Teladoc, Livongo merge in $18.5B deal: 8 details

Teladoc Health merged with Livongo in a multi-billion-dollar transaction expected to close in the fourth quarter.

Telehealth company Teladoc delivers direct-to-consumer virtual care. Livongo is a consumer health company providing digital health services to people with chronic conditions and behavioral health needs.

Eight details on the transaction:

1. Under the agreement, Livongo shares will be exchanged for 0.5920 shares of Teladoc plus $11.33 cash consideration per share. The entire transaction is valued at $18.5 billion, based on Teladoc's closing price on Aug. 4.

2. When the merger completes, Teladoc shareholders will own 58 percent of the company, and Livongo shareholders will own 42 percent of the company.

3. The combined company is expected to report pro forma revenue of about $1.3 billion this year, an 85 percent growth year over year. The combined company expects to have a pro forma adjusted EBITDA of more than $120 million for the year.

4. The merger combines the clinical expertise of Teladoc with Livongo's data-driven approach to create a more personalized and comprehensive virtual healthcare delivery system. The companies anticipate their combined platform will feature artificial intelligence-driven "nudges" and health coaches as well as board-certified physicians and specialists.

5. The company's combination could drive revenue synergies of $100 million by the end of its second year and reach $500 million on a run rate basis by 2025, which creates value for shareholders, according to the joint press release from the companies. There are increased cross-selling opportunities and penetration into new client bases, and Livongo will accelerate its international presence with Teladoc's existing footprint, according to the press release.

6. The companies expect to achieve $60 million in cost savings by the end of the second year after the merger.

7. Teladoc CEO Jason Gorevic will head the new combined company, which will have a board that consists of eight Teladoc members and five Livongo members. David Snow, Teladoc board chairman, will chair the board of the combined company as well.

8. Lazard, a financial advisory company, served as the financial adviser for Teladoc, and Paul, Weiss, Rifkind, Wharton & Garrison was the company's legal adviser. Morgan Stanley was the financial adviser for Livongo, and Skadden, Arps, Slate, Meagher & Flom was the company's legal adviser.


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