Teladoc (TDOC) To Raise Debt For Best Doctors Acquisition

Teladoc, Inc. (NYSE:TDOC) announced recently that it would offer senior notes worth $200 million, with the year of maturity fixed as 2022. The company also expects to provide the initial purchaser an option to buy up to an additional $30 million aggregate principal amount of notes on the same terms and conditions, solely to cover over-allotments.

Teladoc will use proceeds from the offering to fund a portion of the cash payable for its recently announced acquisition of Best Doctors Holdings, Inc., the world’s leading expert medical consultation company. The acquisition primarily aims at improving health outcomes for the most complex, critical and costly medical issues. Teladoc basically intends to create a new paradigm for patients to access care by delivering a powerful connected care platform.

This apart, the company also intends to refinance existing indebtedness and to pay related fees and expenses. The remaining proceeds will be utilized for working capital and other general corporate purposes.

Teladoc’s strategic initiatives to improve profitability and reduce liabilities make it well positioned for future growth. Year to date, shares of Teladoc have rallied 98% outperforming the Zacks categorized Medical Service industry’s gain of only 6%.

At the end of first-quarter 2017, Teladoc had $42 million of long-term debt, up 68% from the year-ago quarter and unchanged from year-end 2016.. Its interest expense also rose 63% year over year but declined 46% from year-end 2016.

Zacks Rank and Stocks to Consider

Teladoc presently has a Zacks Rank #3 (Hold). Investors can consider some better-ranked stocks like Align Technology, Inc. (NASDAQ:ALGN) , EDAP TMS S.A. (NASDAQ:EDAP) and Inogen Inc. (NASDAQ:INGN) . All of the stocks sport a Zacks Rank #1(Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Align Technology, a medical dental supplies company, topped estimates in each of the last four quarters with an average beat of 59.23%.

Inogen is a medical instruments seller, which delivered positive surprises in each of the last four quarters with an average beat of 82.42%.

EDAP TMS also posted positive surprises in two of the last four quarters with an average beat of 366.67%.

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