Telemedicine company Teladoc Health plans to acquire InTouch Health in a $600 million deal, the companies announced Jan. 12.
Santa Barbara, California-based InTouch Health is a leading provider of enterprise telehealth solutions for hospitals and health systems.
The acquisition positions Teladoc as the partner of choice for health systems seeking a single solution for their entire virtual care strategy, Teladoc executives said in a press release.
''Today marks a bold leap forward in Teladoc Health's mission to transform how high-quality healthcare is accessed and experienced, making virtual care available for patients with even the most critical care needs," Jason Gorevic, CEO of Teladoc Health, said in a statement. "Bringing these companies together will make Teladoc Health the clear virtual care leader across every front door of healthcare, further accelerating the adoption and impact of virtual care for millions of people around the world."
Teladoc management will provide additional details of the InTouch Health acquisition during the company's presentation at the 38th annual J.P. Morgan Healthcare Conference in San Francisco on Monday, officials said.
The deal is expected to strengthen Teladoc's long-term revenue growth, company executives said.
Under the terms of the agreement, the purchase price of $600 million will consist of approximately $150 million in cash and $450 million of Teladoc common stock. The transaction is expected to close by the end of the second quarter, subject to customary closing conditions.
InTouch Health is expected to generate 2019 revenues of approximately $80 million, growing about 35% versus the prior year.
InTouch Health supports more than 3,600 care locations around the world, including many of the top 20 U.S. health systems. The company also supports 40-plus clinical use cases through its virtual care platform.
"The newly combined entity will be uniquely equipped to meet the growing needs of the provider market with one single, integrated solution spanning both consumer and provider-to-provider applications," Teladoc executives said.
Demand for virtual care services within the provider market is poised for significant growth, according to Teladoc, with favorable reimbursement tailwinds. A 2019 JPMorgan research survey found 40% of hospitals plan to increase their budgets for telemedicine solutions.
An L.E.K. Consulting report forecasts that 61% of hospital revenue will come from managed and value-based care models by 2021. Virtual care will be a crucial strategy to improve consumer engagement, ensure consistent quality and manage healthcare's rising costs, Teladoc executives said.
"With a continued focus on extending virtual care to new settings, expanding access and improving care coordination, our unmatched capabilities will extend both inside and outside the four walls of the hospital and empower care providers and patients alike," Gorevic said in the press release.
Teladoc reported third-quarter 2019 revenue of $138 million, up 24% from the third quarter of 2018. The company expects full-year 2019 revenue to be between $546 million and $550 million, and adjusted earnings before interest, tax, depreciation and amortization is projected to be in the range of positive $28 million and $32 million, according to its third-quarter earnings call.