HCWC Nears Host Digital Merger as $1.25B AI Lease Adds Momentum

Healthy Choice Wellness Corp. HCWC is moving closer to completing its planned combination with Host Digital Infrastructure LLC, with the digital infrastructure company entering the public-market transition backed by a sizable long-term data center contract.

Host Digital recently secured a 15-year lease covering 43 megawatts (MW) of critical information technology capacity at its operational data center in northeast Oklahoma. The agreement, signed with a major privately owned cloud infrastructure company, represents roughly $1.25 billion of contracted revenues during the initial lease period. The arrangement is also expected to receive credit support from a U.S.-based investment-grade global technology company.

The contract gives Host Digital considerable visibility into future revenues as it seeks to expand its exposure to artificial intelligence and high-performance computing infrastructure. The lease contains annual rental increases and options to extend the agreement. Should all extension options be exercised, the total contracted value could rise to approximately $3.2 billion over 30 years. Host Digital expects to hand over the contracted capacity to the customer during the first half of 2027.

Merger Moves Closer to Completion

The lease announcement comes as HCWC progresses toward completing its previously disclosed merger with Host Digital. HCWC shareholders have approved the proposals necessary for the transaction, removing an important condition to the deal's completion.

The companies expect to close the transaction in September, assuming the remaining conditions are met. Once completed, Host Digital will operate as a wholly owned subsidiary of HCWC. Former Host Digital members are expected to collectively hold about 96% of HCWC's outstanding Class A common stock following the transaction. The combined business is expected to trade on the NYSE American under the ticker “HOST.”

The shareholder approval and the long-duration Oklahoma lease together provide Host Digital with a stronger foundation as it prepares to enter the public markets. The lease is structured on a take-or-pay basis, giving the company contractual revenue support for the 43 MW of capacity covered by the agreement.

Host Digital Targets AI Infrastructure Demand

Host Digital's strategy centers on securing locations where power is already available or can be brought online relatively quickly — an increasingly important consideration as AI computing requirements place greater demands on data center power infrastructure.

The company generally targets sites with roughly 20 MW to 100 MW of grid capacity available either immediately or in the near term. Where appropriate, it may supplement grid access with behind-the-meter power generation. Host Digital also intends to prioritize projects supported by long-term customer commitments and financially strong or credit-enhanced counterparties before committing significant development capital.

Its vertically integrated approach is designed to give the company control over essential data center assets, including land, buildings, utility connections, electrical infrastructure and cooling systems. Customers, meanwhile, retain responsibility for the computing hardware and AI model layers deployed within the facilities.

Management views the Oklahoma contract as an early validation of that model. The company believes ready-to-use power capacity is becoming harder to secure as AI operators seek to deploy computing infrastructure within increasingly compressed timelines. Host Digital's near-term priority is to execute the Oklahoma project on schedule while developing a model that can be replicated for additional AI and HPC customers.

Experienced Leadership to Guide the Combined Company

Following the merger, Host Digital's leadership team is expected to bring extensive experience across data centers, infrastructure investment and capital markets.

Harmol Samra, who is expected to become chief executive officer of the combined company, previously worked at ICONIQ Capital and Starwood Capital and was involved in building and overseeing IPI Partners. At the time IPI Partners was sold to Blue Owl in 2024, its portfolio included 82 data centers with more than 2.2 gigawatts of leased capacity worldwide.

Shawn Matthews, expected to serve as chairman after the transaction closes, was chief executive officer of Cantor Fitzgerald & Co. from 2009 through 2018 and has more than three decades of experience spanning capital markets, energy and infrastructure.

With shareholder approval secured, HCWC and Host Digital have cleared a significant transaction hurdle. The next key milestones will be completing the merger and delivering the 43 MW Oklahoma capacity during the first half of 2027. The potential $3.2 billion contract value remains dependent on the customer exercising all available renewal options.

7 Best Stocks for the Next 30 Days

Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."

Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention. 

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research