Teladoc (NYSE:TDOC) announced today that it entered into a definitive merger agreement with Livongo Health (NSDQ:LVGO) worth $18.5 billion.
Purchase, N.Y.-based Teladoc and Mountain View, Calif.-based Livongo are setting out to improve the delivery, access and experience of healthcare around the world by offering high-quality, technology-enabled longitudinal care, according to a news release.
Under the agreement, each share of Livongo will be exchanged for 0.5920x shares of Teladoc, plus cash consideration of $11.33 per Livongo share, totaling $18.5 billion based on the closing price of Teladoc Health chares as of yesterday, Aug. 4, 2020. Upon the closing of the merger, existing Teladoc shareholders will own approximately 58% and existing Livongo shareholders will own approximately 42% of the combined company.
“This merger firmly establishes Teladoc Health at the forefront of the next generation of healthcare,” Teladoc CEO Jason Gorevic said in the release. “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 companies expect that the merger will bring 2020 pro forma revenue of approximately $1.3 billion, representing 85% pro forma growth year-over-year as they combine to become a “global leader in consumer-centered virtual care,” according to the release.
Teladoc and Livongo also expect that their combined companies’ pro forma adjusted EBITDA will reach over $120 million for 2020.
“This highly strategic combination will create the leader in consumer-centered virtual care and provides a unique opportunity to further accelerate the growth of our data-driven member platform and experience,” Livongo founder & executive chairman Glen Tullman said. “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.”
Both companies took hits in the market after news of the merger broke, as, in midday trading today, shares of TDOC were down -14.9% at $212.26 per share and shares of LVGO were down -7.7% at $133.48 per share.