Telehealth giant Teladoc is acquiring virtual care company Livongo in a deal valued at $18.5 billion.
The deal would combine one of the leaders in the telehealth market with a growing digital health firm that targets chronic disease management. In a release, the companies said the combination represents a "transformational opportunity to improve the delivery, access and experience of healthcare for consumers around the world."
"The highly complementary organizations will combine to create substantial value across the healthcare ecosystem, enabling clients everywhere to offer high quality, personalized, technology-enabled longitudinal care that improves outcomes and lowers costs across the full spectrum of health," the companies said.
Teladoc and Livongo, which went public a year ago, have both experienced explosive growth during the COVID-19 pandemic as consumers have turned to virtual care options.
The newly combined company will be called Teladoc Health and will be headquartered in Purchase, New York. Upon completion of the purchase, existing Teladoc shareholders will own approximately 58% and existing Livongo shareholders will own approximately 42% of the combined company.
The combined company is expected to reach $1.3 billion in revenue in 2020, representing year over year growth of 85%, according to the companies. Adjusted earnings before interest, taxes, depreciation and amortization is expected to reach $120 million for 2020, Teladoc said.
Jason Gorevic, current CEO of Teladoc Health, will be the CEO of the combined company. Led by Teladoc Health chairman, David Snow, the newly combined Teladoc Health Board of Directors will be composed of eight members of the Teladoc Health Board and five members of the Livongo Board.
The transaction is expected to close by the end of Q4 2020, subject to regulatory approvals.
“This merger firmly establishes Teladoc Health at the forefront of the next-generation of healthcare,” Gorevic said in a statement. “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 deal will create the "leader in consumer-centered virtual care" and provides a unique opportunity to further accelerate the growth of Livongo's data-driven member platform and experience,” said Glen Tullman, Livongo founder and executive chairman in a statement.
“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.”
Lazard served as exclusive financial advisor to Teladoc Health and Paul, Weiss, Rifkind, Wharton & Garrison LLP served as legal advisor. Morgan Stanley served as exclusive financial advisor to Livongo and Skadden, Arps, Slate, Meagher & Flom LLP served as legal advisor.