Oak Street Health on Thursday said it acquired RubiconMD, a startup that provides telehealth specialty consults to primary-care doctors.
The primary-care provider purchased RubiconMD for $130 million in cash, with the potential for an additional up to $60 million in cash or a cash-and-stock combination based on performance milestones.
Oak Street, which went public last year, offers a capitated model of managing care for high-needs Medicare patients. The company plans to integrate RubiconMD's services so that its clinics can provide virtual specialty consults, which will allow its primary-care doctors to manage patients' care when possible and streamline referrals to specialists as needed, company officials said in a news release.
Founded in Chicago in 2012, Oak Street has expanded to more than 100 primary-care centers in 18 states. The company posted $353.1 million in revenue for this year's second quarter, up 64.7% year-over-year, and a $100.3 million net loss, compared to a net loss of $26.8 million the year-ago quarter, according to a filing with the Securities and Exchange Commission.
Oak Street has been operated at a loss since its founding.
"Oak Street Health is on a mission to rebuild healthcare as it should be, which we are doing by focusing on preventive care and driving more resources into the primary care setting," said Mike Pykosz, Oak Street's CEO, in a news release. "RubiconMD's technology platform and national footprint allows us to scale the model across our current and future markets to further our mission."
There were 203 mergers or acquisitions of digital health companies in the first three quarters of 2021, according to data compiled by Digital Health Business & Technology. That's up from 132 digital health M&A deals in the first nine months of 2020, and up from 125 and 172 transactions during the same periods of 2019 and 2018, respectively.
RubiconMD, a startup that's raised $37.9 million since its founding in 2013, comprises a network of more than 230 specialists in cardiology, nephrology, pulmonology and other major specialties. It serves more than 5,000 primary-care provider customers, primarily through eConsults—answering questions asynchronously through the company's web platform.
Providers on average save $500 to $800 per eConsult with RubiconMD, mostly by avoiding referrals, diagnostics or procedures, according to a presentation Oak Street shared with investors Thursday.
Oak Street is one of a growing number of players in an evolving senior-care market.
In June, primary-care provider One Medical announced plans to purchase competitor Iora Health for $2.1 billion, in a deal that gives it a foothold in the Medicare Advantage market. Anthem in July said it would partner with grocery chain Kroger for a jointly branded Medicare Advantage product and Humana has said it plans to open new primary-care clinics for low-income seniors.