The founder and former CEO of a major insurer is launching a new “blank check” company with ambitions to acquire businesses that serve the vast market of services for older adults.
The new company, Senior Connect Acquisition Corp., is led by Richard Burke, the founder and former CEO of U.S. insurance giant UnitedHealth Group (NYSE: UNH). With Burke at the helm, Senior Connect Acquisition Corp. will seek to raise up to $300 million to acquire and combine companies that serve the growing “senior market,” according to a Nov. 24 filing with the U.S. Securities and Exchange Commission (SEC).
Burke and the other leaders at the new venture see an opportunity to create a better option for the older adult market than what is currently available, by bringing their expertise to bear and potentially combining innovative enterprises.
“The senior market offers compelling growth trends, controls a disproportionate share of financial wealth, and presents significant opportunities and unmet needs in a broad range of areas, from lifestyle to healthcare,” the company’s S-1 filing reads.
As a special purpose acquisition company (SPAC), also known as a “blank check” company, Senior Connect Acquisition is interested in growing its holdings in a wide range of products and services geared toward older adults, including those relating to social determinants of health, such as housing, transportation and safety; lifestyle-focused offerings for seniors; home-based care; health platforms; and financial services.
The company’s leaders have told the SEC they plan to raise up to $300 million as part of an initial public offering, with a primary strategy of acquiring one or more companies that touch some or all of those market sectors. Its acquisition criteria include senior market companies that are industry-leading or particularly innovative, scaleable and have significant opportunity for growth.
The company’s leadership also believes that “continued technological innovation will be a successful contributor to the senior sector in the near and long term, as broader adoption of new health technology platforms will further increase access to care, lower costs, and improve quality.”
While it’s not clear whether the firm will ultimately invest in the senior living industry by acquiring any communities or operators, and while the company is not formally affiliated with UnitedHealth, it is notable that Burke — the founder, former CEO and current lead independent director for UnitedHealth — is eyeing the senior market with ambitions to grow in it.
Some in the senior living industry — such as Eclipse Senior Living CEO Kai Hsiao — have predicted that a major health insurance company one day will acquire a senior living operating company, in a bid for more control over health outcomes for beneficiaries.
“I think in 10 years, the biggest owner of senior living will be UnitedHealth or Aetna,” Hsiao said in 2019. “Senior housing will argue that we deliver better outcomes and they should use us instead of hospitals, and insurance companies definitely want that side, but until they get better data from us, I think it’s going to be tough, and I think they’re going to get frustrated and say, look, why don’t I just do this myself?”
Reached Monday, Hsiao said that while it’s not clear Senior Connect Acquisition Corp. plans to acquire any senior living companies, it would not surprise him if it did. He added that insurers are now the driving force behind value-based care, particularly in hospitals and skilled nursing facilities.
“More and more people recognize senior living as part of the overall healthcare continuum — especially during Covid — and it would make sense to see if they could do the same,” Hsiao told Senior Housing News. “It could also provide an insurance company a competitive advantage to say if someone chooses them, they’d have access to quality senior living at a better cost.”
Meanwhile, senior living providers are increasingly offering Medicare Advantage (MA) plans in their communities to help residents shoulder the cost of care and, in the process, gain leverage within the broader health care ecosystem.
Perhaps the most notable example of that trend is The Perennial Consortium, a group of senior living companies that includes founding members Juniper Communities, Christian Living Communities, Ohio Living and AllyAlign. The Covid-19 pandemic could make MA-coordinated care models even more attractive to consumers, and more beneficial to senior living provider companies in the process, according to Juniper CEO Lynne Katzmann.
“Linking the payer to the provider makes sense particularly if you address both health and social needs and build the new company on a data platform that can assist in integration of services, customer satisfaction and transparency and provide data for planning, guiding service development and profitability,” Katzmann told SHN Monday. “An integrated platform for serving older adults so that they remain healthy makes sense—lots of sense that will likely yield many ‘cents.'”
In addition to his role as an independent director with UnitedHealth, Burke is currently a managing partner at investment fund Rainy Partners. Joining Burke at Senior Connect Acquisition Corp. is President Isaac “Yitz” Applbaum, who is the co-founder and partner of Israeli investment firm MizMaa Ventures; CFO Ryan Burke, who is the CIO for Rainy Partners and partner at Prime Macaya Capital Management, a New York hedge fund; and M&A Executive Vice President Steven Schwartz, who was the senior vice president of business and corporate development at Livongo.
The company will initially offer 30 million public shares for $10 per “unit,” which consists of one share of common stock and one-half of a warrant, which is exercisable at $11.50 according to Renaissance Capital. Citigroup is the sole bookrunner for the IPO, and plans call for the new company to list on the Nasdaq index under the ticker symbol SNRHU.
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