Latest / StartUp Health NOW Podcast / Cloudbreak’s Jamey Edwards Breaks Down the UpHealth Mega Deal and Why SPACs Work

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Cloudbreak’s Jamey Edwards Breaks Down the UpHealth Mega Deal and Why SPACs Work · StartUp Health NOW Podcast

• 0:00
  [on-hold music] What COVID really did was catalyze that direct to consumer, I'm at home, I don't wanna go into the hospital because I'm afraid of being infected, and my doctor's trying to keep me out of, you know, a place where I could be infected.
• 0:26
  Um, you know, there was a lot of just natural fear to that, that hospital environment. And so it really launched the in-home health model.
• 0:32
  Everyone was able to build a lot of muscle memory, both providers and patients alike, with how digital health could save them a trip, uh, help them p- not pay for parking, and, you know, bring care to where they were on their terms in a really palpable way.
• 0:50
  [upbeat music] Welcome to Startup Health NOW, the podcast where we celebrate the innovators shaping the future of health. I'm Logan Plaster.
• 1:01
  Today on the show, my guest is Jamie Edwards, the CEO and co-founder of Cloudbreak Health, which joined Startup Health in twenty seventeen. So Cloudbreak has a really interesting origin story.
• 1:13
  They got into video telemedicine initially by being a leading provider of sign language services in the hospital setting.
• 1:21
  Once they had the video infrastructure in place to help with remote sign language over video, they, they were primed and ready to add on other medical specialties, uh, in order to deliver telemedicine services.
• 1:32
  [lips smack] But if their past was interesting, I think their future is more so.
• 1:36
  So, uh, Jamie and his team recently announced a merger with UpHealth that rolls up multiple digital health companies into one publicly traded mega company.
• 1:46
  The move brings hundreds of millions of dollars to bear and opens up Jamie's moonshot mission from domestic to global.
• 1:54
  We'll get into all that, plus Jamie gives an insider's explanation of what a SPAC is in the interview. Stick around.
• 2:01
  [upbeat music] Jamie Edwards, CEO and co-founder of Cloudbreak Health, thank you for taking some time with me. Uh, Logan, the pleasure is always mine.
• 2:15
  All right, Jamie, for anyone watching this now who's not familiar with Cloudbreak Health, uh, give us the pitch, give us the overview. What did you build?
• 2:23
  Yeah, Cloudbreak is a unified telemedicine business with a focus on resolving health disparities.
• 2:28
  So the company originally started off bringing language interpreters to the point of care for limited English proficient and deaf and hard of hearing patients, and that was our first health disparity use case.
• 2:38
  And what most people don't realize is that in hospital, that video medical interpreting or that teleinterpretation use case is the number one use case being used in terms of number of encounters.
• 2:48
  And because these LEP and deaf patients go out and traverse every single hospital department in their visit, admitting, registration, ICU, labor and delivery, like, they're in the mall, um, it allows our platform to permeate throughout the entire hospital.
• 3:04
  And so over time, what we realized was that we could solve other health disparities on the platform.
• 3:10
  We could bring, you know, academic trained, um, you know, physicians into underserved communities and do all that stuff over these same video endpoints.
• 3:18
  And so while we started off just solving what was a big challenge with a challenging population for our healthcare providers and building trusted communication between patient and provider, uh, we were able to expand that to bringing other services to the point of care.
• 3:31
  And now we do that, you know, at eighteen hundred plus hospitals, over fourteen thousand plus video endpoints, over a hundred thousand times a month.
• 3:40
  You were into-- it's safe to say you were into telemedicine before it was, it was as cool as it is now. Uh- Yeah...
• 3:46
  we, we just got through the year of telemedicine, you might say, and you were really smack in the middle of it. Uh, how did that impact Cloudbreak? You know, it was really interesting.
• 3:56
  I, I give the analogy of, um, what meaningful use was to the EMR in terms of a catalyst for its adoption, COVID was for telemedicine and digital health tools.
• 4:08
  And look, what most people don't realize is that the telemedicine market has been strong for quite some time.
• 4:13
  Telestroke, telepsychiatry, you know, telederm, like, all these in-hospital specialties have been alive and well and, and really saving lives on a national scale really broadly, millions of lives a year.
• 4:25
  Um, what, what COVID really did was catalyze that direct to consumer, I'm at home, I don't wanna go into the hospital because I'm afraid of being infected, and my doctor's trying to keep me out of, you know, a place where I could be infected.
• 4:41
  Um, you know, there was a lot of just natural fear to that, that hospital environment. And so it really launched the in-home health model.
• 4:47
  Everyone was able to build a lot of muscle memory, both providers and patients alike, with how digital health could save them a trip, uh, help them p- not pay for parking, and, you know, bring care to where they were on their terms in a really palpable way.
• 5:02
  And so, you know, f- that catalyst was pretty impactful for us at Cloudbreak because we do so much hospital-based telemedicine.
• 5:08
  We actually saw a little bit of a, a dip as people said, elective surgeries, uh, well, I'm not gonna do that this month.
• 5:14
  I'm not gonna go in and have my knee replaced, and I'm not gonna go in and, you know, have X, Y, and Z elective surgery. Um, but, you know, that ended up coming back fairly quickly, um, in terms of our volumes.
• 5:26
  And what it really did for us was accelerate our product roadmap. So, uh, we were able to launch new use cases. One was telequarantine.
• 5:33
  It allowed us to turn any of our devices that were into the field and have them roll into a room and turn that room into a connected care room.
• 5:40
  And so as a, a main part of our mission in humanizing healthcare at Cloudbreak is to really protect frontline healthcare workers and make their lives better.
• 5:47
  That was a primary example of where kind of mission met product and us being able in a very short period of time roll out a product that helped reduce the use of PPE, which was a scarce resource during the first wave of COVID, reduce that risk of contagion, lower R zero, um, for these healthcare workers to really protect them, while also reducing isolation for the patient.
• 6:06
  People really talked about COVID being a very lonely diagnosis because your family couldn't see you, they couldn't be in the hospital, couldn't come into the room.
• 6:13
  And so we built in a HIPAA compliant way to communicate with your family at home and bring them into these discussions with the doctor as well.
• 6:20
  So there could be a more team appra-- team-based approach or caregiver-driven approach to care.
• 6:25
  And, you know, uh, there's tons and tons of stories coming out of the use of the platform and how it's really fundamentally made this a more satisfying and tolerable experience for people at the point of care.Now back it up a second.
• 6:36
  You said telequarantine, which even though I'm in the industry, I have not heard before. Yeah. So- Yeah... did you-- maybe you coined that, you know. Uh, you heard it here, telequarantine.
• 6:47
  Um- [laughs] I wanna describe that for a second 'cause you said devices in the field. Uh- Right... what devices? What do you mean by that? So we have fourteen thousand plus video endpoints in the field.
• 6:57
  Our go-to market is an iPad Pro with a battery on an IV pole. Uh, we think that's good for ninety percent of telemedicine use cases that are out there. Um, in the past,
• 7:06
  uh, we had launched telepsychiatry on the platform, we launched telestroke, we launched teleradiology because our hospitals, and this just comes from listening to your clients and to your partners, had basically said, "You guys have really given us a very robust telemedicine solution that's already in our hospital.
• 7:21
  It's effective, easy to use. I hit a button, I get the resource that I want. What other things could I use it for?"
• 7:27
  And so in the process of launching all these new use cases, when COVID hit, we took a step back as a team, and it really galvanized us, the challenge.
• 7:35
  We, we sat back and we're like, "How can we really help and have an impact, you know, in line with our startup health moonshot to increase access and do all those different types of things?"
• 7:43
  And we stepped to the plate, and product team said, "Well, why don't we enable our devices to be rolled into the room and turn any room into the hospital into a connected care room?"
• 7:54
  And by doing that, the doctor, when they want to round on the patient, no longer needs to go into the room. They can dial into the device- Okay...
• 8:00
  or the patient can dial out when they want something, and it protects the frontline healthcare worker, again, reduces PPE, et cetera.
• 8:06
  So it was a telequarantine solution, um, that allowed quarantine to become a, you know, a more tolerable experience and less lonely for the patient. Got it.
• 8:15
  So the device is, is in the hospital still, in the room, uh, allowing them to, uh, to talk to their physician. Correct.
• 8:22
  Now, remind me, you may have mentioned this earlier, but, um, i- have you built primarily the, uh, the infrastructure for telemedicine, the, the pipes and roads with the, the iPads and the platform, or do you also have the physician network as well?
• 8:36
  So we don't have our own physician network. We chose to do that very purposefully. Uh, we didn't wanna be a tech-enabled medical group that eventually competed with our client base.
• 8:45
  We feel like there's room in the market for a digital Switzerland, um, that actually enables the existing continuum of care with telemedicine, that enables them to build their digital front door and, and do that with a partner where they don't have to fear suffering patient leakage.
• 8:59
  Um, because I think some of the larger telemedicine companies now are gonna s-- there-- it's, it's impossible for them not to cross paths with their own clients given their business models.
• 9:08
  So we purposefully wanted to avoid that. Um, instead of us having our own medical group, we can, through our partners, we're creating a marketplace, and that marketplace has medical groups in it.
• 9:19
  And so a hospital in X, Y, and Z geography can create a custom telemedicine strategy. And t-- let's use telestroke as an example, Logan.
• 9:29
  So with telestroke, there are hospitals that wanna be able to transfer a patient to a higher level of care, and there are hospitals that don't because they wanna keep the patient in their community because that's where their support is, that's where their caregivers are.
• 9:43
  And so the fewer patients they can transfer, the better. Well, that dictates a different telestroke group.
• 9:47
  Maybe that latter group wants someone from out of state, whereas the former group wants someone in that same city.
• 9:52
  Our platform gives them the flexibility to not just customize the technology, but actually customize the people who are providing the service on the other, other end of the phone or the other end of the screen to fit their specific telemedicine strategy.
• 10:06
  Got it. Got it.
• 10:07
  Now, as you know, this, uh, twenty twenty, the, the, the catalyst of COVID, uh, not only increased consumer adoption, but also created a lot of activity within the industry in terms of, uh, acquisitions, mergers, uh, companies going public.
• 10:21
  Uh, and part of the reason why we're having this conversation is because of a partnership that you entered into with, uh, with UpHealth. So, uh, could you just kinda lay that out for me? Um, what was that all about?
• 10:32
  Yeah. Well, I think COVID, from a digital health standpoint, was a real launching point, not just for us, but for an entire industry.
• 10:38
  Really was a third-party validator that showed everyone the value of digital health tools. And I will definitely say,
• 10:46
  as COVID continued and people saw the rise in telemedicine, my phone started [chuckles] ringing more with people being like, "Hey, has Cloudbreak thought about raising capital again?
• 10:52
  Is Cloudbreak looking at strategic alternatives?" You know, all those different types of things.
• 10:56
  And when we sat down as a board and figured out, you know, took a look at those alternatives and laid them out on a whiteboard, said, "Hey, which direction do we wanna go?"
• 11:04
  And went over the pros and cons, we were approached two years ago by a founder whose name is Dr. Chiranjeev Kathuria, and he's the founder of UpHealth, and he had a very, very bold vision.
• 11:14
  And the bold vision was, "I wanna create a digital health super company servicing local healthcare in four key segments." And the key segments were, uh, mental health, pharmacy, telemedicine, and population health.
• 11:27
  And the reason he wanted those four segments was because they were all, again, supportive of that local care continuum as opposed to competitive with it. And so we said, "Wow, that's a bold vision.
• 11:36
  Let us know when you pull it together," 'cause pulling together those companies is a Herculean feat in its own right. And lo and behold, six months ago, he called us up and said, "Guys, I've done it.
• 11:46
  Not only do I have that, but I have our financing vehicle. We have a wonderful SPAC partner, and we'd like to introduce you to them." And so we met the team from Gig Capital. They had a SPAC, Gig Capital II.
• 11:57
  And, um, the team from Gig Capital, you know, I was very impressed. They take a, a long-term approach to how they mentor these companies to becoming public.
• 12:05
  Because a lot of companies that are going public through IPOs, Logan, like they're not prepared for it.
• 12:10
  Um, it, it is a much different business to run a public company than it is to run a private company, whether it's investor relations, PCAOB accounting standards, you know, governance, all those different types of things.
• 12:21
  And so we met with the Gig Capital team. We were very, very impressed with them and their ability to actually mentor us through this process, which is a key part of their model.
• 12:28
  But most importantly, we met with the other companies, and we realized that these puzzle pieces fit together really seamlessly, that all the pieces of the puzzle were purely complementary to each other with little overlap.
• 12:39
  And our... You know, if I, if I were to give you an example, Cloudbreak has the US health system market. Thrasys, which is the integrated care management, you know, operates in the government and payer markets, right?
• 12:51
  Our MedQuest, the pharmacy business, operates in the physician office market.
• 12:56
  So all of a sudden, being a part of this larger digital health super company gives Cloudbreak access to those other markets and these other companies access via Cloudbreak to our markets.
• 13:05
  And so it really was just a wonderful fit, a great story, and a chance for us to write Cloudbreak's next chapter as a piece of UpHealth.Well, very interesting. Very interesting.
• 13:12
  Well, you mentioned, uh, that this was all rolled up and taken care of under a, uh, a SPAC framework, and one thing that we do as part of these Health Moonshot updates is give entrepreneurs, uh, like yourself an opportunity to educate our viewer, uh, on a topic that they know better than we know.
• 13:29
  [laughs] So, uh, w- what is a SPAC? Take a minute or two and just, uh, be our teacher for a second. All right. So I'm going through it right now.
• 13:37
  This has been a huge learning experience, uh, for me as an entrepreneur, but I've just realized that the SPAC market is still very early on in its gestation.
• 13:45
  And while it's becoming more and more legitimate, we, uh, have had the benefit of bidding earlier on the c- being earlier on the curve than some other companies. So a SPAC is a special purpose acquisition company.
• 13:54
  It is a public company that has done an IPO and has raised funds with the specific goal of acquiring a company in a specific space, right?
• 14:05
  So when it came to GigCapital, too, as an example, they really focused on, um, telecom, media, and technology companies.
• 14:12
  Um, and so from a digital health standpoint, we fit right into that, you know, technology aspect of, of what they wanted to do. Um, and there are healthcare specific SPACs.
• 14:20
  In fact, there are kind of 58 healthcare specific SPACs right now [laughs] looking for companies.
• 14:26
  And if you take a look at, um, the SPAC market itself, I believe $38 billion has been raised in the first few months of this year in SPAC IPOs, um, versus, you know, um, the previous years, and, and not last year, 'cause last year was a big year when people were raising SPAC money, but it used to be 1 million, 2 million, 3 million.
• 14:44
  It was kind of that type of trajectory, and now we're talking about what has become a real legitimate way to take companies public.
• 14:51
  Um, and so you've seen companies like Hims, Clover Health, and others pursue SPAC transactions as a way to be able to access the public markets and turbocharge their businesses.
• 15:02
  And the way it typically works is once you find the company, you then make the announcement that the company is going to merge in.
• 15:10
  You file your S4, uh, which describes the transaction to everyone and gives the investors options.
• 15:15
  And typically as a part of the SPAC, you'll raise alternative financing as well in case the trust doesn't come in or in case you need to raise more money above the trust funds that were raised in the initial IPO.
• 15:26
  And so you will do something called a PIPE, uh, which is a private investment in public equity, or you will do what is now happening more and more in the SPAC market, a convert.
• 15:36
  Um, and so we as an example raised $285 million, 250 million in a convert, another 30 million in a, uh, 255 million in a convert, another 30 million in a, in a PIPE.
• 15:47
  And so, you know, that's the way that we chose to get the financing done, and we found out that 98% of our trust is gonna stay in, so that's another $168 million going to the balance sheet.
• 15:56
  And pro forma, the company is gonna be, one, in a great financial position, um, but two, the ability to really grow the business.
• 16:04
  We'll have all the working capital that we need to execute our plan with some funds for potential acquisitions so that we can be opportunistic there as, as digital health consolidation continues.
• 16:14
  W- break down the advantages of SPACs and why, why now? Why is this a thing in 2021? Yeah. I think, you know, and people have also asked literally, like, why are, why is healthcare so big in the SPAC world right now?
• 16:25
  So I think a few things have happened. One advantage is to the SPAC, uh, you know, speed to market, um, and valuation visibility. I think those are primary ones. Um, the IPO market tends to take longer.
• 16:36
  You have less control over the end, uh, valuation of the business.
• 16:41
  And by control, I don't mean that the company's going out, control the valuation, but you at least have better visibility into what your rollover equity will be into the SPAC and what it's going to be valued.
• 16:50
  Um, you do get public company mentorship, which I think is a big piece of the puzzle when it comes- Mm... to making a smooth transition to going from private to public.
• 16:58
  And I think the SPAC market has really become a legitimate way to bring high quality companies public, and the market keeps gaining in sophistication. Um, you had a second part to your question.
• 17:09
  W- w- would you say, would you say that the SPAC trend, uh, is allowing for greater collaboration? You said that there's sort of, there's public market- Yeah... mentorship built into it. Yeah.
• 17:19
  So the SPAC sponsors usually come with, one, management experience in the given industry, but two, public company experience.
• 17:27
  And so the ability for me as the COO who, uh, has run a private company but not a public company, has the ability to learn what it's going to take to make that transition a smooth one, you know, how to properly do your earnings calls, how to properly handle investor relations, you know, D&O insurance, everything else that y- you know, you know, we deal with on a, in a different way in private companies, you have to deal with in a much more transparent way in public companies.
• 17:51
  And so looking forward to making that transition. But the GigCapital team, uh, you know, Avi Katz and Rulik Gerdener have been hugely helpful in terms of mentoring, you know, our management team.
• 18:01
  I mean, this is a huge transition, a huge moment for you and Cloudbreak Health. I mean, you were already a sort of moonshot vision, uh, you know, type of CEO.
• 18:12
  Now when you think about where you wanna be in five years, I mean, hundreds of millions of dollars being raised, this roll-up, this, uh, collaborative, uh, super company, I mean, now where are you trying to put yourself when you look out?
• 18:25
  Yeah.
• 18:26
  Um, you know, the dream is all the companies that we are coming together with are forming what we're calling OneUp Health, and we really wanna be able to deliver a one-stop shop for digital health infrastructure for local healthcare.
• 18:38
  The cool thing about this business is we're not just talking about the United States, we're talking about globally. Wow.
• 18:43
  And I will largely tell you, even with my moonshot thinking, I never thought I'd be sitting in a C-level position in a company that is as well funded as this one is going to be, with the ability to not just impact patients and providers here in the States, but to do so on a global basis.
• 18:59
  Mm. So I'm really, really excited about the potential to continue to live our mission and, like, write the next chapter of all these companies as a single chapter. That's awesome.
• 19:08
  You, you used the term local health two or three times. What do you mean when you say that?I mean, local healthcare systems, local physicians' offices.
• 19:16
  I still believe that healthcare is a local business, and I've-- if I'm a patient, Logan, I would much rather, here I am living in LA, I'd much rather know that I can escalate to an in-person visit at my local hospital seamlessly than have called, you know, XYZ telemedicine company who's in New York and I'm in LA.
• 19:33
  They don't have my longitudinal patient information and history, um, and they might say, "Okay, well, we recommend you go to the ER. We recommend, you know, ec- you know, X, Y, and Z treatment."
• 19:44
  So from that perspective, I think that people would rather log on to the Cedars-Sinai website or the UCLA website and know that they can then be escalated seamlessly to that in-person visit, and that in that call, if they don't speak English, an interpreter can be brought in seamlessly.
• 19:58
  And in that call, if the ER doctor's like, "You know what? I'd like to bring in a cardiologist," have that cardiologist brought in in real time and have the cardiologist say, "You know what?
• 20:05
  I'm a little bit worried about your chest pain and how it's presenting. We'd like you to come to the ER. I'm gonna fast-track you to the back for a bed." Like, that's how healthcare should work.
• 20:13
  The digital health tools present that front door that you can handle low-acuity issues, but as you go up the acuity funnel, you can then go to that in-person visit and know it's gonna be handled seamlessly in a coordinated way.
• 20:25
  That's awesome, Jamie. I think that's all the time we have.
• 20:28
  Um, appreciate you keeping us up to date, but more importantly, uh, so excited for what UpHealth represents in terms of bringing telemedicine to, uh, a global audience, rolling up these different types of companies into a collaborative network with, you know, a well-funded entity.
• 20:45
  Uh, it's gonna be an exciting year for, for you and the, and the company. It definitely will. Logan, it's always a pleasure. Thank you so much for having me on.
• 20:52
  [outro music] StartUp Health invests in health transformers from around the world who are committed to achieving audacious health moonshots.
• 21:07
  If you want to learn how you can join this community of entrepreneurs or if you want to connect with one of our three hundred and thirty companies, go to startuphealth.com. Thanks for listening to StartUp Health NOW.
• 21:17
  We'll be back next week. [outro music]