Teladoc Health to Buy Livongo in $18.5b Mega-Deal

Teladoc (NYSE: TDOC), a $553.3m telemedicine provider, is buying Livongo (Nasdaq: LVGO), a $170.2m digital health and virtual diabetes coaching company, in an $18.5b merger, to create a company with a combined $1.3b in revenue in 2020, up 85% YOY.  This is the largest digital health deal in history, ringing in at a purchase price for Livongo at $18.5b, and creating a combined entity worth $38b. This deal eclipses Amazon’s acquisition of PillPack and Google’s $2.1 billion bid for FitBit.

The deal, which adds complementary remote health management devices and platforms to Teladoc’s telehealth offerings, ushers in a new era in digital health.  Teladoc charges subscription fees to employers and insurers so employees and members can access doctors, who are independent contractors, on its platform.  70+ million people in the U.S. have access to Teladoc’s portal.  Livongo, which went public in 2019 and manufactures its devices, is the product of several acquisitions: diabetes management device maker Diebeto, digital behavioral health solutions app developer myStrength, AI-based clinical lab test platform developer Prognos and provider of weight-management programs Retrofit, among others.  Teladoc too grew by acquisition, buying InTouch Health, a telehealth competitor, for $150m in January. The purchase of Livongo is Teladoc’s 12^th transaction.

Teladoc reported a 203% increase in remote visits in Q2 ‘20 vs. Q2 ‘19 as patients, particularly the elderly, have avoided clinics and hospitals to reduce the risk of exposure to coronavirus. Deal price -- $18.5b on sales of $170.2m (109x) and negative EBITDA.

Keywords: Healthcare Investment Banking, Healthcare M&A, Healthcare Mergers, Digital Health, Telemedicine, Healthcare IT