Digital insurer Health IQ weighs $1.5 billion SPAC merger: sources

(Reuters) – Health IQ is weighing strategic options, including a merger with a blank-check acquisition firm that could take the digital health insurance provider public at a valuation of more than $1.5 billion, people familiar with the matter said.

Health IQ is currently working with an investment bank that has reached out to a small number of parties, including so-called special purpose acquisition companies (SPACs), to solicit their interest in a deal, three sources said.

The sources cautioned a deal was not certain and spoke on condition of anonymity because the matter is confidential. Health IQ did not respond to a request for comment.

Insurance technology, or ‘insuretech’, companies have been growing in popularity during the COVID-19 pandemic, as consumers seek out digital platforms to buy financial products.

SPACs have sought to tap into this trend. Last week, home insurance provider Hippo Enterprises said it would go public through a $5 billion merger with a SPAC backed by Silicon Valley heavyweights Reid Hoffman and Mark Pincus.

SPACs are shell companies that raise funds through an initial public offering to take a private company public.

Based in Mountain View, California, Health IQ uses data gleaned from quizzes on someone’s fitness and wellness habits to get them quotes from insurance companies, and offers incentives such as smart watches, juicers and vitamins to customers who maintain healthy lifestyles. It focuses on life insurance and Medicare Advantage plans.

Founded in 2013, Health IQ is backed by investors including Andreessen Horowitz, Hanwha Asset Management and the venture fund of Aquiline Capital Partners. It last raised money privately, a $55 million Series D round, in May 2019, according to its website.

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