AmerisourceBergen, TPG to acquire specialty practice network OneOncology in $2.1B deal

AmerisourceBergen Corp. and private equity firm TPG plan to buy specialty practice network OneOncology from General Atlantic in a deal valued at $2.1 billion.

The deal, which was announced Thursday, will enable AmerisourceBergen to diversify beyond its drug distribution business by expanding into the oncology space. The deal adds a network of cancer specialists to the company's portfolio and builds up its practice management services. It also gives a boost to its specialty pharmaceuticals business.

The transaction is expected to close by the end of September 2023 and is subject to the satisfaction of customary closing conditions, including receipt of required regulatory approvals. Upon closing, the minority interest in OneOncology is expected to contribute a few cents to AmerisourceBergen’s adjusted diluted EPS in the first 12 months following closing.

TPG, AmerisourceBergen and OneOncology’s affiliated practices, physicians and management team will form a new joint venture to acquire OneOncology from its existing shareholders, including current majority owner General Atlantic.

TPG will buy the majority interest in OneOncology, while AmerisourceBergen will purchase a minority stake for around $685 million in cash (35% ownership).

The "put/call" structure of the deal provides AmerisourceBergen with a capital-efficient pathway to full ownership of OneOncology in three to five years. Per the deal,TPG has a one-year put option—effective on the third anniversary of the deal closing—to require AmerisourceBergen to purchase all the JV stakes, including TPG’s interest, at 19x OneOncology's adjusted earnings before interest, taxes, depreciation and amortization.

Nashville, Tennessee-based OneOncology operates a network of independent community oncology practices with a sizable footprint. The company started with three practices, 150 physicians and 14 corporate employees. Four years later, OneOncology's footprint includes 15 practices in 14 states with 550 physicians and 940 providers.

AmerisourceBergen is focused on developing technology, practice management and data and analytics solutions to help address evolving needs and complexity for community oncology practices. OneOncology’s practice management services are viewed as complementary to AmerisourceBergen’s existing capabilities in inventory management, practice analytics and clinical trial support, according to executives in a press release.

“The investment in OneOncology will allow AmerisourceBergen to further deepen our relationships with community oncologists and expand on our solutions in specialty,” said Steven H. Collis, chairman, president and chief executive officer of AmerisourceBergen, in a statement. “As a platform built by and for community oncologists, OneOncology understands the operational complexities oncologists face and works to simplify the provider experience to drive improved patient outcomes. We are excited to work closely with OneOncology’s team and our partners at TPG, who have deep experience and a track record of success in supporting high-quality healthcare companies."

The deal also will deepen the drug distributor's relationships with a leading network of community oncology practices and further strengthens its solutions in specialty, particularly oncology, the company said.

In January, AmerisourceBergen closed its $1.3 billion acquisition of Germany-based PharmaLex to expand its global biopharma services platform.

Competitor McKesson operates US Oncology, one of the nation's largest networks of community-based oncologists.

TPG has a strong track record with its health tech and M&A investments. The private equity firm bought a majority stake in home health provider Kindred at Home in 2018 in a deal with Humana where the insurer picked up a minority stake. Two years ago, TPG sold its 60% interest in Kindred at Home to Humana in a deal valued at $5.7 billion.

TPG's healthcare investments also include the Kelsey-Seybold Clinic, which was sold to Optum last year, and chronic kidney care provider Monogram Health, and the company has a stake in Lifestance Health.