A small group of large buyout funds and not-for-profit healthcare entities are vying for Cancer Treatment Centers of America, according to three sources familiar with the matter.
Goldman Sachs is advising on what has been a narrowly run process, which entered its second round in late June, some of the people said. A deal for CTCA, a network of cancer hospitals and outpatient centers, could be signed as soon as this month, one source said.
The Boca Raton, Florida-headquartered company was marketed off of adjusted EBITDA of approximately $115 million for its fiscal year ended June 30, one of the people said. Value expectations are north of $1 billion, the person said.
One source said about six parties moved forward in the process’s second round. Two experienced healthcare PE investors teamed up with not-for-profit national health systems, another person said.
In-person, on-site visits are coming up over the next couple of weeks, one of the people said, noting it’s unclear if every bidder group will make such visits. CTCA initially garnered inbound interest pre-covid-19, sources said.
CTCA was founded in 1988 by chairman Richard J Stephenson. Pat Basu, a seasoned healthcare, private equity and government executive, was brought on in 2019 to lead the company as CEO.
Basu was previously a partner at Chicago Pacific Founders and Pritzker Group Venture Capital. He also led several businesses for Optum/UnitedHealth, as well as helped start Doctor on Demand, a telehealth business. Basu also served as a White House advisor under former President Barack Obama.
CTCA provides integrated cancer care across its five cancer hospitals in Georgia, Illinois, Pennsylvania, Arizona and Oklahoma, as well as five outpatient care centers in Arizona and Illinois.
CTCA declined to comment on potential transactions, but wrote to PE Hub: “In addition to growing our care delivery capabilities, CTCA is expanding into the areas of value-based care, data and precision medicine, as well as a national network of oncology partnerships to increase the reach of our existing network of hospitals and clinics.”
“During this growth, we are entertaining partnerships with external organizations that share our values and augment our ability to serve more patients while preserving and enhancing the high-quality care and exceptional experience our patients have come to expect,” a company spokesperson said.
Historically speaking, CTCA has become well-known through its aggressive direct-to-consumer branding and advertising efforts over the years – a big differentiator from other oncology care providers, sources said.
While the company grew up building an out-of-network reimbursement model with a large out-of-state patient population, CTCA under Basu has actively shifted its strategy to an in-network model, which, although a lower revenue generator, is considered more en vogue, sources said.
Basu told Modern Healthcare in March that as of the conclusion of his first year, the company would be 95 percent to 98 percent in-network with all major payers.
In other private equity investment in the space, KKR-backed Australian cancer care company GenesisCare recently closed its acquisition of 21st Century Oncology. The deal for Fort Myer, Florida’s 21st Century commanded a total enterprise value close to $1.1 billion, concluding a Jefferies-run process, PE Hub wrote in December.
Elsewhere, Silver Oak Services Partners owns Integrated Oncology Network, which last year bought e+plus CancerCare, an operator of outpatient cancer centers.
General Atlantic in September 2018 injected $200 million in OneOncology, helping launch the startup through the fusion of three cancer practices and Flatiron Health, an oncology-focused software provider.
Goldman Sachs declined to comment.
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