Former Livongo execs start new company and prepare for $500M IPO

Former Livongo executives who aren't making the jump to acquirer Teladoc have quickly moved on to their next major healthcare venture.

Former Chairman Glen Tullman and former President Jennifer Schneider, M.D., are backing a new blank check healthcare technology and are preparing an initial public offering of up to $500 million, according to documents filed Monday with the U.S. Securities and Exchange Commission (SEC).

The blank check company, Health Assurance Acquisition Corp., is sponsored by General Catalyst and backed by Thomas Jefferson University and Jefferson Health CEO Stephen Klasko, M.D., DuPage Medical Group Board Director Anita Pramoda and General Catalyst executives Hemant Taneja and Quentin Clark.

General Catalyst also was a big investor in diabetes management company Livongo, which is being acquired by telehealth giant Teladoc in an $18.5 billion deal.

Four of Livongo's top executives will leave after the merger with Teladoc is finalized, including Schneider, CEO Zane Burke, Chief Financial Officer Lee Shapiro and Steve Schwartz, senior vice president of business development, according to a recent SEC filing by Livongo.

The filing suggests Tullman will keep his seat on the combined company's board of directors.

RELATED: Digital health company Hims & Hers goes public in blank check deal

According to SEC documents filed by Health Assurance Acquisition Corp, the new special purpose acquisition company (SPAC) backed by Schneider and Tullman has not selected any business combination target or initiated any substantive discussions with any business combination target.

Health Assurance Acquisition Corp. is offering stakeholder aligned initial listing securities and aims to identify companies that are involved in what it calls "health assurance," have high growth potential and expanding total addressable markets, and are led by mission-driven CEOs committed to responsible innovation.

According to the SEC documents, "health assurance" companies are "consumer-centric, data-driven, cloud-based healthcare designed to help people stay healthy and avoid today’s 'sick care' paradigm."

"Health assurance companies deliver modern consumer health experiences while decreasing the overall healthcare gross domestic product (GDP) and are rooted in partnership with existing care providers. In a world built on health assurance, care is continuous, proactive, personalized, and available everywhere. Health assurance companies will be rewarded based on patient outcomes, enabling free-market economics to perform their important role in creating best-in-class solutions," the SEC document said.

"The goal for HAAC is to partner with companies that help build this new system of health assurance. We know that health assurance companies can generate both positive clinical outcomes and outsized shareholder returns because our team built the first one—Livongo Health, Inc.," the executives said in the S-1 filing.

In the SEC document, company executives said Livongo and chronic disease management are "just the beginning" of their vision.

"We want to create the conditions for 1,000 Livongos to bloom," the executives said.

Taneja will serve as Health Assurance Acquisition Corp.'s chairman and CEO.

RELATED: How Teladoc's blockbuster deal could impact the entire virtual care landscape

The company executives note that there is a substantial market opportunity that exists at the intersection of health and technology for a potential business combination.

Globally, there are 46 healthcare unicorns, valued in aggregate at $117 billion, with over $45 billion of cumulative value in digital health unicorns alone. The public markets have seen the successful IPOs of several multibillion-dollar digital health companies over the last few years, including Teladoc Health, Livongo, American Well and GoodRx, which currently have a combined market value of more than $55 billion, according to the SEC document.

"This growth in the digital health sector is only set to increase with the tailwinds presented by catalyzing events, including the COVID-19 pandemic, evidenced by a record-setting $5.4 billion of digital health venture funding in the first half of 2020," the executives said.

Private companies will look to merge with a SPAC or blank check company as a nontraditional route to go 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 and Augmedix.

"We believe no other has the same degree of coherent vision, alignment with stakeholders, combination of sector expertise, entrepreneurial mindset, track record, and desire for transformational change," the company said in its S-1 filing.

Morgan Stanley is serving as the sole book-running manager for the IPO.