Bill Gates-Backed Vicarious Surgical to Go Public Via SPAC
Vicarious Surgical, a robotics tech company, has agreed to go public by merging with special purpose acquisition company (SPAC) D8 Holdings (NYSE: DEH). The deal gives Vicarious Surgical an enterprise value of roughly $1.1 billion.
Vicarious Surgical develops surgical robots that assist in minimally invasive procedures, improving efficiency for the surgeon.
The deal is expected to close in the third quarter of 2021, at which point the combined company will be known as Vicarious Surgical and will trade on the NYSE under the ticker symbol “RBOT.”
Here’s what investors need to know about Vicarious.
What Vicarious does
Founded in 2014 by two former Apple (NASDAQ: AAPL) engineers and a certified surgeon, Vicarious hopes to create the next generation of surgical robots that can address the majority of abdominal procedures. The company’s solution combines a human-like robot with virtual reality (VR) technology to allow the surgeon to visualize what is happening inside the patient while performing a procedure.
Currently, robotic surgical procedures are expensive, and the devices have a steep learning curve and are difficult to use. Many existing surgical robots end up adding complications associated with the surgery. That, plus other challenges, have led to low utilization of the machines. Vicarious seeks to address these issues, with the ultimate goal of delivering better patient outcomes while also reducing costs.
The Vicarious Surgical robot is more compact than other surgical robots on the market today, making it more portable and versatile. The machine has two small arms combined with a sensor array that can create 3D depth maps. The sterile components are 3D-printed and designed to be disposable, which aims to improve the variable cost structure. The company notes that its robot is the only such device to receive a breakthrough designation from the FDA.
Vicarious is backed by some big-name tech investors, including Bill Gates, Khosla Ventures, former Google CEO Eric Schmidt’s Innovation Endeavors, and Yahoo founder Jerry Yang’s AME Cloud Ventures.
Vicarious estimates that its total addressable market will initially be a whopping $136 billion. The company is still pre-revenue as its robot has not yet launched commercially. Vicarious expects to start delivering robots in 2023, with revenue forecast to top $1 billion by 2027.
How the deal with SPAC D8 Holdings is structured
The merger with D8 will bring in an estimated $460 million in gross proceeds for Vicarious, consisting of $345 million in the SPAC’s trust account combined with $115 million in PIPE (private investment in public equity) financing. Prominent institutional investors participating in the PIPE include Becton, Dickinson and Company (NYSE: BDX), a large incumbent provider of medical devices, as well as many of the aforementioned existing investors.
After paying an estimated $33 million in transaction expenses, $427 million of that cash will go to the combined company’s balance sheet. The transaction assigns Vicarious with a post-money equity value of $1.5 billion, or an enterprise value of $1.1 billion after factoring in net cash.
D8’s public shareholders will end up owning 22.3% of the combined company, the SPAC sponsor will have a 5.6% stake, PIPE investors will own 7.4%, and existing Vicarious shareholders will represent the remaining 64.7%.
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