GigCapital2 To Merge With Two Telehealth Firms In $1.35 Billion Deal

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GigCapital2 Inc has agreed to merge with UpHealth Holdings Inc and Cloudbreak Health LLC to create a digital healthcare firm valued at $1.35 billion, including debt, the blank-check acquisition company said on Monday.

GigCapital2, a special acquisition purpose company (SPAC) which raised $150 million in an initial public offering (IPO) in June 2019, plans to create a company focused on digital care management, telehealth, digital pharmacy and technology-enabled behavioral health. (https://refini.tv/339ET5M)

The combined company will be named UpHealth Inc and listed on the New York Stock Exchange under the ticker symbol “UPH”.

UpHealth will have agreements to deliver digital healthcare in more than 10 countries after the deal and it expects to generate more than $190 million in revenue and $24 million in core earnings in 2021.

A SPAC is a shell company that uses proceeds from an IPO to acquire a private company, typically within two years. A merger with a SPAC is an alternative to a traditional IPO that more private companies have turned to this year.

The deal comes as the COVID-19 pandemic has supercharged the telemedicine market. McKinsey & Co has forecast that $250 billion of spending will shift to home and office health, compared to the total $3 billion in revenue that top telemedicine companies generated before the pandemic.

U.S. President Donald Trump in August signed https://www.reuters.com/article/us-health-coronavirus-trump-telehealth-idUSKCN24Z2TH an executive order expanding access to telehealth services for 57 million Americans in under-served rural areas and elsewhere, after virtual visits soared during the COVID-19 pandemic.

Reuters first reported the deal https://www.reuters.com/article/us-uphealth-cloudbreak-gigcapital2/gigcapital2-to-merge-with-two-telehealth-firms-in-1-35-billion-deal-sources-idUSKBN2830NO earlier on Monday, citing people familiar with the matter.

Needham & Company serves as financial advisor to UpHealth, while Nomura Securities International serves as financial advisor to GigCapital2.

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