(Reuters) – Online prescription drug company Hims Inc said on Thursday it had agreed to go public by merging with Oaktree Acquisition Corp <OAC.N> in a deal that values the start-up at $1.6 billion.
It is the latest example of a consumer-facing company opting to go public by merging with a so-called special purpose acquisition company (SPAC) rather than through a traditional initial public offering, following on from the likes of sports betting platform DraftKings Inc <DKNG.O>.
Hims connects patients with doctors through its website and sells drugs directly to consumers. The brand started primarily by selling hair loss treatments and has since branched out to offer birth control, dermatology, and other drugs.
By merging with the SPAC, which is backed by private equity firm Oaktree Capital Management, Hims will become publicly listed on the New York Stock Exchange.
Reuters reported in July that Hims, whose brand ambassadors include actress-singer Jennifer Lopez and retired baseball star Alex Rodriguez, was exploring going public through a SPAC.
Once considered obscure, SPACs entered the financial mainstream in 2020 after many of Wall Street’s largest players raised money to form their own blank check companies.
A SPAC is a shell company that raises money through an IPO to buy an unspecified operating company to then take public, usually within two years.
With the Hims deal, Oaktree will be capitalizing on the telehealth industry, a sector that has boomed since the coronavirus outbreak began. At the beginning of the pandemic, the Trump administration eased regulations that made it easier for companies and doctors to offer healthcare to patients in their own homes.
Mergers and IPOs have followed. In August, Teladoc Health said it would buy Livongo Health for $18.5 billion. Shares of online prescription drug company GoodRx Holdings Inc jumped after its September IPO.
(Reporting by Rebecca Spalding; editing by Richard Pullin)