SPAC Deals in Digital Health Soared in 2020

The year 2020 is on course to become the year of the special purpose acquisition companies (SPACs) also known as blank check companies, in the digital health sector.

As COVID-19 created uncertainty in public markets, 2020 saw a surge in the formation of SPACs corporations. SPACs are also set to outpace traditional digital health IPOs in 2021.

The SPACs are designed to take companies public without going through the lengthy IPO process. In one such deal, Hims & Hers, an online direct-to-consumer telehealth company that uses remote consultation to prescribe cosmetic and sexual health products, completed its business combination with blank-check company Oaktree Acquisition Corp.

Hims & Hers announced the business combination deal with Oaktree Acquisition at a $1.6 billion valuation. Hims & Hers is backed by $150 million funding. Investors include Founders Fund, McKesson Ventures, Canadian Pension Plan Investment Board, Atomic, and others.

Other Digital Health SPAC Deals Announced in 2020

Owlet Baby Care, a smart wearable sock maker that monitors a baby’s skin temperature, oxygen levels, and heart rate during sleep and sends relevant data to a companion app, announced that it would go public through a merger with Sandbridge Acquisition Corporation, a SPAC.

The merger deal values the equity of the combined entity at $1,389 million. Owlet reported net revenue of $49.8 million in 2019 and estimated that 2020’s revenue at $75.2 million, representing a 51% year-over-year growth. The company said that it expects to reach a net revenue of up to $1.06 billion by 2025.

Sharecare, a virtual health platform that helps people manage all of their health in one place, and Falcon Capital Acquisition Corporation, a special purpose acquisition company (SPAC), entered into a definitive merger agreement to merge. The newly public company will be listed on NASDAQ under the ticker symbol SHCR. The company is expected to have an initial enterprise value of $3.9 billion with approximately $400 million in growth capital on the balance sheet.

Sema4, a patient-centered healthcare data analytics company, and CM Life Sciences, a SPAC, have entered into a definitive business combination agreement. The transaction values Sema4 at an enterprise value of $2 billion.

DNA testing and analytics technology company 23andMe and VG Acquisition Corp. (VGAC), a SPAC, announced a definitive merger agreement. The business combination values 23andMe at an enterprise value of approximately $3.5 billion. 23andMe has raised over $850 million in venture capital funding to date. The company is backed by Sequoia Capital, NewView Capital, GlaxoSmithKline, and other investors.

Talkspace, a tele behavioral healthcare company, and Hudson Executive Investment Corp, a SPAC, announced that they have entered into a definitive merger agreement. The transaction values Talkspace at an initial enterprise value of $1.4 billion, approximately 11x 2021 estimated net revenue of the Talkspace.


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