Two digital health giants will merge in one of the largest deals seen in the sector. Livongo, which has seen success with its platform for chronic disease management, will be acquired by Teladoc for $18.5 billion.
Teladoc will acquire Livongo’s shares for $158.98 in stock and cash, a little more than its stock’s opening price of $149.90 on Wednesday. It will also assume Livongo’s $550 million in debt.
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At the end of the deal, Teladoc’s shareholders will own roughly 58% of the company and Livongo shareholders will own 42%. Current Teladoc CEO Jason Gorevic would become CEO of the combined company, and its board of directors will include eight members from Teladoc’s board and five members from Livongo’s board.
“This merger firmly establishes Teladoc Health at the forefront of the next-generation of healthcare,” Teladoc CEO Jason Gorevic said in a news release. “Livongo is a world-class innovator we deeply admire and has demonstrated success improving the lives of people living with chronic conditions. Together, we will further transform the healthcare experience from preventive care to the most complex cases, bringing ‘whole person’ health to consumers and greater value to our clients and shareholders as a result.”
The two companies would complement each other well. Livongo’s continuous engagement with patients with diabetes, heart disease and other conditions could fill in the gaps between telehealth visits, and potentially serve as a source of referrals. And with relatively little overlap between their customers, roughly 25%, both companies would have the opportunity to sell into each others’ customer bases.
“This highly strategic combination will create the leader in consumer-centered virtual care and provides a unique opportunity to further accelerate the growth of our data-driven member platform and experience,” Livongo Founder and Executive Chairman Glen Tullman said in a news release. “By expanding the reach of Livongo’s pioneering Applied Health Signals platform and building on Teladoc Health’s end-to-end virtual care platform, we’ll empower more people to live better and healthier lives. This transaction recognizes Livongo’s significant progress and will enable Livongo shareholders to benefit from long-term upside as the combined company is positioned to serve an even larger addressable market with a truly unmatched offering.”
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Both Teladoc and Livongo have seen significant growth in the last year, fueled further by the Covid-19 pandemic. Since January, Teladoc has seen its stock grow from $83 per share to $238 as virtual visits surged when many primary care offices had to close.
Livongo, which went public just a year ago, has seen its stock balloon from $25 to $149.
The combined company is expected to bring in $1.3 billion in revenue in 2020 and cover 70 million members. The deal is expected to close later this year, pending shareholder approval.
Photo credit: Livongo