practicing across 18 states.
- The executive management team of AON encompasses members with an average of more than three decades of oncology practice management experience, enabling physicians to focus on what matters most — providing the highest quality care for patients
EXTENSION – 3/8/23 – LINK
- The SPAC approved the extension from March 12, 2023 to June 30, 2023, and the option to further extend the date by which it has to consummate a business combination beyond June 30, 2023 up to three (3) times for an additional (1) month each time to September 30, 2023.
- 31,502,931 shares were redeemed.
- $150K will be deposited into the trust account to extend until 6/30/23; $50K per month will be deposited thereafter as needed
TRANSACTION
- Under the terms of the definitive business combination agreement, the proposed Business Combination values the combined company at a pro forma enterprise value of $497 million.
- Existing AON equity holders will roll 100% of their equity in AON.
- DTOC’s sponsor has agreed to subject its shares in the combined company to lock-up restrictions and various earnout thresholds.
- The proposed Business Combination, which has been approved by DTOC’s board of directors and AON’s board of managers and members, is expected to close in the first half of 2023.
PIPE
- There is currently no PIPE for this Transaction. (Note: the presentation mentions a $60M PIPE, but it is not included in any of the filed documents at this time)
- Following the date hereof and until the date of the mailing of the Proxy Statement to the stockholders of Acquiror may enter into subscription agreements with investors relating to an investment in convertible preferred stock of Acquiror.
- The aggregate gross proceeds under the Subscription Agreements shall not exceed $100,000,000.
- In connection with Acquiror seeking a PIPE Investment, Acquiror and the Company shall cooperate with each other and their respective Representatives, to use their respective commercially reasonable efforts to cause such PIPE Investment to occur.
SPONSOR EARNOUT
- DTOC Sponsor subject to earnout of 2.9 million SPAC Sponsor Shares (35% of Sponsor Shares):
- 1.7 million shares (20% of Sponsor Shares) vest at $12.50 threshold for any 20 Trading Days within any 30 consecutive Trading Day period beginning after the Closing Date and ending 60 months following the Closing Date.
- 1.3 million shares (15% of Sponsor Shares) vest at $15.00 threshold for any 20 Trading Days within any 30 consecutive Trading Day period beginning after the Closing Date and ending 60 months following the Closing Date.
- The Sponsor Shareholders agree to not transfer any of such Sponsor Shares, until the end of the day that is 12 months after the Closing Date.
- Any Sponsor Earnout Shares that are not released on or before the date that is 60 months after the Closing Date will be forfeited immediately following such date.
LOCK-UP
Company:
- The period beginning on the Closing Date and ending on the day that is 6 months after the Closing Date.
Sponsor:
- The period beginning on the Closing Date and ending on the day that is 12 months after the Closing Date.
NOTABLE CONDITIONS TO CLOSING
- The obligation of AON to consummate the Business Combination is subject to the sum of the following amounts equaling or exceeding $60 million as of the Closing:
- The aggregate cash proceeds available from DTOC’s trust account (after giving effect to all redemptions of shares of DTOC Class A common stock), plus;
- The cash funded to DTOC, AON, or any subsidiary of AON during the period between the signing of the Business Combination Agreement and Closing, or that will be funded to DTOC concurrently with the Closing, in each case pursuant to any equity or debt financing agreement or arrangement other than borrowings under the AON PNC Loan Agreement, dated April 30, 2021, plus;
- The aggregate amount of capital offered in the PIPE Investment that is unreasonably rejected by AON.
NOTABLE CONDITIONS TO TERMINATION
- The Business Combination Agreement may be terminated by either party if the Business Combination is not consummated on or before March 12, 2023.
- Or if a law comes into effect or a governmental order is issued permanently restraining, enjoining, making illegal or otherwise prohibiting the consummation of the Business Combination.
- In the event the Business Combination Agreement is terminated, AON will pay to the Sponsor a termination fee of $18 million no later than the earlier of:
- (a) the date that is six months following the termination and
- (b) the date on which the alternative transaction is consummated.
ADVISORS
- Paul Hastings LLP is serving as legal advisor to DTOC.
- Woolery & Co. PLLC and Dentons US LLP are serving as legal advisors to AON.
MANAGEMENT & BOARD
Executive Officers
Kevin Nazemi, 39
Chairman of the Board and Chief Executive Officer
Mr. Nazemi currently serves as a Partner at Lobby 7 Capital Inc., a startup investment and incubation firm. From November 2012 to April 2015, Mr. Nazemi served as the Co-Chief Executive Officer of Oscar Health Insurance, a technology-driven health insurance company. Mr. Nazemi co-founded Oscar Health in November 2012. In January 2016, Mr. Nazemi founded Renew Health Limited, a technology-driven health platform focused on retirees, and served as its Chief Executive Officer from January 2016 to January 2020. From 2003 to 2008, Mr. Nazemi held several positions at Microsoft Corporation. Mr. Nazemi currently serves on the board of directors of Premera Blue Cross, the largest health plan in the Pacific Northwest. Mr. Nazemi completed a joint MBA/MPP program offered by the Kennedy School of Government, where he was a Zuckerman Fellow, and the Harvard Business School, where he was a Paul & Daisy Soros Fellow. Mr. Nazemi holds a Bachelor of Science from Massachusetts Institute of Technology.
Kyle Francis, 47
Chief Financial Officer
Mr. Francis recently served as the Chief Executive Officer of Southern California Reproductive Center, a leading chain of fertility clinics, from September 2015 to June 2020, and as its Chief Financial Officer from May 2014 to September 2015. Prior to that, Mr. Francis served as Chief Financial Officer from December 2010 to May 2014 and as EVP, Business Development from November 2008 to December 2010 of Apollo Medical Holdings, Inc., a publicly traded healthcare management company. Prior to Apollo, Mr. Francis was an investment banker at CIBC World Markets Inc. from March 2000 to September 2008, in the middle market healthcare and capital markets groups focused on healthcare, technology and industrials. Mr. Francis currently serves on the board of directors of RaceRocks, a Canadian technology company focused on virtual reality training and remote learning for the defense industry. Mr. Francis also acts as an executive advisor to a number of private healthcare companies. Mr. Francis graduated from McGill University with a Bachelor of Commerce.
Board of Directors
Bradley Fluegel, 59
Director
Mr. Fluegel currently advises a number of technology-enabled healthcare companies including Cricket Health Inc., Galileo Inc., Hims Inc., Pager Inc., and VillageMD Chicago, LLC. From October 2012 to January 2018, Mr. Fluegel was the Senior Vice President, Chief Healthcare Commercial Market Development Officer and Chief Strategy and Business Development Officer for Walgreens Company. Prior to Walgreens, Mr. Fluegel served as an executive in residence at Health Evolution Partners from April 2011 to September 2012, Executive Vice President and Chief Strategy and External Affairs Officer of Anthem Inc. from October 2007 to December 2010, Senior Vice President of National Accounts and Vice President of Enterprise Strategy at Aetna Inc. from March 2005 to September 2007, and Chief Executive Officer for Reden & Anders (Optum Consulting) from October 2002 to February 2005. Mr. Fluegel currently serves on the board of directors of Alight Solutions, Metropolitan Jewish Health System in New York City, Performant Financial Corporation, AdhereHealth LLC and Premera Blue Cross. Mr. Fluegel earned a MPP from Harvard University’s Kennedy School of Government and a BBA from the University of Washington. Mr. Fluegel also serves as a lecturer at the University of Pennsylvania’s Wharton School of Business.
Jim Moffatt, 62
Director
Mr. Moffatt held various leadership positions at Deloitte LLP from 1986 to 2018, including: Vice Chairman of Deloitte Consulting from January 2018 to December 2018, Global Chief Executive Officer of Deloitte Consulting from June 2015 to December 2017, Deputy Chief Executive Officer—Global for Deloitte U.S. from April 2015 to March 2017, Chairman and Chief Executive Officer for Deloitte Consulting U.S. from May 2011 to December 2015, Managing Principal for Deloitte U.S. Consulting Clients & Industries from June 2009 to May 2011, National Managing Director Consulting Client Excellence and Regions Leader from June 2007 to May 2009, Principal from June 1994 to May 2007, and Senior Manager from June 1986 to May 1994. Mr. Moffatt currently serves on several advisory boards including Centre for Neuro Skills, SparkCognition, and Icertis and is a strategic advisor to the board of Optiv Security Inc. Mr. Moffatt is also a strategic advisor to Bridgepoint LLC, Greycroft, Kyriba Corp., and March Capital and serves on academic committees for organizations including UCLA Anderson School and the UCLA Chancellor’s Cabinet Council. Mr. Moffatt holds an MBA from UCLA Anderson School of Management and a Bachelor of Arts from University of California, San Diego.
Heather Zynczak, 49
Director
From August 2016 to October 2020, Ms. Zynczak served as the Chief Marketing Officer of Pluralsight Inc. Prior to Pluralsight, from March 2012 to August 2016, Ms. Zynczak served as the Chief Marketing Officer of Domo Inc. Prior to Domo, Ms. Zynczak served as the Global Vice President of Marketing of SAPSE from February 2006 to March 2012, and as Senior Director of Product Strategy of Oracle Corporation from September 2001 to February 2006. Prior to Oracle, Ms. Zynczak served in consulting roles with Booz Allen Hamilton Inc., Boston Consulting Group, and Accenture plc. Ms. Zynczak currently serves on the board of directors of Thryv Holdings, Inc. and as an Operating Advisor to Elsewhere Partners, a growth-stage venture capital firm. Ms. Zynczak has an MBA from The Wharton School of the University of Pennsylvania and a Bachelor of Business Administration from University of Texas at Austin.