HealthLynked a global healthcare network focused on care management of its members and a provider of healthcare technologies that connect doctors, patients, and medical data, today announced that it has signed a definitive agreement to sell its ACO Health Partners (“AHP”) subsidiary to PBACO Holding, LLC (“PBA”), which operates under the DBA Palm Beach Accountable Care Organization (“PBACO”). Under the terms of the agreement, HealthLynked will receive the following consideration:
- $750,000 in cash paid at signing of the definitive agreement.
- Up to $2.25 million incremental cash based on agreement to participate in PBACO by AHP’s existing physician practices or newly added practices, scaled based on the number of covered patients transferred to PBACO by July 31, 2023.
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In the event that PBA completes a planned initial public offering (“IPO”) by August 1, 2024, HealthLynked will receive shares in the public entity at the time of the IPO with a value equal to AHP’s 2021 earnings times the EBITDA multiple used to value the public entity’s IPO shares, net of any cash consideration previously paid by the buyer. For example, if the Healthlynked portion of the public entity’s shares are valued at $10.0 million, HealthLynked would receive approximately $10.0 million in shares of the public entity, less up to $3 million cash consideration received pre-IPO, for net incremental consideration of $7 million in IPO shares. The total consideration, including all IPO shares, vest half at the time of the IPO and half subject to a five-year earnout based on the performance metrics of AHP, or until AHP is transferred to PBACO. The transfer is expected to occur by 2024, at which time the earnout conditions would no longer apply and the balance of the escrowed earnout shares would be issuable to HealthLynked without any required performance metrics.
In the event that PBA goes public through means other than an IPO, the parties would modify the terms to implement such alternate structure. In the event PBA does not go public within eighteen months of the signing date, by August 1, 2024, the transaction consideration is capped at the initial cash consideration of up to $3 million.
HealthLynked will also receive the net proceeds, including allocation for expenses, from any Medicare Shared Savings related to AHP’s performance year 2022, which, if earned, would be determined and paid by the Centers for Medicare and Medicaid Services by October 2023.
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HealthLynked will allocate up to $500,000 of the incremental $2.25 million participation-based cash proceeds as an advance to AHP’s participating physicians to incentivize participation in PBACO going forward and continued quality patient care. Participating physician advances will be repaid out of AHP’s 2023 performance year Medicare Shared Savings received in 2024.
Effective as of January 17, 2023, PBA assumes responsibility for managing AHP’s business operations and for AHP’s operating expenses. Formal transfer of equity ownership of AHP from HealthLynked to PBA will occur at the earlier of PBA’s IPO, PBA going public by other means, or, if PBA does not go public, on August 1, 2024. Until that time, HealthLynked has the right, but not the obligation, to reacquire AHP for a price equal to any consideration already paid by PBA for AHP, plus all expenses incurred by PBA in operating AHP after January 16, 2023.
HealthLynked discontinued its ACO/MSO business segment with the transfer of operations to PBA.
George O’Leary, HealthLynked’s CFO stated, “HealthLynked and AHP are very excited to partner with PBA to have our ACO participating practices and their Medicare patients in the very capable hands of PBACO, the number one ACO in Medicare shared savings in four of the last five years with 100% quality scores over the last two performance years.”
Dr. Michael Dent, HealthLynked’s CEO stated, “We are thrilled to be working with such a likeminded group that prioritizes physician efficiency and high quality patient care. We look forward to expanding our relationship by offering our HealthLynked online concierge services to their participating practices and patients.”
Dr. Hansen, PBACO’s Physician CEO stated, “We are excited to merge two already successful companies and expect it will yield a great outcome for both organizations and all stakeholders. AHP is a high performing ACO with ten years of experience and represents important markets aligned with PBACO’s growth goals. Both organizations are aligned in supporting independent physicians to provide efficient and high quality patient care.”
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