Teladoc Health and Livongo Merge

Andrew Cummings
August 6, 2020

The combined company will do business as Teladoc Health and will be headquartered in NY. Teladoc shareholders will own abut 58% of the combined entity, while Livongo shareholders will own the remaining 42%. "Consumer adoption has skyrocketed, from 11 per cent of USA consumers using tele-health in 2019 to 46 per cent of consumers now using tele-health to replace cancelled healthcare visits". Gorevic will be CEO of the combined company, and the board will comprise eight members of the Teladoc board and five members of the Livongo board. Together, they'll boast pro forma revenue of roughly $1.3 billion.

Analysts said a combined Teladoc and Livongo would be the undisputed leader in both online acute care and management of chronic conditions, an area buoyed by President Donald Trump's executive order on Monday to expand telehealth access to 57 million Americans. Teladoc Health is buying chronic care provider Livingo Health in a $18.5 billion deal, paying a 10% premium. "Together, we will further more rework the health care encounter from preventive care to the most elaborate instances, bringing "whole person" health to customers and higher worth to our clients and shareholders as a final result".

In its recent second quarter earnings report, Teladoc posted 85% growth in revenue, with total virtual health visits up 203% as people put off in-person trips to the clinic over coronavirus concerns.

Teladoc Health shares were trading down 2.17% at $244 in Wednesday's pre-market session.

The companies expect to close the deal by the end of this year. Teladoc estimated that there would be "revenue synergies" of $100 million two years from the close of the deal, reaching $500 million on a run rate basis by 2025, according to a statement.

Lazard served as exclusive financial advisor to Teladoc Health and Paul, Weiss, Rifkind, Wharton & Garrison LLP served as legal advisor.

With the deal, Teladoc said it hopes to create an integrated system through which patients can see a doctor and manage their diseases virtually. Ranked #1 among direct-to-consumer telehealth providers in the J.D. Power 2019 U.S. Telehealth Satisfaction Study and Best in KLAS for Virtual Care Platforms for 2020, Teladoc Health leverages more than a decade of expertise and real-time insights to meet the growing virtual care needs of consumers, healthcare professionals, employers and health plans.

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