Reston’s SOC Telemed is the latest Greater Washington company to make its debut on the public markets, opening Monday at $10 per share on the Nasdaq stock exchange.
The public offering follows the acute-care telemedicine company's Friday closing of its merger with special purpose acquisition company Healthcare Merger Corp. (NASDAQ: HCCO).
The stock dipped as much as 5.8% to $9.42 before bouncing back up to $9.76 per share by early afternoon Monday. The company, which now trades under the "TLMD" ticker symbol, plans to use the proceeds to pay down existing debt, buy equity from existing SOC shareholders and build up its cash. And it plans to grow faster.
The newly combined company — which it said is valued at about $720 million — looks to capitalize on what’s been “a tipping point” for the telemedicine industry amid the coronavirus pandemic and demand for virtual care, said John Kallix, its new CEO.
“I think we have a fundamental opportunity to help change health care,” he said, adding later that the deal's timing was right. “The space has just changed overnight even though the company is 16 years old and we were innovators in the space.”
All eyes on growth
SOC goes public on the back of a successful 2020 and momentum into 2021. From here, the business plans to double the size of its commercial sales force and launch a digital marketing strategy, Kallix said. The company now serves 847 health care facilities, including physician offices and 543 hospitals spanning 47 states — as providers continue to confront tremendous pressure to deliver virtual care in the face of Covid-19.
And it’s eyeing merger and acquisition opportunities.
“This is a very fragmented market,” Kallix said, adding that small regional players have a tougher time navigating the pivot. “The fact that we can work with those groups and apply our technology platform on top of it provides a lot of synergistic growth.”
The merger both bulks up SOC’s leadership team and gives the company fast access to capital, important because “we know we want to be able to grow into this opportunity in the marketplace,” Kallix said.
Upon the deal’s close, institutional investors put in $165 million in common stock, with SOC’s existing management and equity holders also investing some of their equity into the combined business. SOC said Oct. 23 that Marriottsville, Maryland-based Bon Secours Mercy Health would also make an undisclosed private investment along similar terms.
We’ve seen multiple blank-check mergers this year in Greater Washington, most recently with Silver Spring documentary streaming service CuriosityStream, which went public last month. The region also saw a traditional initial public offering from Silver Spring regenerative medicine company Aziyo Biologics, one of numerous local exits in 2020.
The next chapter
Kallix joined SOC in late July as president and leads the combined company more than three months later. He brings 25 years of health care experience after working for New Brunswick, New Jersey-based Johnson & Johnson (NYSE: JNJ); Dublin, Ohio-based Cardinal Health Inc. (NYSE: CAH); Boston-based General Electric Co. (NYSE: GE); and, most recently, as chief operating officer of Melville, New York-based American Partners in Anesthesia.
Paul Ricci, SOC’s interim chief and an adviser for major shareholder Warburg Pincus, is stepping down from the company after succeeding former CEO Hammad Shah earlier this year. Hai Tran remains chief operating officer and chief financial officer of SOC, and HCMC CEO Steve Shulman is now chairman of SOC’s board of directors.
SOC focuses its telemedicine platforms on neurology, psychiatry and critical care areas. It also plans to break into other specialties, including cardiology, infectious disease, hospital medicine, emergency medicine, maternal-fetal medicine, palliative care and oncology. But, Kallix said, it won’t venture outside of the acute-care arena.
“We know focus matters in any strategy. … we’re going to remain in that space,” he said, adding: “The opportunity to grow is tremendous.”
