If you think the WFH movement is big, the same could very well be said for digital health and telemedicine. The future of healthcare is also going virtual.
In a sign of the growing importance and value of digital healthcare in the world of medicine, two of the industry’s publicly traded companies have agreed to a significant $18.5 billion merger in mid 2020.
We are of course talking about Teladoc’s purchase of Livongo at $18.5 billion. You can all it a merger but what it is is the accelerated manifestation of digital health companies that will become very powerful.
Teladoc Health is a multinational telemedicine and virtual healthcare company based in the United States and is one of the main winners of the pandemic in health-tech. It’s stock was near $100 at the start of 2020, now it’s double that.
To give you fair scope of the M&A deal, it’s the third-largest deal for a U.S. company this year, behind 7-eleven’s purchase of Speedway gas stations and Analog Devices’ acquisition of Maxim Integrated. As M&A, Chinese IPOs and SPACs all take new relevance this year, the future of digital health is looking brighter in a pandemic and post-pandemic world.
If Zoom calls are the new normal, so is telemedecine. Digital health is not a new concept but one that’s getting mainstream attention now where working, exercising, studying and doing healthcare from home is just really the new normal in many ways. This gives rise to new winners in Capitalism.
- The merger creates a company that somehow integrates hardware and software to monitor and manage chronic conditions like diabetes, will create a giant in the emerging field of telemedicine and virtual care.
- According to Piper Sandler, the combination gives the companies a joint enterprise value of about $37 billion.
It’s a new world and is a good acquisition for Teladoc Health. The new reality of healthcare delivery in the era of COVID-19 rapidly accelerated the adoption of digital and remote care services like those Livongo was selling to its customers.
When Microsoft said it’s seeing a decade of digital transformation happening in a few months, it wasn’t talking about it acquiring TikTok in some Trumped up cold-tech war, it really means stuff like this.
Healthcare is huge business, something around 15 to 20 percent of the U.S. economy. Think about how behavior has been changing due to the pandemic. Telehealth has been one of the massive growth stories of the Covid-19 era, as patients — particularly in older age groups — avoid clinics and hospitals where they risk exposure to the coronavirus.
So how fast is the sector growing? The combined company is expected to have pro forma revenue of $1.3 billion representing 85% year on year growth, on a pro forma basis. For 2020, the combined company expects adjusted EBITDA to reach $120 million.
Livongo, a provider of coaching services that help people manage chronic conditions, falls in the category of remote health management, which is also seeing soaring demand during the pandemic.
So this is a marriage made possible by a Covid-19 era of one where America mismanaged the pandemic to epic proportions. Innovation can occur in a crisis though, and health-tech is really hot right now.
When we think of Covid-19 stocks, we have to imagine the rise of Health-tech in 2020 will be a story of the ages. As stocks both companies have been on rocket fuel. Teladoc had tripled in value this year and Livongo was up almost six-fold. Together, they might have a stronger position in an evolving future of healthcare.
At the Last Futurist we’re always looking at startup and companies of the future both as stocks and their ability to change the future of industry, business and consumer behavior.
Teladoc Health wants to transform the future of how we do health, and it seems to be working. Teladoc health can be found under the ticker $TDOC and has 10 main investors and a booming business in 2020.