Sarcos IPO, HealthEquity Acquisition, and More (The Week-in-Review, April 3—9, 2021)

UTAH'S TOP BUSINESS NEWS THIS WEEK: Utah’s “Iron Man company” is going public; HealthEquity announces $500 million acquisition; a plea deal in a $135 million fraud case; and more.

By my estimation, there are few indications of any slacking-off within the Utah’s economy.

As evidence I give you the following eight business news items from the State of Deseret for the week of April 3rd through April 9th.

Salt Lake Robotics Firm, Sarcos, to Net Nearly $500 Million by Going Public via a SPAC Merger

The big news this past week out of Utah’s capital city was that Sarcos Robotics announced it will become a publicly traded company after merging into a Special Purpose Acquisition Company (SPAC) in the near future.

Sarcos expects it will net up to $496 million post-merger with “blank check” company, Rotor Acquisition Corp. (NYSE:ROT).

Minus merger related expenses, Sarcos will be worth $1.3 billion after going public, with shares of its company traded via the Nasdaq Stock Market under the ticker symbol STRC.

Begun on the University of Utah campus in Salt Lake City in the early 1980s, Sarcos was formed in 1983 as a standalone, tech transfer spin-out to become an early innovator in robotics components under the direction of founder, Stephen Jacobsen.

Over time the company moved into prosthetics, film props, entertainment robotics and more, including development of an exoskeleton designed for use by humans, a potential precursor to the Iron Man movie franchise which launched two years later with Robert Downey Jr. in the title role.

From 2007 through 2014, however, the firm operated as Raytheon Sarcos after its acquisition by the American defense contractor.

Then in 2015, Raytheon Sarcos’ CEO (Dr. Fraser Smith) and technology entrepreneur, Ben Wolff, led a consortium of corporations and investors to purchase Sarcos from Raytheon and established it as a standalone firm once again. {NOTE: Ben is the current CEO and chairman of Sarcos.}

Since then, several other strategic partners and investors have helped fund Sarcos’ product advancements, including the Guardian XO industrial exoskeleton, which was named to TIME’s list of the 100 Best Inventions of 2020.

Case in point, although Sarcos revenue is expected to be a minuscule $9 million in 2021, the firm projects sales of over $2.7 billion by 2026. Wow!

Slide downloaded from the Sarcos Investor Presentation, 09 April 2021

Although many may cringe at the thought of independent, sentient robots, a lá an Arnold Schwarzenegger-like Terminator, in reality, many organizations apparently see Sarcos’ vision for robotics to be very positive for both employees and the companies alike — such as Delta Airlines’ CEO, Ed Bastian:

“In January of last year, we were proud to announce our partnership with Sarcos Robotics to bring its cutting-edge products to our front-line teams. It was remarkable to have Sarcos’ Guardian XO industrial exoskeleton join me on stage at the Consumer Electronics Show (in 2020) for its first public demonstration ... Delta’s employees are the key ingredient to our success and we are committed to reducing on-the-job injuries as well as fostering workforce diversity and improving worker longevity for a healthier and safer team. My enthusiasm for Sarcos’ potential has only grown since then as we continue to work closely with Sarcos to turn our everyday heroes into superheroes, making their jobs safer and easier than ever.”

Personally, I’ve been a fan of Sarcos ever since I had the privilege of hearing a presentation from Stephen, its founder, some 20+ years ago.

So I’m a total Sarcos fan-boy and super excited to see what it can do as a publicly traded company.

HealthEquity to Acquire Further for $500 Million

Draper-based HealthEquity announced on Thursday it plans to acquire Further, for $500 million.

Further is the country’s ninth-largest administrator of Health Savings Accounts (HSAs) and is part of Eagan, Minnesota-based Stella Health.

The acquisition of Further is expected to help HealthEquity grow its number of HSA customers by over 10% to over 6.3 million HSA Members, with over $16 billion in HSA Assets Under Management post-acquisition, an over 10% boost in AUM as well.

Additionally, HealthEquity expects to also leverage Further’s role as a technology leader in employer-funded Voluntary Employees’ Beneficiary Association (VEBA) trust administration.

{NOTE:  VEBAs are triple-tax advantaged health accounts like HSAs, that cover medical costs while employed or post-retirement. VEBAs are also not restricted to those in high-deductible health plans.

According to HealthEquity’s President and CEO, Jon Kessler,

“Adding VEBA capability to HealthEquity’sTotal Solution brings a new choice to clients and partners seeking to offer differentiated benefits while controlling healthcare costs.”

Please note that besides announcing the acquisition, there are no additional details about the pending transaction, something I expect to see within the next week or so (as per regulations of the U.S. Securities and Exchange Commission).

Draper Businessman Pleads Guilty to Two Felony Cases Involving $135 Million in Fraudulently Gained Trucking Revenue

According to the U.S. Attorney’s Office (District of Utah), Draper businessman, Hubert Ivan Ugarte, pled guilty last week to two felony charges related to fraudulent business practices that enabled him to generate over $135 million in trucking revenue from Federal Express Ground.

In summary, Hubert was convicted last week of fraud and money laundering charges

“… in a pay-to-play trucking scheme where prosecutors alleged that (Herbert) was one of ten defendants who paid approximately $1 million in bribes to the Utah FXG Ground Hub manager in order to exploit the manager’s position with FedEx and make their trucking businesses as lucrative as possible.”

Hubert admitted that he had bribed FXG Senior Line Manager, Ryan Lee Mower, with ~$490,000.

This allowed Hubert to obscure the fact that he had fraudulently established over 45 different local trucking routes (aka, “over-scaling”), a practice that allowed Hubert to generate $135 million in topline revenue from FXG between 2012—2019.

It also generated over $24 million in profit during the same seven-year period.

In addition, Hubert also pled guilty to falsely filing a Payment Protection Program (PPP) loan application through the CARES Act (Coronavirus Aid, Relief, and Economic Security Act) via the U.S. Small Business Administration.

Specifically, Hubert received $210,000 by fraudulently failing to disclose at the time he filed the loan application that he was under federal indictment at the time for his role in the trucking scheme. He also used 60% of the PPP loan to pay past due truck payments, instead of the minimum 75% required to cover payroll costs.

According to the District Court news release, Hubert was 1 of 10 defendants alleged by prosecutors to have paid over $1 million in bribes to the Utah FXG Hub Manager.

Sentencing for Hubert will take place on June 3, 2021 for both matters.

Other News Items of Note from This Week

What follows below are five additional Noteworthy News Items taken from the breaking news announcements that hit our radar this past week from Utah’s business community, news items we thought you might find worthwhile if not also intriguing.

Case in point —

Provo-based Solcius Being Acquired for $51.8 Million by Sunworks

After generating over $90 million in revenue in 2020, Provo-based Solcius has agreed to be acquired to Roseville, California-based Sunworks for $51.8 million.

Under terms laid-out in a news release from the firms, Solcius is being purchased in an all-cash deal by publicly listed Sunworks (NasdaqCM:SUNW).

Combined revenue for 2020 would have been over $130 million, with operations in over 12 states.

The companies expect to combined company to be profitable in the first full year after integration and “captured cost synergies” (aka, lowered expenses by eliminating redundant personnel and operational expenses).

A Total of 10 MW of New Solar Development Projects will be Built at Three Locations in Utah

In a news release distributed yesterday, there are 10 Megawatts of new solar development coming to Utah.

According to the somewhat convoluted news release distributed by Stamford, Connecticut-based ReneSola, it has sold three Utah-based solar development projects that will collectively generate 10MW in renewable solar power to Greenbacker Renewable Energy Company.

This New York City-based firm acquires and manages income-generating renewable energy and energy efficiency projects, and other energy-related businesses.

However, where these three solar development projects are based within Utah was not disclosed, nor was the price paid for the projects. But now you know.

Utah Offers up to $15 Million in Grants to Businesses Negatively Impacted by Covid-19 in 2020

The Governor’s Office of Economic Development of Utah announced this week that it is offering a total of up to $15 million in grants to small Utah businesses negatively impacted by Covid-19 during 2020. Amounts available can reach as high as $25,000.

BYU’s Lavell Edwards Stadium Getting New Video Scoreboards, Sound System and LED Ribbon Boards 100% Paid by Nu Skin

According to a news release published this week by the Athletics Department at Brigham Young University, Nu Skin Enterprises is paying 100% of the costs to design and install brand new video scoreboards, LED ribbon boards, and an upgraded sound system at Lavell Edwards Stadium.

Rendering provided by BYU, downloaded 8 March 2021

According to Duff Tuttle, BYU’s Senior Manager—Athletic Communications, construction of the new audiovisual systems are expected to begin within the next few weeks and will be completed before the first home game for the BYU football team on September 11th against the University of Utah.

The new video scoreboard in the south end of LES will measure 48x131-feet, up from the existing 34x50-foot scoreboard (an increase of nearly 3.7 times in square footage).

The new north end zone video scoreboard will measure 36x72-feet versus the current 34x50-foot size, 52% larger by square footage.

In addition, the new LED ribbon boards will now measure eight-feet high instead of four-feet high. And …

“A new single point sound system will replace the old sound system in the north end zone, which will significantly enhance the audio experience for those in attendance.”

Although the cost of the new systems were not disclosed in the news release, a long-time business associate with over 18 years of experience in the video scoreboard and billboard marketplace suggested that the cost of the new systems could easily surpass $3 million, perhaps more.

Me? I’m just looking forward to being back in LES this coming fall with 60,000-plus screaming fans.

Avelo Airlines Launches with $19 One-Way Fares and Includes an Ogden—Burbank Route

Before yesterday, I had never heard of Avelo Airlines. But on Thursday it announced its launch out of Burbank, California with flights to/from Ogden, Utah at prices starting at $19 one-way.

Photo provided by Avelo Airlines, downloaded 8 March 2021

I don’t know about you, but a round trip ticket to/from southern California for under $50 sounds like something I should look into.

A Teaser for Next Tuesday’s Feature Story

Were you aware that Provo-based Nu Skin Enterprises (NYSE:NUS) launched a strategic investment arm in 2019? Or that this investment arm generated $165 million in revenue in 2020?

Nah, me neither, at least not before this week.

All of this is prelude to what I plan to publish this coming Tuesday, which is an in-depth Feature Story about a Nu Skin business unit that is part of this strategic investment arm, a business unit that on the surface might not seem to fit within Nu Skin.

But such thoughts will need to wait until next week.

So in the meantime, Vaya con Dios.

NOTE:  This article was originally published by Deseret Business Watch. A few minor editorial changes have been made with this version to better match the current Silicon Slopes writing style.

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