When is $525 million not $525 million? Ireland’s LetsGetChecked and California-based Truepill have two things in common: backed by Optum and burning through cash. The deal went under the Labor Day wire:
- How the buy is structured: $25 million in cash, another $200 million in possible earnouts tied to revenue milestones, and $150 million via a convertible note offering to finance the deal….which doesn’t add up to $525 million.
- While LetsGetChecked is technically is doing the buying, it is creating a merger NewCo to unify both businesses. Truepill will be the surviving trade name as it has the slightly healthier business.
- This creates a digital pharmacy to market and fulfill LetsGetChecked’s at-home testing kits.
- Most of Truepill’s senior management, including their CEO, Paul Greenall, will remain. Greenall also received a $7.25 million forgivable loan. (The reason why is unstated, but these loans usually cover stock option purchases.)
No closing date nor required regulatory reviews are disclosed.
According to Axios, both businesses are in the red. “Truepill lost $15 million on $64 million in revenue for the first four months of this year (increased revenue run rate), while LCG lost $32 million on $39 million in revenue over the first five months of 2024 (declining revenue run rate)”. Truepill was valued in 2021 at $1.6 billion and had acquired $370 million in VC funding.
As projected at the beginning of the year, health tech M&A are either tuck-ins or throwing in together to survive. Truepill had been shopped since March but received only one other offer. During the Cerebral and more recently developing Done Schedule II drug prescribing scandal in mid-2022, Truepill, as a mail-order pharmacy for both, found itself in the middle of it and under DEA scrutiny with a ‘show cause’ action. LetsGetChecked was also deeply underwater and not looking like it was surfacing. With the NewCo, it seems like an Optum Ventures-engineered ‘shotgun wedding’. TTA 19 June, 19 Dec 2022
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