Teladoc Bets Big on Online Medicine With $18.5 Bln Livongo Deal

By Noor Zainab Hussain and Manas Mishra

August 06, 2020

(Reuters) - Teladoc Health Inc has agreed to buy chronic care provider Livongo Health Inc in a deal valuing the company at $18.5 billion, betting on a boom in online care and consultations spurred by the coronavirus crisis.

The merger is by far Teladoc's biggest investment in a campaign of smaller acquisitions since 2017 that have made it the leading U.S. provider of a range of phone and online-based healthcare services.

Analysts said the latest deal should make the combined company the undisputed leader in both online acute care and the management of chronic conditions, following President Donald Trump's order on Monday to expand telehealth access to 57 million Americans.

Demand for virtual healthcare has skyrocketed as the pandemic kept patients from visiting doctors, with one recent study estimating 46% of Americans now use telehealth, up from 11% in 2019.

Pre-COVID-19, the total annual revenues of U.S. telehealth players were an estimated $3 billion, whereas consultants McKinsey & Company now estimate up to $250 billion of U.S. healthcare spending could be virtualized.

The deal will give Livongo's customers, who typically get physiotherapy and other proactive treatments for chronic illnesses through coaches on its system, direct access to physicians who can write prescriptions for them.