Digital health company Sharecare going public through blank check deal boosted by Anthem investment

Mergers and acquisitions deals consolidation
Sharecare plans to go public via a merger with Falcon Capital Acquisition Corp., a blank check company. The new company will have an enterprise value of $3.9 billion with approximately $400 million in growth capital on the balance sheet. (Getty/Kritchanut)

Digital health company Sharecare, founded by Mehmet Oz, M.D., and WebMD founder Jeff Arnold, is joining the special purpose acquisition company (SPAC) boom to access more capital via the public market.

Sharecare plans to go public via a merger with Falcon Capital Acquisition Corp., a blank check company that's headed by the brother of former U.S. Treasury Secretary Steve Mnuchin.

Upon closing of the transaction, the new company will become Sharecare Inc. and estimates it will be worth $3.9 billion. It is estimated that post-transaction, Sharecare will have approximately $400 million on its balance sheet to drive sustained growth, sales force expansion, new digital offerings and M&A, the company said in a press release.

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The company will be listed on the Nasdaq under the ticker symbol "SHCR."

Sharecare also announced health insurance giant Anthem will make a direct investment in the company. The size of the investment was not disclosed. Anthem will expand its strategic partnership with Sharecare as the company continues the development of products and services to enhance the healthcare experience.

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"Anthem and Sharecare are focused on delivering proactive, predictive, and personalized health experiences for everyone," said Rajeev Ronanki, senior vice president and chief digital officer of Anthem Inc. and a recently added member of Sharecare's board of directors.

"We share a relentless focus on delivering meaningful improvements to consumers' health and well-being as we simplify healthcare. Through this relationship, we will leverage human-centered design and digital technologies, including artificial intelligence, that increase consumer engagement, deliver more affordable healthcare, and achieve better health outcomes through services such as next-generation personalized healthcare concierge and advocacy services."

The Atlanta-based company recently closed its acquisition of healthcare artificial intelligence startup Doc.ai for an undisclosed amount.

Sharecare reported $330 million in revenue in 2020 and is projecting revenue to grow to $396 million in 2021, according to an investor presentation. The company expects revenue to grow 24% at a compound annual growth rate over the next three years to reach $629 million by 2023.

M&A deal

Launched in 2010, Sharecare is a digital health company that helps people consolidate and manage various components of their health in one place.

The deal with Falcon Capital Acquisition gives Sharecare the advantage in shifting how people use smartphones across the dynamic continuum of their healthcare needs by bringing together healthcare, technology and media into one connected virtual care platform, the company said.

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"We started Sharecare to leverage innovations in consumer technology—specifically the smartphone—to create a frictionless experience that engages people across the dynamic continuum of their healthcare needs," Arnold said in a statement. "By integrating fragmented point solutions and bringing together stakeholders across the healthcare ecosystem into one connected virtual care platform, we believe that Sharecare is uniquely positioned to transform the way people access, providers deliver, and employers and health plans administer high quality, cost efficient healthcare."

Private tech companies have been looking to merge with a SPAC or blank check company as a nontraditional route to going public rather than a typical IPO. With the IPO market rattled by COVID-19 and wild volatility, it has become a more attractive way to go public.

There has been an increasing number of technology-focused blank check companies issued in recent months, including SOC Telemed, Hims & Hers, Clover Health, Augmedix, Butterfly Network, Talkspace and 23andMe.

Falcon Capital Acquisition, led by Alan Mnuchin, is expected to own approximately 20% of the new company inclusive of the private investment in public equity (PIPE) investors—Koch Strategic Platforms, Baron Capital Group, Eldridge, Woodline Partners LP and strategic partner Digital Alpha.

Arnold will continue leading Sharecare as CEO and chairman. Mnuchin will join Sharecare's board of directors.

The transaction is expected to be funded through a combination of Falcon's $345 million of cash in trust supported by a $425 million fully committed PIPE at $10 per share and the Anthem investment.

The deal value represents about 9.5 times 2021 estimated net revenue, the companies said. They said Sharecare has a recurring revenue model that could deliver a 20% year-over-year growth.

Sharecare and Falcon will donate about $4 million in the surviving company's stock to Sharecare's charitable foundation at closing, expected in the second quarter,