Skylight Health Makes Its Largest Acquisition With NeighborMD Purchase; Expects To Add $35 Million Doubling Revenue And Expand Risk Contracts To Existing Practices In Florida

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Skylight Health Group Inc. SLHG SLHG announced the execution of a definitive agreement to acquire NeighborMD (NMD) which will close concurrently with a debt facility of $20 million that the company has arranged with a New York-based lender.

Based in central and southern Florida, NMD operates 9 owned practices offering primary care services to over 5,000 lives. Within these, NMD has over 1,100 MA lives in full-risk contracts with two leading healthcare payors in Florida, Humana, and CarePlus. In addition, NMD provides complete management services for over 1,400 additional MA lives through its affiliated providers and practices.

NMD’s existing contracts offer competitive capitation fee schedules and allow for broad geographic coverage, with over 30 Florida counties covered, including all counties in which company currently operates. Of the Medicare Advantage lives at full risk, NMD currently sees an average reimbursement of $10,000 to $12,000, per member/per year, and Skylight expects to receive the same, thereby providing the capital to focus on the patient needs and leading to improved patient health outcomes.

At the expected close of the acquisition, all key leadership and operational teams will continue with Skylight. With over 5 years of experience in leading and growing a successful delivery against the MA risk contracts, the company is excited to welcome all NMD employees, providers, and support teams to its growing organization.

Total consideration for NMD will be $8 million paid in cash at closing. In conjunction with the closing of NMD, the company has also arranged a $20 million debt line facility with a New York based credit lender that will close at the same time as the closing of the acquisition. Terms of the facility will allow for the Company to draw down $10 million to fund the NMD acquisition including working capital to support integration costs and operating expenses. The company will still have $10 million and working capital available to fund additional acquisitions. The term of the facility is 3 years, with an annual coupon of SOFR plus 11% paid in cash.

Following the acquisition, the company will also be strongly positioned with risk contracts to begin focusing on its pipeline of acquisitions in Florida that will present strong Medicare and MA growth. This is in addition to the existing Medicare lives within its practices in Jacksonville, Florida.

TTM revenues from primary care including MA contracts were approximately $35 million on an unaudited basis. While NMD has not yet generated profitability, with its scale in combination with Skylight and planned initiatives, the company expects to become profitable this year. The expected expansion of the risk contracts to existing Skylight practices in Florida represents a significant organic growth opportunity. 

The company expects to close the transaction in short order following customary closing procedures, including required board and exchange approvals. The company will issue a release upon closing of the transaction.

*All references to “dollars” or “$” or “US$” in this article refer to United States dollars

This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.