In what is becoming a trend in 2020, a third healthcare technology company plans to go public through a merger with a special purpose acquisition company (SPAC) in a blank check deal.
Augmedix recently secured $25 million in private placement financing and completed a reverse merger with Malo Holdings. The deal was announced earlier this month.
The combined company will rename itself Augmedix Inc. and list shares on the over-the-counter market that lists early-stage and developing companies in the U.S. and international markets.
In connection with the financing, current investors Redmile Group, DCM and McKesson Ventures contributed alongside new investors.
Private companies will look to merge with a SPAC or blank check company as a nontraditional route to go public rather than a typical initial public offering. With the IPO market rattled by COVID-19 and wild volatility, it has become a more attractive way to go public in 2020.
Acute care telemedicine company SOC Telemed is merging with Healthcare Merger Corp. in a blank check deal, and Hims & Hers is going public through a blank check merger with Oaktree Acquisition Corp.
Manny Krakaris, Augmedix's CEO, said in a statement, "We're thrilled to complete this financing, which we believe puts Augmedix on the path of accelerated expansion, and will enable us to broaden our operational capabilities, accelerate our technology research and product development, and strengthen our marketing and sales."
Doctors spend a lot of time taking and transcribing notes following patient visits. Augmedix uses natural language processing technology and remote medical documentation experts to help reduce the burden of medical documentation for physicians.
The company provides clinicians with hardware such as Google Glass or an app on the doctor's smartphone to capture the doctor-patient conversation during the clinic visit and then populates the patient's electronic health record. Fifteen national health systems, including Sutter Health, Dignity Health and CommonSpirit, currently partner with Augmedix.
Augmedix's services are compatible with over 35 specialties. The company says its remote medical scribe services can save clinicians two to three hours per day while increasing productivity by as much as 20%.
Founded in 2013, the San Francisco-based startup has raised $107 million in capital to date.
The company has generated in excess of 4 million medical notes since it began offering its service and is currently delivering over 35,000 notes to customers each week, according to documents Augmedix filed with the U.S. Securities and Exchange Commission (SEC).
The company reported $14 million in revenue in 2019, up $3.3 million as compared to $10.8 million in revenue in 2018. Two of its customers, Sutter Health and Dignity Health, accounted for 26% and 17% of 2019 revenue, respectively.
There are currently about 1.1 million physicians in the U.S., and about 88% of these, or 980,000, work within the specialties that Augmedix currently covers. Using its average current subscription price of $1,800 per doctor per month, Augmedix estimates its total addressable market in the U.S. is approximately $6 billion annually.
The company's existing enterprise healthcare customers represent about 19% of the total U.S. addressable market. With 510 providers on its platform, Augmedix has only penetrated about half of 1% of the potential that resides within its existing enterprise customer base, the company said.
What's interesting is that for a company that uses technology to make medical documentation more efficient, Augmedix's service is very labor-intensive. The company uses remote medical scribes to do the documentation work. In the SEC filing, Augmedix said its medical scribes are well educated, most at the university level, and many are recruited straight out of university. The company also recruits from a large, established pool of medical transcriptionists in India.
Augmedix owns and operates two remote documentation centers in the U.S. and Bangladesh, and it contracts with outside vendors to run seven other centers in India and Sri Lanka.
While the company's revenue has grown, it also has significant losses. Augmedix reported a net loss of $18.5 million in 2019 and $8 million in losses for the first six months of 2020.
At the end of 2019, the company had an accumulated deficit of $68 million, and that reached $76 million by June 30, 2020.
In its SEC filing, Augmedix also said it has outstanding debt obligations that exceed its cash reserves.
The company also noted that as artificial intelligence and machine learning technology develop, competitors may be able to better utilize these technologies to automate the medical note documentation process rendering its solution less competitive. Public health experts have raised alarm that Americans might lose trust in any vaccine that is ultimately approved. An editorial in the Journal of the American Medical Association called for the Food and Drug Administration to take steps to reassure the public and clinical community about the scientific review and approval of a COVID-19 vaccine.