Teladoc to buy Livongo in $18.5B deal

Dive Brief:

  • Teladoc Health is buying digital chronic disease management company Livongo in an $18.5 billion cash and stock deal, the companies announced Wednesday. The deal is expected to close by the end of this year.
  • The combined company will have expected 2020 revenue of $1.3 billion, an estimated growth of 85% over last year. Revenue growth of 30% to 40% over the next two to three years is expected, Teladoc CFO Mala Murthy told investors on a call Wednesday morning.
  • The overlap in client base is estimated at 25%, giving Teladoc the opportunity to pitch Livongo products and services to its 70 million members in the U.S., executives said.

Dive Insight:

The acquisition builds on the momentum the sector has seen as patients and providers pursue more virtual care in light of the COVID-19 pandemic.

Teladoc reported last week that it saw visits triple in the second quarter of 2020 to 2.8 million and the company increased its full-year revenue guidance for the second time this year. Livongo, which went public in July 2019, on Wednesday reported 125% second-quarter revenue growth reaching $91.9 million.

Last month, Teladoc closed its $150 million acquisition of InTouch Health, which contracts with hospitals and health systems to offer telehealth providers.

Teladoc shareholders will own about 58% of the combined company while Livongo shareholders will own 42%. The board of directors will include eight members of the Teladoc board and five members of Livongo’s.

Teladoc CEO Jason Gorevic will lead the combined company, which will retain the name Teladoc and headquarters in Purchase, New York. Livongo shares will be exchanged for 0.59 shares of Teladoc plus $11.33.

This story is developing.