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American Oncology Network, a network of oncology practices based in Fort Myers, recently became the region’s newest publicly traded company.
Representatives for the company — including a patient of one of its network doctors — rang the bell for the Nasdaq stock exchange Sept. 21, the same day its shares began trading publicly. Share of AON stock closed that day at $20.50 in high-volume trading. By market close Oct. 6, the share price had fallen by more than half, to $7.93. (That, at least, was up from its $5.92 close Oct. 5.) The company had a market capitalization of $274.71 million as of Oct. 6.
“We think this is a great milestone for what we've accomplished,” CEO Todd Schonherz said in a phone interview that day. “We're more bullish about what the next five years will hold.”
AON generated $1.2 billion in revenue in the 12-month period that ended in June 2023, according to an investor presentation from Sept. 29, given about a week after going public. The company also reported a non-GAAP adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $23 million for the same time frame, along with a net loss of $4.6 million.
AON’s network of clinicians includes 200 providers at 30 practices in 20 states (including Washington, D.C.). The company’s doctor partners can leverage AON for a number of ancillary services, including clinical services like imaging and local lab testing, along with back office tasks like staffing, legal and IT.
AON’s path to going public can actually be traced back to March 2021, when an entirely different company completed an IPO of its own.
In that month, a company named Digital Transformation Opportunities Corp. was created. DTOC was formed as a special purpose acquisition company, or SPAC — essentially, a company created so it can buy another company. Led by CEO Kevin Nazemi (a former co-founder of Oscar Health Insurance), DTOC raised more than $333 million from investors, at a time when SPACs were particularly popular.
Once DTOC’s IPO was completed, a clock started ticking: as is typical for SPACs, DTOC had two years to identify an acquisition target and complete a transaction. If a deal can’t be reached before time runs out, investors get the option to take their money back.
In October 2022, seemingly well ahead of the deadline for a deal, DTOC’s leadership team reached an agreement with AON’s leadership team to complete a merger. The terms of the deal valued AON at roughly half a billion dollars.
But the deal still required approval from DTOC’s shareholders.
In early March 2023, weeks before the deadline and with no word of approval, DTOC’s leadership announced in a filing with the SEC that it had managed to extend the deadline further into the year. But there was bigger news: In that same filing, the company disclosed that its cash holdings had declined to less than $19 million, with more than $300 million having been returned to the original investors at their request.
It would take until Sept. 19, at a special meeting of DTOC shareholders, for the combination of DTOC and AON to get final approval, shortly before the merged company went public via listing on the NASDAQ stock exchange. In the phone interview, Schonherz declined to get into specifics about the amount of capital being provided through the DTOC merger, instead focusing on his company’s broader market opportunity.
“We remain 100% committed to the patients that we serve each and every day,” Schonherz says. “With $200 billion spent on cancer treatment delivery, we think AON is extremely well positioned to serve those providers in a very fragmented market.”
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