Acute care telemedicine developer/provider SOC Telemed, formerly Specialists On Call, will be going public in an interesting maneuver called a ‘blank check’ acquisition. They are acquiring an already publicly-traded company, Healthcare Merger Corporation (HCMC) (NASDAQ: HCCO). HCMC is a special purpose acquisition company (SPAC) that had its own assets of $250 million of cash from a December 2019 IPO. A group of institutional investors, including funds and accounts managed by BlackRock Inc., Baron Capital Group, and ClearBridge Investments, have committed to a private additional investment of $165 million in common stock when the deal closes.  HCMC will disappear and the company will trade as SOC Telemed. The companies estimate the combined value to be about $720 million. 

The combination of the two companies allows SOC Telemed to go public fairly quickly without the usual routine and steeper climb of an IPO by acquiring a purpose-built public company. Given that telemedicine is hot, but markets are post-COVID volatile, it’s a smart move that others (Hims) are already rumored to be following.

According to the release, HCMC will file a registration statement (which will contain a joint proxy statement/consent solicitation statement/prospectus) with the SEC in connection with the transaction as part of their Form 8-K. The closing is expected to be in 4th Quarter 2020, subject to the usual approval and timing procedures present in public company acquisitions.

SOC Telemed is also an interesting company in that it specializes in telemedicine for the acute care market, supplying virtual consults in specialty areas such as neurology, psychiatry, and ICU. It claims to be the largest national telemedicine provider to hospitals, health systems, value-based care organizations, post-acute care, and physician networks. SOC provides services to 847 facilities including 543 acute care hospitals in 47 states, including 19 of the 25 largest U.S. health systems. It is also the largest provider of acute teleneurology and telepsychiatry. The company has delivered over one million acute care consultations. Recent acquisitions include behavioral health telemedicine company JSA in 2018 and NeuroCall in 2017.

From the release, some details about how the acquisition will work:

• SOC’s current management and equity holders, including Warburg Pincus, will roll a portion of their equity into SOC.
• SOC Telemed’s existing majority equity holder, Warburg Pincus, will remain SOC’s largest shareholder.
• Proceeds generated by the transaction will be used to pay down existing debt, purchase a portion of the equity owned by existing SOC shareholders, and capitalize the SOC Telemed balance sheet.
• Assuming no redemptions of HCMC public shares, current SOC equity holders will own 40%, HCMC shareholders will own 32%, PIPE investors will own 21%, and HCMC’s sponsor will own 7% of the issued and outstanding shares of common stock of SOC immediately following the closing, respectively.

SOC’s management team, based in Virginia, will also shuffle a bit. Paul Ricci, Interim Chief Executive Officer, will be stepping down (presumably back to Warburg Pincus where he is an advisor). John Kalix, currently President, will become CEO. Hai Tran, presently COO and CFO, will continue in those positions. At HCMC, Steve Shulman, currently CEO and a director of HCMC, will become the Chairman of the SOC Telemed board of directors.  Mobihealthnews, FierceHealthcare  Hat tip to reader Paul Costello of Boost Health Network.