Telemedicine and virtual healthcare company Teladoc Health and California-based Livongo Health Inc., which provides digital health management for chronic conditions, have agreed to merge, the companies announced Wednesday (Aug. 5).
Under the terms of the $18.5 billion agreement, each share of Livongo will be exchanged for 0.5920x shares of Teladoc Health, $249.42 at the closing on Tuesday (Aug. 4), plus cash consideration of $11.33 per Livongo share.
Upon completion of the deal, Teladoc Health shareholders will own 58 percent while Livongo shareholders will own 42 percent of the combined company.
The transaction is expected to close by year’s end. The new company will be called Teladoc Health and will be located in Purchase, New York.
“This merger firmly establishes Teladoc Health at the forefront of the next-generation of healthcare,” said Teladoc Health CEO Jason Gorevic in a statement.
Livongo Founder and Executive Chairman Glen Tullman said the strategic combination will create a leader in consumer-centric virtual care.
The combined companies are expected to have revenue of $1.3 billion at the close of the year, an 85 percent year-over-year growth, according to the announcement. The two companies said they anticipate adjusted EBITDA of more than $120 million for 2020.
Gorevic will be CEO of the combined company. Led by Teladoc Health Chairman David Snow, the newly combined Teladoc Health Board of Directors will include eight members of the Teladoc Health board and five members of the Livongo board.
Last year, just 10 percent of patients used telemedicine, according to JD Power. But like everything else, a change came when doctors’ offices closed and patients and providers saw the light in telehealth.
A recent study of patient visits at NYU Langone found virtual visits rose 4,345 percent for non-urgent care between March 2 and April 14 and rose 683 percent for urgent care.
“This situation has really laid bare a lot of the issues that have been within the system for this whole time,” Murray Brozinsky, CEO of virtual care platform Conversa Health, told PYMNTS. “This was building, but what telehealth likely required was a catalyst, COVID-19 has now been that catalyst that pushed it… right over the edge.”
Last month, Ryan Krause, vice president at Wisconsin-based healthcare software company Epic Systems Corp., told PYMNTS trying to change how medical care gets delivered and paid for was a slow, uphill battle until COVID-19 hit.
“The system has changed, consumers are really changing how they think and how they approach healthcare,” Krause said. He said the public is warming up to “things that maybe have had trouble gaining traction in the past.”