Digital Health (NASDAQ:DHAC) announced this afternoon that it has entered into a backstop agreement in connection to its proposed merger with telehealth software firm VSee and digital healthcare provider iDoc.
Under the agreement, the sponsor is committed to purchase any and all additional PIPE shares and accompanying warrants that remain unpurchased by the PIPE investors in the additional PIPE offering at the same purchase price and on the same terms and conditions of the backstop commitment.
As a refresher, DHAC entered into an amended and restated securities purchase agreement on October 6 with certain accredited investors to have the participation right in subsequent offerings of the company’s equity securities. The PIPE investors agreed to purchase convertible preferred stock of the company designated as Series A Convertible Preferred Stock and warrants exercisable for shares of DHAC common stock for proceeds of at least $8M. Prior to the closing of the business combination, DHAC intends to offer the PIPE investors the right to purchase up to an additional $2M of shares of its Series A Preferred Stock, or the additional PIPE shares, and accompanying warrants.
Back in August, the SPAC entered into a PIPE Securities Purchase Agreement with certain institutional and accredited investors for promissory notes convertible into shares of DHAC common stock, and warrants exercisable for shares of DHAC Common Stock for proceeds of at least $10M.
As background, DHAC did not include a PIPE at deal announcement, but brought in $115 million into the transaction from its trust. The deal had already featured a lock-up agreement for the company, at 50% six months after the close and 50% after 12 months after the close, and for the sponsor, at 6 months from the closing, but the parties decided to also include a PIPE Lock-Up Agreement through the securities purchase agreement in August.
Digital Health initially announced the $110 million deal with VSee and iDoc on June 16, 2022. California-based VSee provides a no code and low code SaaS platform to help physicians set up telehealth applications and Houston-based iDoc has a set of neurological telehealth tools to treat patients suffering from strokes or other brain injuries.
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