Deerfield Healthcare Technology Acquisition Corporation
PROPOSED BUSINESS COMBINATION: CareMax, CareOptimize, IMC Health (Collectively as “CareMax 2.0”)
ENTERPRISE VALUE: $692 million
ANTICIPATED SYMBOL: CMAX
Deerfield Healthcare Technology Acquisitions Corp. has entered into a definitive agreement for a business combination with CareMax Medical Group, LLC (“CareMax Medical Centers”) and IMC Medical Group Holdings, LLC (“IMC Health”), technology-enabled providers of value-based care to seniors. Following the business combination, DFHT expects to be renamed CareMax, Inc. (“CareMax” or “the Company”) and will remain listed on the NASDAQ stock market under a new ticker symbol.
Upon closing, CareMax will operate 26 wholly owned medical centers in South and Central Florida, servicing approximately 16,000 Medicare Advantage members under value-based contracts, as well as 36,000 Managed Medicaid and Affordable Care Act patients. The Company expects to have partnerships with nineteen payors, including affiliates of Anthem, Humana, Florida Blue, United Healthcare, and Centene.
CareMax medical centers offer 24/7 access to care and provide a comprehensive suite of high-touch health care and social services to its patients, including primary care, specialty care, telemedicine, health & wellness, optometry, dental, and transportation. CareMax’s differentiated healthcare delivery model, focused on care coordination with vertically integrated ambulatory care and community-centric services, ensures that members receive the right care at the right time in the most efficient setting. The goal of CareMax is to intercede as early as possible to manage chronic conditions for its patients in a proactive, holistic, and tailored manner. This intervention has a significant positive influence on patient outcomes and overall healthcare costs.
TRANSACTION SUMMARY
The total consideration for CareMax Medical Center’s business, including Care Optimize, will be approximately $364 million and, net of debt, the current equity holders will receive 68% in cash and 32% in shares of common stock. The equity holders of CareMax Medical Centers are primarily the founders and executives of the company.
The total consideration to IMC Health equity holders will be $250 million and, net of debt, the current IMC Health equity holders will receive 45% in cash and 55% in shares of common stock. The equity holders of IMC Health include Comvest Partners, a private equity firm located in West Palm Beach, Florida, and Athyrium Capital Management, a private equity firm located in New York, NY.
In addition to the approximately $144 million held in the DFHT Trust Account, healthcare investors have committed to a $405M PIPE, and RBC has committed to a new debt facility.
Assuming no redemptions of DFHT public shares, the current owners of CareMax Medical Centers and IMC Health will collectively own 27%, Deerfield will own approximately 18%, other DFHT stockholders (including other PIPE investors) will own 51%, DFHT’s sponsor will own 4% respectively of the issued and outstanding shares of common stock of CareMax immediately following the closing.
PIPE
- The Company is entering into subscription agreements to purchase an aggregate amount of 40,500,000 shares of Class A Common Stock, at $10.00 per share for an aggregate purchase price of $405,000,000
- Investors include Deerfield, Fidelity Management & Research, LLC, Eminence Capital, LP, funds and accounts managed by BlackRock, and Maverick
EARNOUT
IMC Earnout Shares
- Up to an additional 2,900,000 shares of DFHT Class A Common Stock (the “IMC Earnout Shares”) are payable after the Closing to IMC Parent if: (i) at any time during the 12-month period following the Closing Date the volume weighted average trading price of DFHT Class A Common Stock equals or exceeds $12.50 on any 20 trading days in any 30-day trading period, then 1,450,000 IMC Earnout Shares will be issued and paid to IMC Parent, and
- (ii) at any time during the 24-month period following the Closing Date the volume weighted average trading price of DFHT Class A Common Stock equals or exceeds $15.00 on any 20 trading days in any 30-day trading period, then 1,450,000 IMC Earnout Shares will be issued and paid to IMC Parent. If the $12.50 Share Price Trigger is not satisfied but the $15.00 Share Price Trigger is satisfied, DFHT shall issue and pay to IMC Parent 2,900,000 shares of DFHT Class A Common Stock in connection with the satisfaction of the $15.00 Share Price Trigger.
CareMax Earnout Shares
- Up to an additional 3,500,000 shares of DFHT Class A Common Stock (the “CareMax Earnout Shares”) are payable after the Closing to the members of the CareMax Group if: (i) if during the First Earnout Period the VWAP of DFHT Class A Common Stock equals or exceeds the $12.50 Share Price Trigger, then 1,750,000 CareMax Earnout Shares will be issued and paid to the members of the Care Max Group, and
- (ii) at any time during the Second Earnout Period the VWAP of DFHT Class A Common Stock equals or exceeds the $15.00 Share Price Trigger, then 1,750,000 CareMax Earnout Shares will be issued and paid to the members of the CareMax Group. If the $12.50 Share Price Trigger is not satisfied but the $15.00 Share Price Trigger is satisfied, DFHT shall issue and pay to the members of the CareMax Group 3,500,000 shares of DFHT Class A Common Stock in connection with the satisfaction of the $15.00 Share Price Trigger.
NOTABLE CONDITIONS TO CLOSING
Subject to the satisfaction or waiver of certain conditions set forth in the Business Combination Agreement, the closing consideration payable by DFHT to the CareMax Group in exchange for the CareMax Units will be equal to:
(a) an amount in cash equal to $364,000,000, multiplied by 68%, subject to pre-closing adjustments, including adjustments based on estimated cash, debt and working capital at Closing; and
(b) a number of shares of DFHT Class A Common Stock, rounded down to the nearest whole number, equal to $364,000,000, multiplied by 32% and divided by a reference price of $10, subject to pre-closing adjustments, including adjustments based on estimated cash, debt and working capital at Closing.
Subject to the satisfaction or waiver of certain conditions set forth in the Business Combination Agreement, the closing consideration payable by DFHT to IMC Parent in exchange for the IMC Units will be equal to:
(a) an amount equal to (A) the product of $250,000,000, multiplied by 45%, subject to pre-closing adjustments, including adjustments based on estimated cash, debt and working capital at Closing; and
(b) a number of shares of DFHT Class A Common Stock, rounded down to the nearest whole number, equal to (A) $250,000,000, multiplied by 55% and divided by a reference price of $10, subject to pre-closing adjustments, including adjustments based on estimated cash, debt and working capital at Closing.
NOTABLE CONDITIONS TO CLOSING
- It is a condition to the Closing under the Business Combination Agreement that at the Closing Date, after giving effect to (i) the redemptions each holder of DFHT Class A Common Stock is entitled to and (ii) the sale and issuance of DFHT Class A Common Stock pursuant to the Deerfield Subscription Agreements, the Subscription Agreements and the sale and issuance of other securities of DFHT between the signing and Closing, the amount of cash available to DFHT in the aggregate, including amounts held in the Trust Account, shall be no less than $50,000,000
ADVISORS
- Deutsche Bank Securities Inc. and UBS Investment Bank are acting as financial advisors and capital markets advisors to DFHT.
- Morgan Stanley & Co. LLC is acting as financial advisor to CareMax Medical Centers and Piper Sandler is acting as financial advisor to IMC Health.
- White & Case LLP and Polsinelli PC are acting as legal advisors to DFHT.
- DLA Piper LLP (US) is acting as legal advisor to CareMax Medical Centers.
- McDermott Will & Emery LLP is acting as legal advisor to IMC Health.
- Katten Muchin Rosenman LLP is acting as legal advisor to Deerfield.
MANAGEMENT & BOARD
Executive Officers
Steven Hochberg, 58
President, Chief Executive Officer & Director
A partner in the private transactions group at Deerfield Management, Mr. Hochberg joined Deerfield Management in 2013 to work on structured transactions. Mr. Hochberg has been a co-founder and manager of many healthcare companies, including DFB and DFP, and he led the merger of two New York City-based hospital systems, which created a healthcare delivery system in New York City with revenues in excess of $5 billion. Mr. Hochberg currently serves as the President and Chief Executive Officer of DFP. Mr. Hochberg has also led investments in more than 55 healthcare companies, including rollups of companies within the services and the medtech sectors. Since 2004, Mr. Hochberg has managed Ascent Biomedical Ventures, a leading venture capital firm he co-founded focused on early stage investment and development of biomedical companies. Since 2011, Mr. Hochberg had been the Chairman of the Board of Continuum Health Partners until its merger with Mount Sinai in 2013, where he is a Vice Chairman of the Icahn School of Medicine at Mt. Sinai and the Mount Sinai Health System, a non-profit healthcare integrated delivery system in New York City with over $7 billion in combined annual revenues. Mr. Hochberg serves on the board of Solar Capital and Solar Senior Capital, two publicly-traded business development companies and Solar’s private Business Development Corporation. Mr. Hochberg is also a member of the board of the Cardiovascular Research Foundation, a non-profit organization focused on advancing new technologies and education in the field of cardiovascular medicine. Mr. Hochberg graduated from the University of Michigan and earned his M.B.A. from Harvard Business School.
Christopher Wolfe, 40
Chief Financial Officer & Secretary
Mr. Wolfe currently serves as the Chief Financial Officer and Secretary of DFP. Mr. Wolfe was a partner of Capital Z Partners, a middle market private equity firm, from June 2003 until December 2017. He was responsible for sourcing, structuring, execution and monitoring of private equity transactions across a variety of verticals. Mr. Wolfe served on the board of directors of Universal American Corp. from 2009 to 2014. Prior to joining Capital Z in 2003, Mr. Wolfe worked in the mergers and acquisitions group at Credit Suisse First Boston. Mr. Wolfe graduated magna cum laude from Harvard College.
Board of Directors
Richard Barasch, 65
Executive Chairman
Mr. Barasch served as the Chairman and Chief Executive Officer of DFB from its formation until the closing of its initial business combination. Mr. Barasch currently serves as Chairman of AdaptHealth and DFP. Mr. Barasch was Chief Executive Officer of Universal American Corp., a publicly-traded health insurance and services company focused on the senior market and government programs, from 1995 until Universal American’s acquisition by WellCare Health Plans in May 2017. Mr. Barasch has developed an extensive network of contacts throughout the healthcare industry and speaks regularly at industry conferences as a healthcare services expert. He is currently founding partner of RAB Ventures, formed to invest in growth healthcare companies, Chairman of HouseWorks LLC and Co-Chairman of ELMC Risk Management Inc. He is on the Board of Advisors of the Health Policy and Management program at the Columbia University Mailman School of Public Health, where he is also an Assistant Adjunct Professor, and the Brown School of Public Health. He also serves on the Board of Trustees of the Maimonides Medical Center in Brooklyn, New York. Mr. Barasch graduated from Swarthmore College and Columbia University Law School.
Dr. Peter J. Fitzgerald, 63
Director
Dr. Fitzgerald, an interventional cardiologist with a Ph.D. in engineering, currently serves as the Director of the Center for Cardiovascular Innovation. Dr. Fitzgerald has also served as the Director of Cardiovascular Core Analysis Lab at Stanford University School of Medicine since 1997. Dr. Fitzgerald is a professor in the Department of Medicine and Engineering at Stanford. From 2004 until 2018, Dr. Fitzgerald served as the Director of the Center for Cardiovascular Technology. Dr. Fitzgerald also served as the Co-Director at the Center for Research in Cardiovascular Interventions from 1994 until 2004. Dr. Fitzgerald has been the principle and/or founder of twenty-one medical device companies, fourteen of which he transitioned from start-ups to large medical device companies. In 2009, Dr. Fitzgerald co-founded TriVentures in Israel, a venture fund focused on early-mid stage medical technology and digital healthcare. Dr. Fitzgerald was also on the founding team of LVP Capital in 2001, a venture firm focused on medical device and biotechnology start-ups. Dr. Fitzgerald graduated from Santa Clara University after which he earned his M.S. in Electrical System Engineering at Rensselaer Polytechnic Institute. Dr. Fitzgerald also earned his M.D. at Dartmouth Medical School and his Ph.D. in Biomedical Engineering at Dartmouth College, Thayer School of Engineering.
Dr. Linda Grais, 64
Director
Dr. Grais currently serves as a board member at the following biopharma companies: PRA Health Sciences (Nasdaq: PRAH), Corvus Pharmaceuticals (Nasdaq: CRVS), Zosano Pharma (Nasdaq: ZSAN) and Arca Biopharma (Nasdaq: ABIO). Dr. Grais also serves as a board member of several non-profit organizations, including Gladstone Institutes, Research Bridge Partners and PartnersGlobal. Dr. Grais was the president and chief executive officer of Ocera Therapeutics, Inc. from 2012 until 2018. From 2005 until 2011, Dr. Grais was a partner at InterWest Partners. Prior to joining InterWest Partners, Dr. Grais founded and served as the executive vice president at Structural GenomiX, Inc. from 1997 until 2004. Dr. Grais was also a corporate attorney at Wilson Sonsini Goodrich & Rosati from 1993 until 1997, and was an assistant professor in the Department of Internal Medicine at the University of California, San Francisco from 1988 until 1990. Dr. Grais graduated from Yale University after which she attended Yale Medical School. Dr. Grais also earned her J.D. from Stanford Law School.
Hon. Dr. David J. Shulkin, 60
Director
Dr. Shulkin served as the ninth United States Secretary of Veterans Affairs from February 2017 to March 2018 and the Under Secretary of Veterans Affairs for Health from July 2015 to February 2017. Prior to coming to such appointments, Dr. Shulkin was a healthcare executive, having served as chief executive of leading hospitals and health systems including Beth Israel in New York City and Morristown Medical Center in Northern New Jersey. Dr. Shulkin has also held numerous physician leadership roles including the Chief Medical Officer of the University of Pennsylvania Health System, the Hospital of the University of Pennsylvania, Temple University Hospital, and the Medical College of Pennsylvania Hospital. Dr. Shulkin has held academic positions including the Chairman of Medicine and Vice Dean at Drexel University School of Medicine. As an entrepreneur, Dr. Shulkin founded and served as the Chairman and CEO of DoctorQuality one of the first consumer-orientated sources of information for quality and safety in healthcare. He has served on boards of managed care companies, technology companies, and health care organizations. Dr. Shulkin was the 2018 University of Pennsylvania Leonard Davis Institute Distinguished Health Policy Fellow. He is board-certified internist. He received his medical degree from the Medical College of Pennsylvania, his internship at Yale University School of Medicine, and a residency and Fellowship in General Medicine at the University of Pittsburgh Presbyterian Medical Center. He received advanced training in outcomes research and economics as a Robert Wood Johnson Foundation Clinical Scholar at the University of Pennsylvania.