Edoc SPAC searching for US, China-based healthcare service targets via own physician networks, executives say

14 December 2020

Edoc Acquisition Corp [NASDAQ: ADOCU] is looking to leverage its proprietary physician networks as it hunts for a target in the US or Chinese healthcare services sector, according to CEO Kevin Chen and CFO Christine Zhao.


The sweet spot for a deal is between USD 300m and USD 600m, they said, although the company is flexible and is open to considering a transaction up to USD 1bn.


For the Victor, New York-based blank check company, a “key differentiator” is its sponsor, which is backed by a group of physician entrepreneurs, the executives said. As a result, Edoc can source proprietary deal opportunities directly referred or recommended by its sponsor’s network, they said.


While Edoc is actively screening candidates both in the US and Asia, a China-based target would benefit most from Edoc’s doctor resources, CFO Christine Zhao said. The target will have access to Edoc’s network with thousands of Chinese-American doctors in North America, through the potential business combination, she explained.  


The company is also open to pitches from investment banks and other external channels in the meantime, the executives added.


Hospitals or clinical chains, telemedicine, and AI healthcare are three areas where Edoc is actively looking, according to CEO Kevin Chen.  


In particular, Edoc sees opportunities in the telemedicine market, as the COVID-19 pandemic has boosted demand for virtual care, with patients increasingly looking to receive care remotely and follow social distancing rules, he said.  


The ongoing change among healthcare systems to increase virtual outpatient services capacity is a long-term catalyst for broader adoption of telemedicine, even in the post-pandemic era, he added.    


For a potential hospital or healthcare facility target, Edoc plans to acquire the asset and help it explore the telehealth market, Zhao said, noting the company can assist the health service provider with employing big data and artificial intelligence technologies.   


An ideal target would have the infrastructure that would allow Edoc to quickly grow its telehealth capability, she said.   


One of the earlier examples of a Chinese healthcare service business going public through a SPAC merger is United Family Healthcare‘s combination with New Frontier Corp [NYSE: NFH]. The China-based hospital group operator, previously backed by TPG and Fosun Pharma, merged with the NASDAQ-listed blank check company in 2019 for USD 1.44bn.  


This year, SPAC IPOs have experienced an unprecedented boom on the US exchange. The trend is also drawing interest from Chinese companies, as a few Chinese or China-linked sponsors have launched blank check companies on the Nasdaq and are looking to acquire targets home and abroad, as this news service reported.  


Edoc expects to complete its initial business combination within one year but can extend to up to 18 months, according to the filings.    


The executives said they are confident the company would be attractive to potential targets and investors, given its unique physician networks as well as potential expansion into telehealth.  


In early November, Edoc netted USD 90m in proceeds from its initial public offering. I-Bankers Securities was the sole bookrunner on the deal, while Ellenoff Grossman & Schole was its legal advisor. 


The company’s potential business combination targets may include hospitals or hospital networks, specialty clinics chain, chronic disease health care service providers, telemedicine or digital health providers, associated technology platform enablers, and artificial intelligence and big data-enabled diagnostic providers, according to its SEC filings.