Teladoc, Inc. started the long road to an IPO yesterday, announcing that it had taken the first step in the process by submitting an S-1 registration statement — the very detailed disclosure document required by regulators — with the U.S. Securities and Exchange Commission.
Teladoc is a pioneer in the grail-like quest to provide health care services by mass communication — whether it be smart phones, tablets or other mobile and not-so-mobile, web-based communication devices. Teladoc took advantage of the JOBS Act-enabled convenience of submitting its S-1 on a confidential basis, leaving us to wonder about details like its financial record or plan for the cash it seeks to raise.
But we don’t have to wait for the registration statement to know that Teladoc and companies like it face both capital markets challenges as well as a fragmented and evolving regulatory environment. Telemedicine companies have to navigate a panoply of regulatory hurdles, including: state law restrictions on the corporate practice of medicine; varied state scope of practice rules and licensing requirements; and privacy safeguards and record-keeping burdens under the federal HIPAA regulations. And not all stakeholders have welcomed telehealth players like Teladoc — in its own backyard, Dallas-based Teladoc, with over 2.4 million members in Texas, has sued to enjoin implementation of a Texas Medical Board rule requiring an in-person evaluation prior to making a diagnosis or prescribing medications.
Nevertheless, Teladoc and its bankers must be confident in the company’s prospects — normally an IPO candidate tries to keep secret its plans for going public as long as possible, but Teladoc seems eager to get the word out. If all goes well, Teladoc could file its S-1 publicly by Memorial Day and price an offering before the portfolio managers head for their beach houses in August. If the SEC slows them down, or if the IPO market cools, we may not see an offering until the Fall.
Either way, as a “leading indicator,” the Teladoc IPO process bears watching.