Teladoc finalizes blockbuster deal with Livongo in less than 3 months

private equity investment
The combined company is expected to reach $1.3 billion in revenue in 2020 and is projecting revenue growth of 30% to 40% over the next two to three years. (Natee Meepian/Getty Images)

Telehealth giant Teladoc completed its massive $18.5 billion acquisition of Livongo, the company announced Friday.

The deal was wrapped up quickly, in under three months, as the companies likely look to leverage the current financial tailwinds of the telehealth boom and investor interest in digital health spurred by the COVID-19 pandemic.

Teladoc announced Aug. 5 it planned to pay $18.5 billion in cash and stock for Livongo, which provides diabetes monitoring and remote monitoring. The combination of two of the largest publicly-traded virtual care companies will create a health technology giant just as the demand for virtual care soars.

The combined company is expected to reach $1.3 billion in revenue in 2020 and is projecting revenue growth of 30% to 40% over the next two to three years.

Under the terms of the merger, Livongo shareholders will receive 0.5920 times shares of Teladoc Health plus cash of $11.33 for each Livongo share. Teladoc shareholders will own about 58% of the combined company, and Livongo shareholders about 42%. Livongo stock stopped trading prior to Friday's open.

Teladoc's stock was down 5% in opening trading Friday morning.

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Shareholders overwhelmingly approved the deal, according to the company. 

During a special meeting of shareholders Thursday, Teladoc Health’s shareholders approved the deal with more than 99% in approval. Livongo shareholders also approved the acquisition with more than 99% of votes in approval, Teladoc said in a Thursday release.

In a press release, Teladoc said the milestone marks the completion of the "most significant blending of capabilities and talent in the history of digital health."

The combined company becomes the only consumer and healthcare provider partner to span a person’s entire health journey, Teladoc officials said.

“Both Teladoc Health and Livongo were founded with the same mission: to create a new kind of healthcare experience, one that empowers people everywhere to live their healthiest life. Today’s news dramatically accelerates our ability to make this a reality for the tens of millions of consumers and healthcare professionals we serve around the world,” said Jason Gorevic, CEO of Teladoc Health, in a statement.

“Together, our team will achieve the full promise of whole-person virtual care, leveraging our combined applied analytics, expert guidance and connected technology to deliver, enable, and empower better health outcomes.”

RELATED: How Teladoc's blockbuster deal could impact the entire virtual care landscape

Gorevic will lead the combined company and much of its senior leadership, including its chief financial officer and chief operating officer, will come from Teladoc.

Four of Livongo's top executives will leave now that the deal is finalized, including CEO Zane Burke, President Jennifer Schneider, Chief Financial Officer Lee Shapiro and Steve Schwartz, senior vice president of business development. 

Former Livongo Chairman Glen Tullman will have a seat on the combined company's board of directors.

Both companies reported strong third-quarter financial results this week.

Teladoc's third-quarter revenue soared 109% to $289 million from $138 million during the same period a year ago. During the first nine months of 2020, revenue grew 79% to $711 million.

Livongo reported third-quarter total revenue of $106 million, up 126% year over year from $47 million during the same period in 2019.

The company expects to directly deliver more than 10 million virtual visits this year and has reported an additional 3 million enabled visits for its health system clients so far in 2020.