The uncertain future of medtech Spac deals

With one medtech Spac deal having recently collapsed, investors will be on alert for something similar happening to the seven mergers between blank-cheque groups and device, diagnostics or health tech companies awaiting closure. The acquisition of Heartflow by Longview Acquisition Corp II fell apart because the two parties could not agree on the combined company’s valuation, initially set at $2.4bn. Of the current crop of deals, five are aiming for a pro forma enterprise value in the billions, and one, the Chinese telemedicine and software company Etao International, actually seeks to exceed the Heartflow mark. Interestingly the average pro forma enterprise value of the open medtech Spac deals exceeds that of the open biotech mergers – $1.1bn versus $904m. While medtechs do tend to be more shielded than biotechs from turbulence on the markets, now is an extremely tricky time to get these deals done. Dismal market conditions might explain why two of the below deals are still struggling to close after more than six months, though greedy valuations might also play a part. Either way, it would be unwise to rule out further terminations. 

Open health tech Spac deals 
Spac Target Focus Announced  Proceeds (IPO+Pipe, $m) Pro-forma EV ($m) Guidance on closure
Mountain Crest Acquisition Corp III Etao International Telehealth Jan ’22 304 2,500 Mid-2022
Social Capital Suvretta Holdings Corp I Akili Digital health  Jan ’22 412 1,000 Mid-2022
Viveon Health Acquisition Corp  Suneva Medical Aesthetics Jan ’22 260 511 H1 2022
CHP Merger Corp Accelus  Spinal surgery Nov ’21 300 482 Early 2022
Artisan Acquisition Prenetics  Diagnostics Sep ’21 459 1,250 Q1 2022
Medtech Acquisition Corp Memic Innovative Surgery Robotic surgery Aug ’21 360 1,000 None given
Healthcare Capital Corp Alpha Tau Medical Radiology Jul ’21 367 1,000 End 2021
EV=enterprise value. Source: company communications & SEC filings.

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