Investment firm will take SOC Telemed private in deal valued at $300M

Healthcare investment firm Patient Square Capital plans to take SOC Telemed private in a deal that values the company at roughly $304.2 million.

Under terms of the buyout deal, shareholders of SOC Telemed, an acute care telemedicine company, will receive $3 per share of Class A common stock in cash which is a premium of 366% above Wednesday's closing price of 64 cents. The per-share purchase price also represents a 93.1% premium to SOC Telemed's 60-day volume-weighted average price through Feb. 2.

The companies announced the deal Thursday and it's expected to close in the second quarter of this year.

Once the acquisition is completed, SOC Telemed will become a private company, which will give the company the "flexibility and resources to continue investing in its clinical capabilities, innovating its offering and expanding its footprint," the companies said in a press release. 

The company's stock rallied 336.6% on heavy volume in pre-market trading on Thursday after the deal was announced, according to Seeking Alpha.

SOC Telemed kicked off the 2020 wave of healthcare SPAC deals when it announced in July plans to merge with Healthcare Merger Corp. in a "blank check" deal.

When the company went public in November 2020, shares opened at $10 but the stock price steadily dropped to around 60 cents before the acquisition was announcement.

RELATED: SOC Telemed expands acute care telehealth services with Access Physicians acquisition

Founded in 2004, SOC provides acute telemedicine services to nearly 1,000 facilities, including more than 700 hospitals across 47 states and services 19 of the 25 largest health systems. Last April, SOC Telemed picked up Access Physicians in a deal valued at $194 million to solidify its market position in the acute care telehealth space.

The deal made SOC Telemed the largest pure-play provider of acute care telemedicine in the nation, according to the company. The company's clinical service lines include infectious disease, cardiology, maternal-fetal medicine and nephrology along with its core services of neurology, psychiatry, critical care and pulmonology.

In November, SOC Telemed reported third-quarter revenue of $27 million, up 76% from $15 million the year before. But the company's losses grew to $11 million in the third quarter from a loss of $10 million the same period a year ago.

The agreement includes a 30-day "go-shop" period, which allows the SOC Telemed Board and its advisors to actively initiate, solicit and consider alternative acquisition proposals from third parties. The SOC Telemed board will have the right to terminate the merger agreement to enter into a superior proposal subject to the terms and conditions of the merger agreement. 

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"The board unanimously determined that the all-cash offer unlocks maximum value to stockholders, and that the experience and resources of Patient Square Capital would best position the Company for growth in the years to come," said Steve Shulman, chairman of the SOC Telemed board of directors, in a statement.

Chris Gallagher, M.D., SOC Telemed's CEO and previously co-founder and CEO of Access Physicians, will continue to lead the company.

"Today's announcement validates SOC Telemed's market-leading technology-enabled clinical services platform for acute care telemedicine, which we have deployed across more than 1,000 facilities nationwide," Gallagher said in a statement.

"The last several years have revealed the critical ways that technology can expand access to care, improve clinician efficiency, and enable more cost-effective care delivery. Achieving those goals will require focus, time and meaningful investment in the years to come. We believe that as a private company, with the expertise and support of the team at Patient Square Capital, SOC Telemed will be best positioned to meet the growing needs of patients, physicians and our hospital partners," Gallagher said.