Digital Health (NASDAQ:DHAC) has entered into a definitive agreement to combine with telehealth software firm VSee and digital healthcare provider iDoc to create an entity valued at approximately $110 million.

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.

The combined company is expected to trade on the Nasdaq under the symbol “VSEE” once the deal is completed by the end of the third quarter.

Transaction Overview

Digital Health brings $115 million into the deal from its current trust and has not yet supplemented this with a PIPE. The parties have not yet filed their merger documents or an investor presentation, but Digital Health’s profile page will be updated once additional terms are made available.

Quick Takes: This deal appears to be another platform company play with the transaction putting the target in a position to go on a run of bolt-ons with stock liquidity and cash from what remains of the SPAC’s trust post-close.

The parties’ press release notes that iDoc will be the “first module for the VSee software platform, with the goal of adding additional modules in the future.” Any additional modules would go towards serving VSee’s existing book of about 2,000 clients.

These include GE Healthcare (NYSE:GE), the Mount Sinai health system and NASA, for whom it is an exclusive telehealth supplier. VSee’s products appear to be largely white-labeled for these clients and it also provides remote medicine hardware for humanitarian situations and other instances where clients need medical access on the go. It recently added Ukraine to its client list, setting up a remote health solution for its hard-to-reach conflict areas.

And, while VSee has handled such functions as permanent telehealth staffing for clients, its role appears to have been largely confined to that of a software intermediary between physician and patient. But it has wide-ranging integrations already with FitBits and Apple (NASDAQ:AAPL) wearables as well as point-of-care scanners and lab instruments able to connect directly to the software for remote readings.

VSee also handles payments and provides analytics to clients, but this also appears to be at least partially via the integrated technology of partners like Stripe. The addition of iDoc’s technology appears to be the start of a strategy shift towards having more proprietary healthcare products to sell in addition to access to the platform itself.

The release also describes both companies as profitable, which is an important detail for the current climate, particularly because the public markets have held telehealth companies in a high degree of scrutiny as the pandemic has waned.

Teladoc (NYSE:TDOC) is down about -80% over the past 12 months, despite beating its earnings projections in each of the past three quarters. GoodRx (NASDAQ:GDRX), meanwhile, is down -84% with some concern across the sector about the level of differentiation each telehealth player has from another.

VSee has the potential to dodge a portion of that risk as a largely white-labeled product serving a variety of patient-facing companies that compete with each other. It also likely has fairly stable contract structures if those clients see the telehealth offering as being core to their operations.

But, VSee nonetheless may be swimming upstream in the current market.