What You Should Know:
– Teladoc Health to merge with Livongo for $18.5B in cash and stock to create a powerhouse leader in consumer-centered virtual care.
– Teladoc Health shareholders will own approximately 58 percent and existing Livongo shareholders will own approximately 42 percent of the combined company.
– Jason Gorevic, current CEO of Teladoc Health, will be the CEO of the combined company.
Teladoc Health (TDOC) and Livongo (LVGO), today announced that they have entered into a definitive merger agreement 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.
Under the terms of the merger agreement, each share of Livongo will be exchanged for 0.5920x shares of Teladoc Health plus cash consideration of $11.33 for each Livongo share, representing a value of $18.5 billion based on the closing price of Teladoc Health shares as of August 4, 2020. The transaction is expected to close by the end of Q4 2020
“This merger firmly establishes Teladoc Health at the forefront of the next-generation of healthcare,” said Jason Gorevic, CEO of Teladoc Health. “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.”
Here are 5 things to know about this landmark merger deal:
1. Upon completion of the merger, existing Teladoc Health shareholders will own approximately 58 percent, and existing Livongo shareholders will own approximately 42 percent of the combined company.
2. The combination of Teladoc Health and Livongo creates a global leader in consumer-centered virtual care. The company will have expected 2020 pro forma revenue of approximately $1.3 billion, representing year over year pro forma growth of 85 percent. The combined company is expected to have pro forma Adjusted EBITDA of over $120 million for 2020.
3. The newly combined company will be called Teladoc Health and will be headquartered in Purchase, New York led by Jason Gorevic, current CEO of Teladoc Health.
4. The combined company is positioned to execute quantified opportunities to drive revenue synergies of $100 million by the end of the second year following the close, reaching $500 million on a run-rate basis by 2025. These opportunities include increased cross-selling and penetration into each company’s client base. They also include accelerating Livongo’s international expansion through Teladoc Health’s existing footprint, improving combined company member retention rates, and driving more efficient enrollment.
5. The combined company is expected to achieve cost synergies of $60 million by the end of the second year following the close, which can be reinvested to drive topline growth and margin expansion.