News Feature | May 18, 2015

Teladoc To Launch IPO Despite Texas Setbacks

Christine Kern

By Christine Kern, contributing writer

CMS Increases Telemedicine Reimbursement

Despite the passing of restrictive telemedicine rules in Texas, Teladoc still plans to go public.

Telemedicine provider Teladoc announced it has submitted a draft registration statement with the SEC to launch an initial public offering of its common stock. The submission of the Form S-1 was done confidentially, and no determination has yet been made regarding number of shares to be sold or the price range of the shares. The initial public offering (IPO) is anticipated to begin once the SEC completes the review process.

Teladoc has 10 million registered users nationwide, including 2.4 million in its home state of Texas, according to The Dallas Business Journal. And last fall Teladoc announced it has raised $50.2 million in fresh capital which will be used to reinforce its leadership position and support the acceleration of its growth strategy.

The provider has also filed an antitrust suit accusing the Texas Medical Board of violating the Sherman Act and Commerce Clause in response to the Board’s new requirement that physicians see patients in person to establish a relationship before providing telehealth care. The restrictive rules are set to take effect this summer, and follow four years of debate and lawsuits in Texas.

Yet Teladoc has not been stymied by the recent challenges. Dr. Bijan Salehizadeh, co-founder of healthcare investment firm NaviMed Capital told Modern Healthcare, “They obviously feel they can get it done despite the Texas state board issue.”

“I think it's a solid business with strong leadership and supported by market tailwinds,” McKesson's Tom Rodgers said of the IPO move to Modern Healthcare. “Smart move to get out now and I would expect a warm reception from Wall Street.”

And while Texas may be tightening the reins on telemedicine, other regions are recognizing the value and importance in providing healthcare to underserved populations because of its low costs and ability to reach otherwise inaccessible patients, as Health IT Outcomes reported. While legislation supporting it has been slow to develop, New York Governor Andrew Cuomo signed a telehealth bill designed to help service the populations that would benefit most and also require Medicaid to reimburse the service costs.

And Teladoc has already proven itself in the industry. An October 2014 press release announcing the addition of two new board members stated, “With the expansion of health insurance to an estimated eight million new patients through the Affordable Care Act, innovations are needed to meet the primary care needs of all Americans. Dallas-based Teladoc, the nation’s largest telehealth provider, has proven that telemedicine is an exceptional way to deliver high-quality, cost effective care.”

The patient monitoring market is also anticipated to exceed $5 billion by 2020, as Health IT Outcomes, with telehealth for disease conditions management comprising over 50 percent of the telehealth market, according to an iData Research survey.