Tech-enabled primary care provider One Medical has entered into an agreement to acquire Iora Health, another primary care competitor focused on Medicare patients, in a $2.1 billion deal.
One Medical has largely focused on care for the commercially insured, so a union with Iora Health will broaden its reach in the Medicare space, the two companies announced Monday morning. The deal would expand One Medical's potential market opportunity to $870 billion.
Through the all-stock deal, Iora Health shareholders will receive 56.1 million shares in One Medical, or about 26.75% of the combined company. The companies expect the deal to close in the late third quarter or fourth quarter of this year.
“We are delighted to announce plans to combine with Iora Health, a technology-powered primary care leader delivering outstanding member-based, value-based care for adults 65+ enrolled in Medicare Advantage and other at-risk reimbursement models," said Amir Dan Rubin, CEO of One Medical, in statement.
"Together we will expand our addressable market to serve more members in more geographies with digital and in-person care across every stage of life, with further capabilities to deliver care within full-risk models. Together with Iora Health, we can deliver better health, better care, and lower costs for children, adults, and seniors," Rubin said.
One Medical said the deal will enhance its ability to enter into risk-based contracts, particularly in the Medicare space. The two companies expect the acquisition would create in excess of $350 million in revenue synergies by 2025 as well as about $30 million in annual net cost synergies in that same window.
In addition, the pair expects the deal to lead to approximately $30 million in cumulative capex savings by 2025.
“Chris McKown and I founded Iora Health over 10 years ago to build an innovative primary care model that transforms lives and improves outcomes through relationship-based care, and we are excited to take this next exciting step with One Medical,” said Rushika Fernandopulle, M.D., co-founder and CEO of Iora Health, in a statement.
“Together, with our aligned cultures, shared mission, and complementary models, we can drive even greater impact for our patients, our teams, and our investors, and most importantly, our shared vision of transforming healthcare," Fernandopulle said.
Should the deal be finalized, Iora Health will tap a representative to One Medical's board, and Fernandopulle will become One Medical's chief innovation officer.