SOC Telemed (TLMD) Stock: Why The Price Surged Today

By Amit Chowdhry ● Feb 3, 2022
  • The stock price of SOC Telemed Inc (NASDAQ: TLMD) increased by over 300% pre-market today. This is why it happened.

The stock price of SOC Telemed Inc (NASDAQ: TLMD) increased by over 300% pre-market today. Investors are responding positively to SOC Telemed entering into a definitive agreement to be acquired by Patient Square Capital, the leading dedicated health care investment firm.

Under the terms of the agreement, SOC Telemed stockholders are going to receive $3 in cash per share of Class A common stock. The per-share purchase price represents a premium of approximately 366.1% over SOC Telemed’s closing share price on February 2, 2022, the last full trading day prior to the transaction announcement and a 93.1% premium to SOC Telemed’s sixty-day volume-weighted average price (VWAP) through February 2, 2022.

The Board of Directors of SOC Telemed has unanimously approved the transaction and recommends that company stockholders approve the transaction and adopt the merger agreement at the Special Meeting of Stockholders to be called in connection with the transaction. And the stockholders collectively holding approximately 39% of the outstanding shares of common stock have entered into a voting agreement pursuant to which they have agreed to vote their shares of the Company’s common stock in favor of the transaction.

Upon the completion of the transaction, SOC Telemed is going to become a private company with the flexibility and resources to continue investing in its clinical capabilities, innovating its offering, and expanding its footprint.

Following the completion of the transaction, SOC Telemed is going to continue to be led by CEO Dr. Chris Gallagher, who assumed the role in September of 2021. Dr. Gallagher was previously Co-Founder and CEO of Access Physicians, a high-growth and experienced multi-specialty acute care telemedicine business that was acquired by SOC Telemed in March of 2021.

This agreement includes a 30-day “go-shop” period, which allows the SOC Telemed Board of Directors and its advisors to actively initiate, solicit and consider alternative acquisition proposals from third parties. And the SOC Telemed Board of Directors 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. There can be no assurance that this “go-shop” will result in a superior proposal, and SOC Telemed does not intend to disclose developments with respect to the solicitation process unless and until it determines such disclosure is appropriate or otherwise required. Following the expiration of the go-shop period, SOC Telemed is going to be subject to customary “no-shop” restrictions on its ability to solicit acquisition proposals from third parties or to provide information to and engage in discussions with any third parties in relation to an alternative acquisition proposal, subject to customary exceptions that permit the SOC Telemed Board of Directors to comply with its fiduciary duties.

The deal is expected to close in the second quarter of 2022, subject to the satisfaction or waiver of customary closing conditions. Upon closing of the transaction, SOC Telemed’s common stock will no longer be listed on any public market.

KEY QUOTES:

“Patient Square Capital’s acquisition of SOC Telemed, which is the culmination of a comprehensive process, represents a compelling opportunity for all stakeholders. After being approached by Patient Square Capital, we formed an independent committee of the Board, which thoroughly reviewed the proposal with the assistance of independent financial and legal advisors. Following the independent committee’s unanimous recommendation, 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. Lastly, today’s announcement is a testament to the hard work of the SOC Telemed team, which worked tirelessly to achieve an optimal outcome for our stakeholders.”

— Steve Shulman, Chairman of the SOC Telemed Board of Directors

“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. 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.”

— Dr. Gallagher

“Having served on the board of Access Physicians prior to its acquisition by SOC Telemed, I had the opportunity to see first-hand the vital role that inpatient telemedicine can play in transforming clinical workflows, addressing clinician shortages, and enabling timely and high-quality patient care. We look forward to partnering with Dr. Gallagher and the SOC Telemed team to invest meaningfully in the business to further accelerate growth and expand its offerings in the years to come.”

— Karr Narula, Founding Partner of Patient Square

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.