SOC Telemed acquired by Patient Square Capital: fairness opinion by William Blair
Deal terms
Implied value per share by method vs. $3.00 offer
Ranges as disclosed in the banker’s summary of analyses; the red line marks the per-share consideration.
Opinion of William Blair to the target board
Discounted cash flow assumptions
Included present value of potential federal tax savings from utilization of federal NOLs ($20-$23 million); added management's latest estimate of net debt as of December 31, 2021 and divided by total diluted shares using treasury stock method.
Selected public companies (7)
1Life Healthcare, Inc. · Accolade, Inc. · American Well Corporation · Cano Health, Inc. · LifeStance Health Group, Inc. · Talkspace, Inc. · Teladoc Health, Inc.
| Multiple | Peer low | Peer median | Peer high | Range applied | Implied per share |
|---|---|---|---|---|---|
| EV / CY2022E Revenue | 1.4x | 2.5x | 5.5x | — | — |
| EV / CY2023E Revenue | 1.1x | 2.0x | 4.4x | — | — |
Selected precedent transactions (8)
| Date | Target | Acquirer | Multiple |
|---|---|---|---|
| 2021-06 | Iora Health | 1Life Healthcare | — |
| 2021-06 | Sentry Data Systems | Craneware | — |
| 2021-04 | PlushCare | Accolade | — |
| 2021-01 | 2nd.MD | Accolade | — |
| 2020-10 | Health Advocate | Teleperformance | — |
| 2020-07 | Benefytt Technologies | Madison Dearborn Partners | — |
| 2020-01 | Stratus Video | AMN Healthcare | — |
| 2017-06 | Best Doctors | Teladoc Health | — |
| Multiple | Low | Median | High | Range applied | Implied per share |
|---|---|---|---|---|---|
| EV / LTM Revenue | 1.9x | 4.9x | 10.9x | — | — |
Other analyses
| Analysis | Summary | Implied per share |
|---|---|---|
| Leveraged Buyout Analysis | Hypothetical LBO targeting IRRs of 15.0%-25.0%, financing scenarios with no debt and with $100 million of debt, exit value based on CY2027E revenue multiples of 1.5x-2.5x. | $0.25–$2.86 |
| M&A Premiums Paid Analysis | Reviewed 264 acquisitions of U.S. public companies announced since January 1, 2010 with equity values between $200 million and $400 million where 100% of equity was acquired; compared premiums at one day, one week, one month, 60/90/180/270/365 days prior. Implied premiums at $3.00/share: 322.9% (1 day), 358.4% (1 week), 134.4% (1 month), 54.6% (60 days), 27.7% (90 days), (30.2)% (180 days), (61.6)% (270 days), (57.8)% (365 days). | — |
Letter agreement dated January 28, 2022: $1,250,000 fairness opinion fee payable on delivery of opinion; approximately $6,550,000 total, less the $1,250,000 opinion fee, payable upon consummation of the Merger. No fees contingent on conclusions reached. Within prior two years, William Blair received approximately $2,050,000 in fees from the Company (capital markets advisor on HCMC business combination in October 2020 and underwriter in June 2021 follow-on offering).
Management projections
| Projection year | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | CAGR |
|---|---|---|---|---|---|---|
| Revenue | $149M | $184M | $227M | $282M | $343M | 23.1% |
| Revenue growth | 22.0% | 22.9% | 23.9% | 23.9% | 21.8% | |
| EBITDA | $-1.9M | $11.2M | $19.6M | $42.4M | — | — |
| EBITDA growth | — | — | 75.0% | 116.3% | — | |
| EBITDA margin | -1% | 6% | 9% | 15% | — | |
| Implied EV / EBITDA | — | 30.5x | 17.4x | 8.1x | — |
Year-1 growth is against LTM at announcement ($123M revenue, $-12.5M EBITDA); later years are year over year.
Management Forecasts prepared by SOC Telemed senior management covering fiscal years 2022E-2027E on a standalone basis, provided to the Company Board, William Blair and (in summary) to Parent. Revenue grows from $122.5 million in 2022E to $343.1 million in 2027E; Adjusted EBITDA moves from $(12.5) million in 2022E to $42.4 million in 2026E (no 2027 adjusted EBITDA was calculated). The forecasts also included estimates of potentially realizable existing federal NOL carryforwards, valued at $20-$23 million of present value tax savings in William Blair's DCF.
Process notes
Other Digital / HealthTech fairness opinions
- Benefitfocus / Voya Financial 2022 · 11.6x EV/EBITDA
- Castlight Health / Vera Whole Health 2022 · 30.4x EV/EBITDA
- Vocera Communications / StrykerCorp. 2022 · 52.3x EV/EBITDA
- NextGen Healthcare / Thoma Bravo 2023 · 16.1x EV/EBITDA
- Tabula Rasa HealthCare / Nautic Partners / ExactCare Pharmacy 2023 · 27.1x EV/EBITDA
- Cerner / Oracle 2021 · 15.2x EV/EBITDA
All Digital / HealthTech opinions → · William Blair opinions