Jaws Acquisition targets primary care with Cano Health deal

Primary care provider Cano Health will receive a nearly $1.5 billion infusion as investors push deeper into a growing form of care delivered to Medicare Advantage patients.

The privately held Miami-based company said Thursday that it will merge with a publicly traded special purpose acquisition company, Jaws Acquisition Corp., in a deal aimed at fueling value-based care.

In that approach, doctors essentially focus more on keeping patients healthy or improving their health instead of waiting to treat whatever ailment makes them seek care.

Medicare Advantage plans are privately run versions of the government’s Medicare program that covers care for people who are age 65 or older or have certain disabilities or illnesses.

Cano Health treats more than 103,000 patients through a network of primary care doctors in Florida, Texas, Nevada and Puerto Rico. It brought in about $365 million in revenue last year, and CEO Dr. Marlow Hernandez said he expects big growth for value-based care.

“The market is vast, the demand is huge and the supply (of care providers) is incredibly limited,” he said.

This type of care often involves a lot of things done outside the doctor’s office. Cano Health, for instance, has drivers who take patients to and from appointments.

The company offers incentives for patients who keep up with their health screenings or keep their blood pressure under control. It also provides home visits for some minor illnesses.

About 60% of the company’s patients qualify for both Medicare and state-based Medicaid coverage.

These so-called “dual eligible” patients generate a lot of medical claims, and states want to improve their health and cut costs.

The federal government also has shifted in recent years to allow more reimbursement for value-based care.

The deal announced Thursday will value the combined company at about $4.4 billion. It includes up to $690 million in cash from Jaws and an $800 million private placement of common stock in the combination.

Investors include funds tied to BlackRock and Maverick Capital as well as Starwood Capital’s Barry Sternlicht, who is Jaws Acquistion’s chairman and will serve on the combined company’s board.

The deal is expected to close in the first half of next year, and the combined company will operate under the name Cano Health. Its stock will trade under the new ticker symbol “CANO.”

Shares of Jaws Acquisition Corp. climbed more than 4% to $10.58 in midday trading Thursday while broader markets were down.

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Follow Tom Murphy on Twitter: @thpmurphy

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