Vicarious Surgical Enters SPAC Merger for $115M

Vicarious Surgical will be valued at $1.1B as it develops robotics and VR for minimally invasive procedures.

Vicarious Surgical

Vicarious Surgical is developing robotic systems for minimally invasive surgery.

Surgical robotics developer Vicarious Surgical Inc. today announced that it has agreed to a merger with D8 Holdings Corp., a special-purpose acquisition company, or SPAC. Waltham, Mass.-based Vicarious said its goal is to create technology to increase the efficiency of surgical procedures, improve patient outcomes, and reduce healthcare costs. The companies said the private investment in public equity (PIPE) of $115 million will bring its enterprise value to $1.1 billion.

Vicarious Surgical was founded in 2014 by experienced roboticist Adam Sachs, now CEO; Sam Khalifa, chief technology officer; and Dr. Barry Greene, a board-certified bariatric and general surgeon with more than 25 years of experience performing advanced laparoscopic surgical procedures. The company's technology combines proprietary surgical robots and virtual reality (VR) to enable surgeons to more easily perform minimally invasive surgery.

The U.S. Food and Drug Administration granted the technology Breakthrough Device Designation, making it the first surgical robot to receive this designation, claimed Vicarious.

Vicarious aims to improve robotic operations

“Legacy robotic platforms were introduced with a promise of solving the challenges of open surgery,” stated Sachs. “Unfortunately, these legacy robotic platforms have significant limitations, including prohibitive cost of adoption, limited mobility and capabilities in the body and required space, setup time, and lengthy training. After more than two decades on the market, it is no surprise that legacy robotic penetration is just 3%.”

“Our robotic solution has arms that replicate human motion, offering remarkable mobility with nine degrees of freedom per arm with 360-degree visualization, all through a 1.5 cm incision,” he added. “Our robot can see, reach, and work anywhere inside the abdomen, which effectively shrinks the surgeon and puts her/him inside the human body.”

“Our system fits through a standard door, making it portable from operating room to operating room, and [it] does not require a large footprint or facility construction build-out,” Sachs said. “With cost of goods that are significantly lower than competing products, we believe our robotic solution will offer a cost-effective path to improving patient outcomes and increasing the efficiency of surgical procedures for hospitals and ambulatory surgical centers.”

Vicarious Surgical's system in development includes virtual reality. Source: Vicarious Surgical

Investors bet big on surgical robotics

The global surgical robotics market will experience a compound annual growth rate (CAGR) of 11.52% between 2020 and 2027, growing from $6.9 billion in 2020 to $14.8 billion by 2027, predicted Research and Markets. Although the number of surgical robots in use is still relatively low compared with that of industrial robots, the unit prices are higher. Advances in motion control, machine vision, and human-machine interfaces have encouraged the development of robot-assisted surgical systems. 

Vicarious Surgical had previously raised $16.8 million in 2018, $10 million in 2019, and $13.2 million in August 2020. The company said it expects the latest transaction to provide more than $425 million in cash on the balance sheet after closing including a fully committed PIPE priced at $10 per share

Investors include Becton, Dickinson and Co. (BD), a global medical technology company, as well as new and existing investors including Bill Gates, Vinod Khosla's Khosla Ventures, Eric Schmidt's Innovation Endeavors, and Philip Liang's E15 VC.

Hong Kong-based D8 Holdings said its objective “is to identify a target business that is under-valued relative to its potential and ready for transformative improvement.”

“D8 reviewed numerous investment opportunities in search of an exciting growth company to merge with, and Vicarious Surgical impressed us with their visionary team and market-disrupting products,” said Donald Tang, co-founder and president of D8 Holdings. “Beyond the technology and the capabilities of Vicarious Surgical's robot, we were also excited about the positive feedback from surgeons and hospitals.”

The transaction is expected to deliver up to $460 million of gross proceeds, including up to $345 million of cash held in D8's trust account, assuming no redemptions are effected. The company is projected to have more than $425 million in cash on its balance sheet after closing. The transaction implies approximately 3.1x 2025 estimated revenue of $355 million, said D8 Holdings.

Conditions and NYSE listing

The company added that, based on current assumptions regarding the financial condition of Vicarious Surgical, current equity holders will own approximately 64.7%, D8 equity holders will own approximately 22.3%, D8's sponsor will own approximately 5.6%, and PIPE investors will own approximately 7.4% of stock of the combined company at closing. 

David Styka, executive chairman of Vicarious Surgical, will serve as chairman of the combined company's board of directors. Tang and David Da-I Ho, M.D., director of D8 Holdings, will become members of the combined company's board.

The transaction, which was unanimously approved by the boards of directors of both Vicarious Surgical and D8, is subject to approval by D8's shareholders and other customary closing conditions. The transaction is expected to close in the third quarter of 2021, and Vicarious Surgical will be listed on the New York Stock Exchange (NYSE) under the new ticker symbol “RBOT.”


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Vicarious Surgical

Vicarious Surgical is developing robotic systems for minimally invasive surgery.


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