GigCapital2 to merge with two telehealth firms in $1.35 bln deal

Credit: REUTERS/Lee Jae Won

Nov 23 (Reuters) - GigCapital2 Inc GIX.N 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 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 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.

(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Krishna Chandra Eluri)

((noor.hussain@thomsonreuters.com; Within U.S. +1 646 223 8780; Outside U.S. +91 80 6182 2663 or +91 80 3796 2663 ;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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