Teladoc Announces IPO Plans, Promptly Sues Texas Medical Board


Dallas-based telemedicine vendor Teladoc filed a confidential Form S-1 with the SEC this week, declaring its intention to file a public offering in the coming months. Teladoc has raised $90 million in VC funding since its 2002 launch, culminating with a $50 million Series C round that the company closed in September 2014. With just $75 million raised, Teladoc is pursuing its IPO significantly earlier than the average technology startup, which according to Crunchbase analytics, tends to have raised north of $160 million before filing for an IPO. 

Because the company chose to file its SEC Form S-1 confidentially, no financial performance or valuation information has been publically disclosed. Confidential filing is a new right for businesses considering a public offering, and provides them with an extended timeline to work out the logistics of their offering before disclosing financial performance figures to the public. Stock offerings tend to be meticulously timed, and businesses have fought for the right to coordinate everything beforehand, but then wait with their approved IPO until market conditions are ideal. By allowing businesses to withhold financial performance figures, logistics and timing can be more carefully considered without worrying about potential investors scrutinizing their earnings and forecasts, or competitors analyzing their revenue streams. Confidential filings, which were only introduced in 2012 as part of the JOBS Act, have become a common path to public offerings, with Imprivata and Castlight Health having also filed confidential S-1 forms prior to their IPOs. Though current financial figures have not been disclosed, Teladoc did report on its Series C filing that its annual revenue was between $25 million and $100 million.

In addition to its IPO filing, Teladoc also filed a federal antitrust lawsuit against the Texas Medical Board over recently implemented limits on telemedicine services in Texas. In 2010, the Texas Medical Board approved a new requirement mandating that any video consultations be prefaced with an in-person visit, which undermines Teladoc’s business model of matching patients with the next available state-licensed MD. In 2011, the Texas Medical Board sent a letter to Teladoc threatening to discipline any Texas-based doctors prescribing medications over the platform. These initial battles resulted in years of legal proceedings that concluded in April when the Texas Medical Board legally implemented the restrictions on telehealth that it had sought.

Teladoc argues in its lawsuit that the Texas Medical Board’s new regulations are not medically substantiated, and accuses the board of trying to unfairly limit competition by requiring clinicians to be physically present during consultations. Because Teladoc is a Texas-based company, a significant portion of its revenue comes from consultations performed within the state, and so it comes as no surprise that it would want to file a confidential Form S-1 to give itself time to sort out its regulatory problems and properly forecast its earnings.

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