IPO Report: Teladoc (TDOC)

Francis Gaskins |

Teladoc IPO, Teladoc IPO price, Teladoc IPO date, IPOs this week, stocks to buy now, small-cap stockTeladoc (TDOC) is the nation's first and largest telehealth platform, delivering on-demand healthcare anytime, anywhere, via mobile devices, the internet, video and phone. The company is based in Purchase, NY.

Three other companies are scheduled to IPO for the week of June 29. The full IPO calendar is available at IPO Premium.

SEC Documents

Manager, Joint-managers: J.P. Morgan and Deutsche Bank Securities

Co-managers: William Blair, Wells Fargo Securities, and SunTrust Robinson Humphrey

End of lockup (180 days): Monday, December 28, 2015

End of 25-day quiet period: Monday, July 27, 2015

TDOC scheduled a $112 million IPO with a market capitalization of $573 million at a price range midpoint of $16 for Wednesday, July 1, 2015 on NYSE.

Teladoc (TDOC) IPO Summary

TDOC is the nation's first and largest telehealth platform, delivering on-demand healthcare anytime, anywhere, via mobile devices, the internet, video and phone.

TDOC’s solution connects its Members, with its over 1,100 board-certified physicians and behavioral health professionals who treat a wide range of conditions and cases from acute diagnoses such as upper respiratory infection, urinary tract infection and sinusitis to dermatological conditions, anxiety and smoking cessation.

Teladoc (TDOC) Valuation

Glossary

Accumulated deficit (mm)

.

.

-$85

     

Per share dilution

.

.

-$13.60

     
             

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

Teladoc (TDOC)

$573

8.7

-11.3

3.7

6.7

20%

             

Teladoc (TDOC) IPO Conclusion

Buy

Visits +126% in Q1

Members +49% in Q1

Satisfaction rate, 95%, 104% net dollar retention

Q1 rev +75%, 60% gross profit, Loss -77% of rev

Price to earnings is -11, indicating fairly heavy cash burn relative to market cap

Price to sales  8.7 (fairly high)

Price to book of 3.7

Teladoc (TDOC) Business

TDOC is the nation's first and largest telehealth platform, delivering on-demand healthcare anytime, anywhere, via mobile devices, the internet, video and phone.

TDOC’s solution connects its Members, with its over 1,100 board-certified physicians and behavioral health professionals who treat a wide range of conditions and cases from acute diagnoses such as upper respiratory infection, urinary tract infection and sinusitis to dermatological conditions, anxiety and smoking cessation.

$40 a visit, 24/7

Nearly 11 million unique Members now benefit from access to Teladoc 24 hours a day, seven days a week, 365 days a year, at a cost of $40 per visit.

TDOC’s solution is delivered with a median response time of less than ten minutes from the time a Member requests a telehealth visit to the time they speak with a Teladoc physician. TDOC completed approximately 300,000 telehealth visits in 2014.

The Teladoc solution is transforming the access, cost and quality dynamics of healthcare delivery for all of TDOC’s market participants.

TDOC’s Members rely on Teladoc to remotely access affordable, on-demand healthcare whenever and wherever they choose.

TDOC’s Clients purchase TDOC’s solution to reduce their healthcare spending while at the same time offering convenient, affordable, high-quality healthcare to their employees or beneficiaries.

TDOC’s Providers have the ability to generate meaningful income and deliver their services more efficiently with no administrative burden.

Satisfaction rate, 95%, 104% net dollar retention

TDOC believes the value proposition of its solution is evidenced by its overall Member satisfaction rate, which has exceeded 95% over the last six years, and a 104% annual net dollar retention rate among TDOC’s Clients on average over the last three years.

TDOC further believes any consumer, employer or health plan or healthcare professional interested in a better approach to healthcare is a potential Teladoc Member, Client or Provider.

Teladoc (TDOC) Market

According to the CDC, there are approximately 1.25 billion ambulatory care visits in the United States per year, including those at primary care offices, hospital emergency rooms, outpatient clinics and other settings.

TDOC estimates that 417 million, or 33%, of these visits could be treated through telehealth. TDOC believes that the total addressable market for telehealth in the United States consists of the ambulatory care telehealth opportunity, a subset of visits currently delivered in urgent and retail care settings and care foregone by those currently not accessing the healthcare delivery system.

Teladoc (TDOC) Acquisitions

TDOC has scaled and intend to continue to scale its platform through the pursuit of selective acquisitions.

In August 2013, TDOC acquired Consult A Doctor for $16.6 million, net of cash acquired.

In May 2014, TDOC acquired AmeriDoc for $17.2 million, net of cash acquired.

Both of these acquired businesses specialized in providing telehealth solutions to small- and medium-sized businesses through broker distribution channels. These acquisitions added new distribution opportunities that TDOC believes are an important element of the growth strategy.

In January 2015, TDOC completed the acquisition of BetterHelp, a provider of direct-to-consumer, behavioral health services, for $3.5 million in cash and a $1.0 million promissory note and agreed to make annual payments to the sellers equal to 15% of the total net revenue generated by the BetterHelp business for each of the next three years.

On June 17, 2015, TDOC closed the acquisition of StatDoc for aggregate consideration of $30.5 million, comprised of $13.3 million of cash and $17.2 million of our common stock (or 1,051,038 shares), subject

StatDoc is a telemedicine provider, focused on managed care, health system and self-insured clients.

Teladoc (TDOC) Regulatory Risks

Some states (Texas, Arkansas, Idaho) take the position that prescriptions need personal interaction.  TDOC is apparently making progress in Texas and Idaho.  For more information see page 20 in the SEC filing.

Teladoc (TDOC) Intellectual Property

TDOC owns and uses trademarks and service marks on or in connection with its services, including both unregistered common law marks and issued trademark registrations in the United States. TDOC also has trademark applications pending to register marks in the United States. In addition, TDOC relies on certain intellectual property rights that TDOC licenses from third parties and on other forms of intellectual property rights and measures, including trade secrets, know-how and other unpatented proprietary processes and nondisclosure agreements, to maintain and protect proprietary aspects of TDOC’s products and technologies.

Teladoc (TDOC) Legal Risk

On June 8, 2015, American Well Corporation filed a complaint against TDOC’s company in the United States District Court for the District of Massachusetts alleging that certain of TDOC’s operating platform's technology infringes one of its patents that TDOC is currently seeking to invalidate pursuant to an inter partes review that TDOC filed with the Patent Trial and Appeals Board in March 2015.

Teladoc (TDOC) Competition

TDOC views as its competitors those companies that currently (or in the future will) (i) develop and market telehealth technology (devices and systems) or (ii) provide telehealth, such as the delivery of on-demand access to healthcare.

In the provision of telehealth, competition focuses on, among other factors, experience in operation, customer service, quality of technology and know-how and reputation.

TDOC’s key competitors in the telehealth market are Doctor On Demand, MDLive and American Well.

Teladoc (TDOC) 5% Shareholders Pre-IPO

CHP III, L.P.      17.3%

HLM Venture Partners II, L.P.     17.3%  

Entities affiliated with Trident Capital      16.9%  

KPCB Holdings, Inc.      11.6%  

Entities affiliated with Icon Ventures       6.9%    

Teladoc (TDOC) Dividends

No dividends are planned

Teladoc (TDOC) Use of Proceeds

TDOC expects to receive $100 million from its IPO and use it for the following:

for working capital and other general corporate purposes, including to expand its current business through acquisitions of, or investments in, other businesses, products or technologies. However, TDOC has no commitments with respect to any such acquisitions or investments at this time.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
TDOC Teladoc Inc. 17.95 -0.20 -1.10 281,080

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