SOC Telemed has signed a deal to go public through a merger with a blank-check company, 16 years after the Reston telemedicine provider launched as a videoconferencing service for hospitals — and as the coronavirus pandemic stimulates unprecedented demand for virtual care.
The local firm’s agreement to combine with special purpose acquisition company Healthcare Merger Corp. positions it to trade on the Nasdaq, still as SOC Telemed. The transaction, announced Wednesday, values the company at about $720 million.
When the deal closes, expected in the fourth quarter, institutional investors plan to invest $165 million in common stock of the combined company, according to its announcement. That roster includes accounts managed by BlackRock Inc., Baron Capital Group and ClearBridge Investments. HCMC holds $250 million in its trust account. SOC’s current management and equity holders — including its largest, New York private equity firm Warburg Pincus — will also put some of their equity into the combined business. The company said it plans to use proceeds from the transaction to pay down existing debt, buy equity from existing SOC shareholders and build up its cash.
Upon the deal’s close, current SOC equity holders would own 40% of the business, HCMC shareholders would own 32%, current investors would own 21% and HCMC’s sponsors — Shulman Ventures LLC and MTS Health Partners LP — would own 7%. Warburg Pincus will remain SOC’s largest shareholder.
Under the agreement, John Kalix, current president of SOC, would become CEO of the combined company; HCMC CEO Steve Shulman would serve as chairman of SOC’s board of directors; and Hai Tran, chief operating officer and chief financial officer of SOC, would continue in both positions. Paul Ricci, interim CEO and board chairman, would step down from SOC. He stepped into those roles this year, when former chief Hammad Shah left after five years with the company.
SOC, one of DC Inno’s 2020 Inno on Fire winners, started 2020 with $15 million in fresh funding, and plans to reach more patients and health systems. Coronavirus then marked a turning point for the telehealth industry, as health care providers leaned more heavily on virtual tools to manage capacity and care for dangerously contagious patients. So SOC grew its customer base, bulked up its team and expanded its services — by both making its specialists available to patients, and providing its software platform to hospitals to use with their patients.
SOC focuses on neurology, psychiatry and critical care. Founded in 2004 as Specialists on Call, the company now serves 847 provider facilities, including 543 acute-care hospitals, spanning 47 states. SOC said it has provided 1 million acute-care consultations to patients.
Editor’s Note: This story first appeared in the Washington Business Journal. It appears here in an abbreviated format. See the original post here.
