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Exclusive: SOC Telemed buys Forefront Telecare

Aug 31, 2022
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Illustration: Sarah Grillo/Axios

Four months after going private, SOC Telemed is back on the M&A train —acquiring Forefront Telecare and renaming the combined acute care telemedicine provider Access TeleCare, the parties tell Axios exclusively.

Why it matters: By uniting with Forefront, SOC gains the additional wherewithal needed to tackle what CEO Chris Gallagher says its hospital customers ask for most: more access to virtual behavioral health services.

  • Forefront expands Patient Square Capital-backed SOC's foothold in this specialty beyond hospital emergency departments and into inpatient and outpatient behavioral health units.
  • Behavioral health already is SOC's No. 2 revenue generator (after the neurology specialty), and the merger will boost the Dallas-based company's capacity in that specialty by 300%.
  • "[Behavioral] is the No. 1 service line we need to bolster," Gallagher says.
  • MTS Health Partners advised Forefont, with the deal concluding a strategic-focused process. Terms were not disclosed.

Flashback: About five years ago, Forefront began migrating away from senior-only long-term care to hospital-based behavioral health telemedicine for both older adults and seniors.

  • "That's when we started to bump into Chris and crew," says Rob Rebak, CEO of Forefront.
  • The companies subsequently began working together a couple years back, making combining a natural next step.

Context: The transaction aligns with Access TeleCare's vision of building out the largest and most diversified acute care telemedicine provider in the nation.

  • The newly combined company provides virtual care in nearly 1,500 locations, with over 2,500 combined programs (spanning 10 specialities) that operate in 50 states.
  • The size and scale already achieved gives it an edge, Gallagher says: "We've already [knocked down] all the inpatient barriers that take so much time to actually make a program go live."
  • Gallagher believes it's addressing a nearly $10 billion TAM, hinting that more M&A is likely to follow.
  • Forefront, Rebak adds, is growing 100% year-over-year and is still barely penetrated into the market.

State of play: While telehealth startups with D2C models flooded the market at staggering valuations during the recent digital health boom, Access TeleCare will be sticking to its niche — where fewer have traveled.

  • "There’s just unlimited demand flowing into ERs, into behavioral health units, into the other outpatient pieces of the hospital system," Rebak says. "We don’t need to get into the business of advertising direct-to-consumer."
  • Underscoring this opportunity, the average wait time in the emergency department ranges from 100 minutes to over 200 minutes, depending on the state, according to Beckers Hospital Review.

Yes, and: Fueling the mental health funding bonanza broadly speaking, the global prevalence of anxiety and depression skyrocketed by 25% in the first year of COVID, according to the World Health Organization.

  • Other telepsych startups targeting clinics and hospitals include Array Behavioral Care, Iris Telehealth, and FasPsych.

Be smart: Telehealth's role in the hospital — which includes improving access to specialist care and preventing burdensome, costly patient transfers — is quickly gaining acceptance, Gallagher says.

  • "It’s all about keeping care local and building programs that enhance a hospital’s ability to care for [patients of] growing complexity and severity of illness," he says.
  • Ultimately, Gallagher predicts the hybrid in-person and virtual care model will evolve such that the only in-person providers in the hospital are ER doctors and proceduralists.

Catch up quick: Forefront marks the first deal for SOC since ending its 15-month stint as a public company.

  • It went public in November 2020 at an initial EV of about $720 million, via a merger with Healthcare Merger Corp., a SPAC co-sponsored by Shulman Ventures and MTS Health Partners.
  • SOC bought acute telehealth provider Access Physicians in April 2021 for $194 million, soon after which Gallagher, founder of the latter, took the helm of the combined company.
  • Patient Square Capital took SOC private in April at a $312 million equity value.

The bottom line: As this deal illustrates, the pessimistic sentiment pervading the broader universe of public digital health companies is making growth in the private markets increasingly attractive.

  • "Our fortunes oftentimes followed the fortunes of others," Gallagher recalls. "We really wanted to get out of that shadow and continue to build our company."
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