OpEx Awards 21: Americas Lower mid-market winner – Clayton, Dubilier & Rice

CD&R has grown agilon health into a value-based healthcare company operating across 17 geographies in the US.

Back in 2016, Clayton, Dubilier & Rice and Ravi Sachdev, a partner on the firm’s healthcare team, spotted an opportunity to build a healthcare company that focuses on improving outcomes for senior patients through a value-based rather than traditional fee-for-service model. To bring this vision to life, CD&R invested $162 million to create agilon health through the acquisition and combination of Primary Provider Management Company and Cyber-Pro Systems. In April 2017, it executed a $60 million follow-on investment to support a strategic partnership with Central Ohio Primary Care.

With Sachdev at the helm as vice-chairman of the board and Ron Williams, a CD&R operating adviser and former chairman and CEO of Aetna, serving as chairman, CD&R set out to build value through four key initiatives.

First, it drew on its partnership with Central Ohio Primary Care to refine its technology and clinical services partnership model. The next step was to roll out and scale its model by entering new markets across the US and launching new partnerships with independent physician groups. With CD&R’s backing, agilon health then leveraged growth opportunities in established markets, for example, it expanded further into Ohio through a new partnership in the city of Akron.

The fourth initiative involved building a best-in-class management team by recruiting operations-focused managers at the corporate, care delivery, technology, analysis and payor contractor level. Key hires included former president and CEO of Health Net Steve Sell as CEO in June 2020, as well as former chief financial officer of Blue Apron Tim Bensley as CFO, and Girish Venkatachaliah as chief technology officer.

Employee numbers double

The healthcare company focuses on Medicare Advantage patients, and now supports 230,000 Medicare Advantage members including live and implementing markets through long-term, exclusive partnerships with physician groups in 17 geographies.

In the year ended 31 December 2020, agilion generated medical services revenue of $1.2 billion compared to $196.5 million for the year ended 31 December 2017. Over the same period, employee numbers more than doubled.

$1.2bn

Medical services revenue in 2020

In April 2021, agilon health listed on the New York Stock Exchange at $23 per share, with the share price closing at $31 on the day of its market debut. CD&R’s efforts are understood to have resulted in a 43x gross multiple on investment, based on the closing share price as of 21 June 2021.

The judges commended CD&R’s “impressive focus on building the right management team and arming them with the capital and support to execute”, as well as its vision to combine two companies to create a “new type of healthcare company”. The focus on continuous improvement, growing agilon health’s footprint and ensuring it was in the best position to IPO also stood out to the judging panel.