LumiraDx and special purpose acquisition company (SPAC), CA Healthcare Acquisition (CAHC), have revised the transaction terms of their proposed merger to adjust the former’s pro forma valuation for the combined group from $5bn to $3bn.

The revision is based on several factors, including the latest market setting for publicly traded diagnostic firms, a general fall in the Covid-19 testing market and feedback from advisors and shareholders of CAHC.

The updated pro forma valuation excludes $115m raised by CAHC in its initial public offering.

Assuming no redemptions of current public stakeholders of CAHC, the merged company is expected to receive this sum in cash held in trust.

LumiraDx is a point of care diagnostics testing company with ten new tests awaiting approvals in the next two years on its platform, including Troponin, Flu/Covid and tuberculosis tests.

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By GlobalData

The company’s growth in implementing its platform, extending its testing menu and enlisting clients in key regions, along with the adjusted valuation, creates an attractive investment thesis for long-term stakeholder value, LumiraDx noted.

LumiraDx chairman and CEO Ron Zwanziger said: “We are growing our presence in the point of care testing market across cardiovascular disease, diabetes, coagulation disorders and infectious disease and have a strong pipeline and go-to-market strategy for driving growth over the coming years.

“Today’s announcement reflects our commitment to delivering significant upside potential and long-term value for both our current CAHC shareholders as well as future shareholders of LumiraDx.”

Subject to approval from CAHC and LumiraDx security holders and customary closing conditions, the business combination is anticipated to conclude in the coming months.

Present stakeholders of LumiraDx will retain the entirety of their current holdings in the company after the conclusion of the merger.

Cash from operations and the further capital from CAHC’s cash held in trust, following any redemptions, will offer growth capital to boost production and continue research and development works, as well as commercial and production expansion.

The boards of directors of LumiraDx and CAHC confirmed their recommendation of the transaction.

Earlier this month, the US Food and Drug Administration granted emergency use authorisation to LumiraDx’s SARS-CoV-2 Ab test.