- Digital health company Sharecare is going public via a blank check merger, along with a healthy investment from major insurer Anthem, in a deal valuing the startup at $3.9 billion.
- As part of the transaction expected to close in the second quarter, Sharecare will merge with special purpose acquisition company Falcon Capital Acquisition Corp. to create a new, publicly traded company. The deal will raise about $400 million for Sharecare, which it plans to use to expand its sales team and new product lines and embark on future M&A, the company said.
- Anthem has pledged to invest at least $25 million in Sharecare in a concurrent private placement, according to a preliminary prospectus filed with the SEC Tuesday.
As utilization of digital health tools becomes more mainstream during COVID-19, payers have been upping their tech investments to streamline back-end functions, create cohesive consumer platforms and better target care.
Indianapolis-based Anthem has definitively pledged to invest $25 million in Sharecare prior to the deal's close, but could increase its initial investment to $50 million if both parties decide before mid-March, according to the prospectus.
Anthem already held a 25% equity investment in doc.ai, a healthcare artificial intelligence startup that Sharecare signed an agreement to acquire late January for $175 million.
Atlanta-based Sharecare, founded by WebMD founder Jeff Arnold and medical TV personality Mehmet Oz in 2010, aims to help consumers manage different elements of their health in one platform.
Since launching its platform in 2012, the company has grown to 64,000 employer clients covering more than 7 million eligible lives and roughly 6,000 health system customers.
Sharecare brought in $330 million in revenue last year, and projects that'll increase to $396 million in 2021 and $629 million by 2023, according to an investor presentation on the deal.
Sharecare hopes the influx of cash brought by entering the public markets will give it an advantage in the increasingly competitive virtual care space. The digital health market saturation is a key risk for Sharecare, with management noting in its prospectus it's a rapidly evolving industry undergoing significant technological change and shifting regulations, and there's a limited window to capture market share.
Falcon, led by the brother of former U.S. Treasury Security Steve Mnuchin, signed a letter of intent and term sheet with Sharecare in November, but the deal's been in the works since October. On closing, Falcon will own about 20% of the new company, inclusive of the private investment in public equity (PIPE) investors, which include Koch Strategic Platforms and Baron Capital Group, among others.
The transaction is being funded through a combination of $345 million in cash from Falcon, along with $435 million from the PIPE at $10 per share, and the Anthem investment.
The deal value represents about 9.5 times Sharecare's estimated 2021 revenue.
More and more healthcare companies looking to go public during the COVID-19 health tech craze have hopped on the blank check bandwagon in recent months. SPAC mergers are rising in popularity among founders and investors looking for guaranteed access to capital, while retaining more control of their company.
Sharecare will be listed on the Nasdaq under the ticker "SHCR." Arnold will stay on as CEO.