Medical Tech Platform Excelera to go Public in $459M Transaction

Artificial intelligence (AI) company Excelera DCE will go public in a deal with special purpose acquisition company Future Health (Nasdaq: FHLT) in a move said to help expand Excelera’s approach and platform.

According to the filings, Excelera is an AI platform that “equips physicians with precision medicine insights and financial resources to excel in Medicare’s value-based delivery programs.” It operates under Medicare’s Global & Professional Direct Contracting program, which will be called ACO REACH in 2023

The combined company has a $459 million valuation, which is 1.3 times annualized Q1 2022 revenues of $352 million. As stated in the filings, 40 million shares will be issued to the seller at closing with the option for an additional 20 million shares when the company achieves $150 million in revenue for any calendar quarter within five years of closing. Excelera’s parent company will roll over all of its equity stake into the new company.

 Additionally, the transaction proceeds are expected to be at least $105 million and up to $282 million in net proceeds, which include up to $201 million cash held in Future Health’s trust and $100 million from PIPE stock funding at $11 per share and PIPE investors have also agreed to acquire an additional $20 million of Future Health’s shares on the open market before the close of the transaction. The proceeds will be used to help grow the platform into other geographic areas. Currently, Excelera operates in California and Hawaii.

“Rather than rationing access to care or avoiding high risk patients, our model actually embraces the opportunity to improve outcomes for the sickest and most vulnerable seniors,” Excelera Founder Dr. Sanjay Patil said in a press release. “By proactively incorporating genomics and predictive machine learning algorithms into care delivery, for example, our Human Insights healthcare platform has been proven to deliver better quality and outcomes at a lower cost reducing medical expense by over 14% compared to the Medicare benchmark during the 2020 plan year.”

The owner breakdown of the company is as follows: Excelera shareholders will own approximately 64%, Future Health shareholders will own approximately 21%, PIPE investors will own approximately 10% and Future Health’s sponsors will own about 5%. The common shares held by Excelera’s parent, PIPE investors and Future’s sponsor is subject to a lock up agreement either one year after closing or certain stock pricing, whichever is first.

Upon consummation, the combined company will operate as Excelera Health, Inc. and will be listed on Nasdaq under the “XLRA” symbol. The company’s existing management team will continue to lead the company. The deal also has a no-shop provision. 

“Our mission with Future Health was to identify and bring to the public markets a disruptive company that leverages modern technology and data-science to improve outcomes, reduce waste, and better personalize care,” Bradley Bostic, Co-founder and CEO of Future Health said in a press release. “It is difficult to imagine a company better aligned with this mission than Excelera.

The deal, announced June 14, is expected to close in the second half of the year. The deal has been approved by both companies’ respective boards and is subject to Future’s shareholder approval and other customary closing conditions.

Excelera’s legal counsel is Buchanan Ingersoll & Rooney PC and Future Health’s legal counsel is McDermott Will & Emery and its financial advisors are Cantor Fitzgerald & Co., BTIG, LLC and Roth Capital Partners, LLC.

This deal follows other recent transactions that are occurring in the healthcare space, such as Pfizer’s acquisition of Biohaven and Peak Bio’s and Ignyte Acquisitions deal  as well as Isleworth Healthcare’s combination with Cytovia Therapeutics.