A special purpose acquisition company (SPAC) is a type of “blank-check” company that raises capital through initial public offerings (IPOs) with the intention to use the proceeds to acquire other companies at a later time. Unlike traditional IPOs, SPACs do not have commercial operations at the time of the IPO, explaining why they are referred to as blank-check or “shell” companies.
Compute Health Acquisition Corp, a Wilmington, DE-based company, plans to raise $750 million by offering 75 million units at $10. Each unit will consist of one share of common stock and one-fourth of a warrant, exercisable at $11.50. Medical device company Medtronic has indicated interest in purchasing 1.5 million units in the offering. Compute Health will have a market value of $938 million at the proposed deal terms.
The company is led by Chairman Dr. Omar Ishrak, who currently serves as the Chairman of Intel (Nasdaq: INTC) and previously served as CEO of Medtronic. He is joined by Co-CEO and Director Jean Nehmé, who co-founded Digital Surgery in 2011, and Co-CEO and Director Joshua Fink, who is the Managing Partner of private investment company Ophir Holdings. Compute Health intends to focus on opportunities that are emerging at the intersection of computation and healthcare, with a particular focus on how data access, artificial intelligence, algorithms, and computational power feed innovation in the healthcare industry.
Acquisition Strategy
The past few years have seen the doubling of computational power at a rate significantly faster than Moore’s Law. Concurrently, tech devices have migrated towards data analytics, with computational capabilities shifting from the “cloud” to what’s called the edge. While edge devices used to mostly collect and send data to the cloud for further processing and analysis and thus play a limited role in the computational process, these devices are doing more data analysis to improve network latency and allow for faster response times and real-time response. This is a fast-evolving cycle with algorithms needing having faster access to even more data being developed in the cloud.
The company believes that medical devices have remained largely insulated from these two converging trends, driven by the a lack of innovation to bridge tech progress in other industries and medical applications, despite healthcare data now representing approximately 5% of all the data in the world. For example, while a computed tomography, or CT, image may require 10 to 20 minutes for an expert to read, the company believes that an algorithm could currently read the same image in under a minute, with the likelihood to significantly improve outcomes in line with more powerful computational power.
This increase in computational power in healthcare is estimated to have the potential to save $300 billion dollars in the U.S. alone, and AI alone is expected to represent an approximately $45 billion market within healthcare by 2026, an increase from approximately $4.9 billion in 2020, representing a 45% growth per annum over a 6-year period. The company believes that while mature players within healthcare are only catching on to the possibilities offered by computational progress, earlier-stage, more nimble companies lack the capabilities, financing and velocity to tackle this opportunity at scale.
Compute Health will rely on the experience and expertise of its founders whose backgrounds across various medical and tech innovations will converge to further accelerate the computational opportunity within healthcare. The company will focus on healthcare businesses that are already leveraging or have the potential to leverage computational power, with an emphasis on companies in the medical device space, including imaging and robotics. The company is also interested in companies operating in the virtual care space, including telehealth, care delivery and next-generation payor and provider models.
The company believes the experience and expertise of our founders, with backgrounds in Medtronic, Digital Surgery and GE Healthcare Systems, will attract potential target businesses and bring value through their ability to:
• bring credibility and access to the global provider and payer network;
• contribute experience and knowledge around specific healthcare needs and workflows within defined medical specialties;
• create commercial relationships with key healthcare players;
• provide deep insight into the future of technology and healthcare, and identify the players who are best positioned to transform the landscape at the intersection of computation and healthcare;
• implement, where needed, and/or accelerate the scaling of technological innovation, leveraging computation, data and AI;
• identify and implement underexploited computational improvement opportunities to reshape the growth trajectory; and
• provide access to capital and other resources through longstanding relationships with the global business and finance community.
When assessing targets, Compute Health plans to capitalize on its founders’ network of relationships, tech expertise, deep industry knowledge, acquisition experience and deal sourcing capabilities to access a broad spectrum of opportunities.
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