In its largest acquisition to date and one of the top digital health deals of the year, Teladoc has acquired second opinion service Best Doctors in a $440 million deal, including $375 million cash and $65 million in equity. As 40 percent of Best Doctors’ revenue is generated outside the U.S., the deal is intended to boost Teladoc’s international clout and provide telehealth cross selling opportunities for both companies.
Teladoc CEO Jason Gorevic noted that Best Doctors has a presence in 100 countries.
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The second opinion service from Best Doctors is used by employers, insurers, accountable care organizations and for worker’s compensation cases. After securing permission from patients to obtain their medical records, the company matches their case with a suitable medical expert, who reviews their diagnosis and treatment plan. It also provides a service for critical care patients to help them fully understand what their options are. Although Best Doctors has a network of more than 50,000 doctors covering 450 specialties, the largest categories for patient queries involve musculoskeletal conditions and cancer. Earlier this year Best Doctors inked a deal with IBM Watson to make the oncology clinical decision support service available to Best Doctors’ physician network for employer clients.
Revenue for Best Doctors added up to $92 million last year and is projected to be $100 million this year. As part of the deal, Best Doctors CEO Peter McClennen will join Teladoc as president of the new division of the telehealth company.
One of Teladoc’s priorities has been building on services beyond the telehealth company’s primary care services to include behavioral health, dermatology, tobacco cessation and sexual health. Since the initial public offering in 2015, the telehealth business acquired Healthiest You. In the runup to the IPO, Teladoc acquired Consult-a-Doctor in 2013 and AmeriDoc in 2014.
Another advantage of the acquisition is that the combined per patient per month fee will rise considerably.
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In a conference call about the acquisition, Gorevic said as talks with BestDoctors became more serious six to eight months ago on how they would collaborate, they debated between having a close partnership or pushing forward to an acquisition and decided on the latter.
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