Owlet SPAC, HealthEquity Money Raise, and More (The Week of Feb. 15-21 in Review)

Baby monitor company, Owlet, hits Unicorn status as it announces plans to “Go Public” via a SPAC-merger; HealthEquity raised $400 million; and eight other business news items of note

Feb 22, 2021

Back when terrestrial radio was king, a fairly common phrase shared over the air by disc jockeys was, “And the hits just keep on coming.”

Lately a similar phrase could truthfully be uttered about Utah’s business community.

Case in point, it’s rare that a company catapults from a $24 million Series B round of funding to a billion dollar valuation 30 months later … without raising any additional funds. But it happened last week in Utah.

The company in question is Lehi-based Owlet Baby Care, and it all went down last week when Owlet announced it is merging into a Special Purpose Acquisition Company, a move that gives Owlet a valuation of over $1 billion valuation pre-merger.

The SPAC Owlet is merging into is known as Sandbridge Acquisition Corporation, and like other blank-check companies, Sandbridge was established specifically to find an existing firm (with real revenue, potential or both) that it can merge into and take public instantly.

The four main differences between a SPAC-merger and a reserve-shell merger are

The combined company will have real money in its bank account post-merger,
Shares of the post-merger company will be listed on a major stock exchange (in this case, the NYSE), and generally the combined company will have

Market makers supporting the stock, as well as
Financial analysts following and reporting on the post-merger company.

As per the Owlet/Sandbridge Investor Presentation, post-merger,

Owlet will net $325 million from its SPAC-merger;

Its shares will be listed on the NYSE under the stock symbol OWLT;
Existing shareholders have agreed to an 18-month lockup (meaning they cannot sell their shares for at least a year-and-a-half post-merger); and
The lockup also applies to those investors putting money into the deal pre-merger.

Additionally, the Investor Presentation projects annual Owlet revenue jumping to over $1 billion in 2025, up from estimated 2020 revs of $75 million.

NOTE: If you don’t know Owlet, its flagship product is the Smart Sock baby monitor. And Owlet plans to expand into Telehealth and what it defines as the “Connected Nursery.”

Overall, this SPAC-merger is huge news for Owlet, its investors, parents with infants (or those planning to be parents), and Utah’s business community.

So congrats all the way around.

HealthEquity Public Offering Raises $400 Million

Draper-based HealthEquity (NASDAQ:HQY) raised $400 million in a secondary public offering last week.

HealthEquity is the largest non-bank Health Savings Account custodian in the country, with over $14.3 billion in HSA assets under management.

Currently, HealthEquity helps over 12 million people manage their HSAs, through over 100,000 employers and more than 175 health plan partners.

For its fiscal year ended January 31, HealthEquity had revenue of between $729 million to $733 million and expects profits of up to $8 million for the year.

As of Sunday evening, HealthEquity has a market valuation of over $6.5 billion.

XANT Lead-to-Sales-Conversion Insights

A week ago I wrote fairly extensively about free monthly reports being offered by Sandy-based Analytic Index that provided insights into paid and organic keyword usage on both Amazon.com and Walmart. And I still highly recommend looking into these reports if you work in direct-to-consumer marketing, sales, or eCommerce.

However, Lehi-based XANT shared some pretty interesting research insights itself last week that I also feel are worth exploring, especially if your company is interested in transforming leads into customers.

In summary, XANT examined three years of data from over 400 companies that had generated 5.7 million marketing leads that produced over 55 million sales activities. And what did XANT discover from its analysis?

Lead-to-Conversion rates are 8X higher for those sales teams that respond within 5 minutes from when a lead is generated vs. those who wait to respond after 6 or more minutes;
Unfortunately, less that 1/10th of 1% of all leads are contacted within 5 minutes;
In fact, 57% of all attempted contacts take longer than a week, and
77% of all leads are never contacted.
It also turns out that 81% of all salespeople make 5 or fewer attempts to contact a lead, yet
Those salespeople who make 7 or more follow-up attempts yield 15% more connections.
Additionally, the best time to attempt a contact is between 9—10am (where the contact is based), which is 28.4% higher than the full day average.
The best day to attempt to contact a lead is Tuesday; conversely, the worst days are Wednesday and Friday. (BTW: Monday and Thursday are ~25% less effective than Tuesdays.)

BTW, if you don’t know, XANT was originally known as InsideSales.

Other News Items of Note from Last Week

What follows below are seven additional News Items of Note taken from the breaking news announcements that hit our radar last week from Utah’s business community, news items we thought you might find worthwhile if not outright intriguing.

Case in point —

American Fork-based Henry Schein One announced last week that Mike Baird has been named as its Chief Executive Officer. Henry Schein One is a joint venture between Henry Schein and Internet Brands that serves dental practices globally.

An undergrad alumnus of Brigham Young University, Mike served as an Executive Advisor to the HSO Board of Directors since mid-2020. He has extensive experience in the information technology world, with additional emphasis in healthcare, telehealth, and telemedicine. In addition, he currently serves as a board member of the American Telemedicine Association.

Utah’s ties to Henry Schein One began with the 1989 formation of dental practice management software company, Dentrix, which was acquired by Henry Schein in 1997, and then rolled into the current JV in 2018.

It didn’t take long, but former U.S. Congressman Ben McAdams has landed on his feet at the University of Utah’s Sorenson Impact Center within the David Eccles School of Business. As a Senior Fellow for the Impact Center, Ben will focus on two areas:

Exploring opportunities for public-private partnerships to seek solutions to challenges facing local communities and the federal government; and
Creating opportunities for students to develop experience in fields related to impact investing, data science, impact measurement, innovative finance and initiative building.

Best wishes, Congressman.

The Utah GOED (Governor’s Office of Economic Development) announced last week that Lehi-based Route App plans to add over 3,300 jobs in Utah over the next 11 years. If it delivers on its expectations, Route will earn a post-performance tax credit of over $23 million after generating state tax revenue of nearly $117 million. Route provides various online services to eCommerce companies designed to turn their one-time clients into loyal repeat customers. According to Crunchbase, Route has raised a total of $47 million, with a $35 million Series A round closed in March 2020.

If you haven’t been to southern Utah lately, a trip might be in order, especially to Washington City to the north of St. George. As this article in StGeorgeUtah.com points out, there is some serious economic development underway in this town of 33,000 residents, including plans for an auto mall at the Washington Blvd. exit off of I-15 that’s slated to house 12 to 15 dealerships.

Props to Mori Kessler for a nice write-up.

There was a fair amount of excitement and interest last week with the landing of the NASA Perseverance rover landing on Mars after a journey of nearly 300,000 miles from earth. However, unless you caught the story on ABC Channel 4 last Thursday, you probably have no idea that North Salt Lake-based OxEon Energy has a product on Mars at this very moment. In fact, OxEon Energy has partnered with NASA and the Jet Propulsion Laboratory to see if it’s possible to produce oxygen on the red planet using OxEon’s technology. Pretty cool stuff if you ask me.

The February 11th issue of Deseret Business Watch was an in-depth feature focused on the Industrial Bank industry in Utah and plans of mega-FinTech Square to open an Industrial Bank in Utah in the near future.

Now comes word that Brex (another San Francisco-based FinTech) applied last week with Utah’s Department of Financial Institutions and the U.S. Federal Deposit Insurance Corporation (FDIC) for approval to establish Brex Bank as an Industrial Bank headquartered in Draper. Clearly it’s too soon to even prognosticate how Brex’ applications will fare with the state or the Feds.

By way of background, however, four-year-old Brex has raised a total of $900 million in equity and debt funding, but it had a 17% reduction-in-force (RIF) last spring, laying-off 62 employees in the process.

Last of all, in case you missed it, Governor Spencer Cox held the first of what is planned to be a monthly news conference last week. I liked it and felt Gov. Cox handled himself well, especially in light of the significant focus on activities on Utah’s Capitol Hill given the fact that the Legislature is in session.

That said, did anyone else notice that not one single question addressed Utah’s business community? I’m mostly curious, that’s all.

ICYMI: The “Five Utah Metros Recognized” Feature Story

Consider this a postscript, but last Thursday we took a deep-dive into the Milken Institute’s newly published Best-Performing Cities 2021 Report and the fact that the Report recognized five Utah cities for their strengths vs. hundreds of cities nationwide. You can get the details at “Five Utah Metros Recognized.” Thank you.

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