SPAC update: Sharecare, Ro said to be discussing multibillion-dollar mergers

Reuters' reports also highlighted Sharecare's now confirmed acquisition of healthcare AI startup, doc.ai.
By Dave Muoio
01:32 pm
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This week Reuters reported that two more major digital health companies are discussing potential merger agreements with special purpose acquisition companies (SPACs) that would lead to multibillion dollar valuations.

The first, reported late Tuesday, is app-based patient-engagement and benefits-navigation platform Sharecare.

Per Reuters' anonymous sources, the proposed deal would see Sharecare acquire doc.ai – a startup that builds artificial intelligence tools for healthcare industry clients – and subsequently merge with Falcon Capital Acquisition Corp, an SPAC led by prominent investor Alan G. Mnuchin that closed $345 million in an IPO last September. One of Reuters' sources said that the two-part deal would bring the merged companies to a nearly $4 billion valuation.

The first part of that deal has now been confirmed, with Sharecare formally announcing its purchase of doc.ai just a few hours ago. That deal is set to close in the first quarter of Q1, and will add the AI company's fleet of 70 engineers to the team while appointing cofounders Sam De Brouwer and Walter De Brouwer as Sharecare's new chief strategy officer and chief science officer, respectively.

The second potential deal, reported Wednesday evening, involves D2C virtual health and mail-order-prescription brand Ro. Should these talks bear fruit, the well-funded startup could be valued at more than $4 billion, the anonymous sources told Reuters. A specific SPAC was not disclosed.

WHY IT MATTERS

Both companies' discussions are not set in stone, the sources said, although Sharecare's deal was described as nearly final. Ro, however, could still opt to pursue other fundraising approaches such as an additional investment round.

The deals would help cement Sharecare and Ro's positions as fairly large players in their respective markets. One of Reuters' sources said Sharecare's two-part deal would bring the merged companies to a nearly $4 billion valuation, while Ro's deal was said to bring the well-funded startup a valuation exceeding $4 billion.

The new funds from each agreement would help the digital health companies continue to expand their reach and offerings.

As of this summer's $200 million raise, Ro said that it would be looking to add connected devices, diagnostic testing and urgent care to its list of consumer services.

Sharecare, meanwhile, spent much of this past year fleshing out its platform by acquiring and integrating a number of smaller platforms specializing in quality management, behavioral health and AI-driven healthcare payments. Bringing doc.ai into the fold as well helps Sharecare pitch an even more robust version of its platform to clients.

In the announcement, Sharecare CEO, chairman and founder Jeff Arnold said the company will be able to "unlock the value of health data in a compelling, impactful and scalable way while advancing our shared mission to expedite digital transformation in healthcare." Statements from doc.ai's cofounder similarly highlighted the opportunity to scale their platform across Sharecare's broader customer base and beyond (a goal that would likely be easier with the additional funds a SPAC merger would provide).  

THE LARGER TREND

SPACs muscled their way into the market during 2020, with the digital health sector no exception.

Just last week Hims & Hers (perhaps Ro's primary competitor) wrapped up its merger with SPAC Oaktree Acquisition and began trading on the New York Stock Exchange. Amwell announced plans for an SPAC merger not too long after wrapping up an IPO, while the summer saw an early SPAC deal from SOC Telemed (formerly Specialists on Call).

That list extends to non-telehealth players as well, with Clover Health, Butterfly Network, UpHealth Holdings and Talkspace all sidestepping the traditional IPO on their way to the public market.

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