Singapore-based healthtech company Euda Health is aware that for start-up healthcare companies to gain growth traction within the rather traditional industry, it can be tough, especially when trust is only given to those that have been in the industry for a long time.

Founder and CEO Dr Kelvin Chen says this is the reason why it has decided to take the company public, after having been around for some five years. He tells The Edge Singapore: “One of the key reasons for us listing, aside from getting funding, is to obtain accreditation and transparency as a listed healthcare company.”

Chen adds that contracts given within the healthcare industry always favour those that have an established reputation and have been around for very long. Many companies are wary of awarding contracts to start-ups, as there is a fear that these companies will not be able to continue the service after being awarded the contract.

Hence, Chen believes going public will help propel the company to secure more and larger contracts, as the company will then be transparent in terms of its accounting and ISO standards and other business aspects.

In April, Euda announced that it will be listing on Nasdaq via a special purpose acquisition company (spac) — 8i Acquisition 2 Corp — that is currently held by Singapore-based 8i Capital.

The spac was listed in November 2021, offering 8.63 million units at an offering price of US$10 per unit. This includes 1.1 million units from the full exercise of the underwriter’s over-allotment option. The spac raised about US$86.3 million ($118.7 million) in its IPO.

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As at June 13, shares in 8i Acquisition 2 Corp are trading slightly below its IPO price at US$9.86.

8i Acquisition 2 Corp’s CEO and director is James Tan Meng Dong, who also heads other entities in the 8i Group, including 8i Capital, 8i Holdings and 8i Enterprises. Tan has over 25 years of experience in managing private and public companies in Asia and the US.

Upon the close of the transaction, where 8i Acquisition 2 Corp fully acquires Euda, the latter will be listed on Nasdaq under the new ticker symbol “EUDA”. This transaction is expected to be completed in 4Q2022.

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The combined company will have an estimated post-transaction enterprise value of US$583 million, consisting of an estimated equity value of US$673 million and US$90 million in net cash, assuming no redemptions of 8i public stockholders. Additional earnouts in the form of nine million total shares will be awarded post-transaction close if Euda’s share price reaches US$15, US$20 and US$25 over three years.

Proceeds from the trust account (assuming no redemptions) is expected to be used for product development and other AI technology research, business expansion, and potential strategic investment and acquisition opportunities. Euda’s growth strategy is expected to generate estimated revenue and adjusted ebitda of US$200 million and US$43 million, respectively, in 2023.

“Listing via spac gives us a faster and more expedient way to get listed, because we could have gone through the more traditional way for an IPO, but the exchanges would typically prefer a more mature company,” says Chen. He adds that Euda is on a mission to expand and grab larger contracts, and this spac listing will give it the much-needed boost.

Transparent medical service

Euda claims to be a “first-of-its-kind” healthtech company that offers healthcare solutions that strengthen the delivery of effective care outcomes. Essentially, Euda operates a proprietary AI platform that helps companies to streamline communication and information flow to deliver better care and improve patient experience.

Euda is somewhat the bridge between medical institutions and professionals to patients. To put it simply, what Euda does via its platform is to give patients a transparent and personalised costing of services. Through this costing, patients can view what sort of treatments are covered by their insurance and what they would need to pay. Euda’s platform helps to create the best value for users.

Chen explains that the platform can be customised, such that users can receive a list of costing while keeping some aspects of the treatment journey with specific doctors or clinics that they prefer.

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Currently, Euda is a business-to-business platform, where it onboards companies and its employees onto its platform and integrates its insurance coverage, while providing them access to Euda’s team of connected doctors.

Chen explains that Euda should not be seen as some telemedicine platform. It aims to do more, such as allowing patients to make more informed decisions and be more educated in their own treatment journey, rather than to blindly follow recommendations. All these are supported by the group’s AI technology, cloud-based decision support system, serverless blockchain, smart wearable solutions and mobile application.

“Euda Health’s mission is to make healthcare more affordable and accessible, while improving the patient experience and healthcare outcomes through personalised healthcare,” he says.

“Our platform creates an ecosystem that accomplishes this through comprehensive, end-to-end care,” says Chen, adding that the group has purposefully assembled a team of industry experts who are passionate about transforming how patients are cared for.

The platform gives users accessibility — not just to healthcare practitioners or institutions — to take charge of their own medical costing. “This scheme is something that no one has done before in Asia and is something that we see as quite disruptive,” says Chen.

Currently, members do not pay Euda a fee, but the company earns its revenue through the doctors and medical institutions that it onboards on its platform. Chen also explains that Euda’s platform is currently only available to corporates and is not for consumers at large.

In its investor presentation, Euda has shown a 25% y-o-y increase in revenue from US$8.8 million in 2020 to US$11.0 million in 2021. With the listing, it expects revenue to further grow every year for the next five years, to hit US$1.3 billion in 2026. Euda has projected a five-year CAGR of 127% from 2023 to 2026 and long-term ebitda margins of 24%.

The group’s revenue is divided into four broad service care lines: healthcare, lifestyle & wellness, health plans and enablement. According to the group, revenue from the healthcare segment will represent the largest portion of the revenue and the main growth driver.

While it may seem that its revenue could come in lumpy as revenue is recognised only when a user uses the platform and engages with the healthcare professionals or institutional partners on the platform, Chen is not worried. The platform indeed cannot predict when a user will need medical help, but Euda’s sizeable user base ensures that revenue is consistent, according to Chen.

Going forward, Euda sees several market opportunities that can help it grow beyond its listing. According to data from the Economist Intelligence Unit, the regional healthcare expenditure in Asia Pacific (Apac) is projected to be growing by 7% annually to US$2.4 trillion by 2022, outpacing growth in the US and Europe.

Furthermore, demand for healthcare within the region is expected to increase as the ageing population increases. Data from United Nations has shown that by 2025, 10% of Asia’s population will be people aged 65 years old and above, representing a 14% y-o-y increase over 2021. And by 2025, it is predicted that there will be close to half a billion people aged 65 or above in Apac.

However, the Apac region is home to several developing countries that are still building up their medical industries, hence many people experience poor service from healthcare institutions or completely lack access to healthcare services. Research from management consulting firm LEK Consulting shows that 72% of people in Apac consider wait times to be one of the primary pain-points in the healthcare system, while World Health Organization data shows that the average ratio of doctors to people in the region stands at just 1.7 to 1,000.

While the availability of data that supports the growing healthcare industry in Apac has been accelerated thanks to the Covid-19 pandemic, Euda is determined to ride this wave and grow its footprint within the region.

Chen notes that the pandemic has indeed helped healthtech companies, including Euda, as users have become more accepting of online platforms and the pandemic has forced people online. Also, the age range of online users has widened.

When asked about the company’s plans to expand its footprint into different markets, he says: “We have gone on more of the B2B route and that is why we have to find good local partners to partner with first [when entering a new market], then we can [easily] tap into some of the local schemes and organisations.”

Additionally, Chen is aware of manpower requirements when venturing into a new market. Hence, a partnership can alleviate the issue as the partner company is more familiar with the labour market.

On the outlook, Chen says that Euda is open to a secondary local listing, but right now, the focus is on expansion into various countries.

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Photo: Albert Chua/ The Edge Singapore

Euda seeks Nasdaq listing via spac to gain better opportunities in healthcare market

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