- Teladoc is acquiring provider telehealth business InTouch Health for $600 million in the vendor's largest buy to date as it looks to expand its presence in hospitals and health systems.
- The transaction announced Sunday will be funded by $150 million in cash and $450 million in stock and is expected to close by the end of the second quarter.
- Teladoc, which expects to report revenues of $552 million in the 2019 fiscal year, saw its stock climb almost 8% in morning trading Monday following the news.
Santa Barbara, California-based InTouch is a savvy buy for Teladoc, analysts say, as it will integrate with Teladoc's existing provider platforms to allow the company to follow a patient through the entire continuum of care, regardless of acuity and location.
Teladoc could also eventually integrate its provider network into InTouch's software, allowing patients access to the company's doctors along with the hospital's.
"With this acquisition, TDOC has taken a big step forward in becoming healthcare's digital front door, in our view, allowing patients to engage with the health system through multiple modalities and treating everything from low-acuity to chronic conditions," SVB Leerink analysts wrote in a Monday morning note.
Though adoption of telehealth has been slow, vendors like Teladoc and American Well are betting it will ramp up as barriers to virtual care gradually begin to fall. Reimbursement uncertainty is an oft-cited roadblock, but a number of states are passing regulations calling for payment parity between in-person and virtual visits and CMS last year expanded virtual care flexibility in Medicare Advantage.
Hospitals and health systems have been especially wary of telemedicine as a market force that could tamp down on facility volumes. But a number of providers have signaled increasing willingness to adopt virtual care, with 40% of hospitals reporting they plan to increase their budgets for telehealth solutions according to J.P. Morgan's 2019 Hospital Survey.
Teladoc's provider telehealth segment is relatively small, accounting for an estimated 10% of its annual revenue. But the vendor has said the segment, which includes relationships with roughly 340 hospitals, is one of its fastest growing businesses.
The company, which went public in 2015, signaled prior to Monday's acquisition it wants to move into primary care within the health system through lanes like remote patient monitoring, digital therapeutics and other tools.
The snap-up of InTouch is another prong of that strategy due to its strong provider footprint. The company works with about 450 hospitals and health systems, including 30 of the 50 largest U.S. health systems like HCA, Providence St. Joseph Health and Kaiser Permanente. In the 2019 fiscal year, the 18-year-old company is expected to generate $80 million of revenue, representing 35% growth year over year.
InTouch sells both telehealth software and hardware. Its cloud-based telehealth platform Solo integrates directly into providers' EHRs and can handle patient intake, scheduling, documentation, image access and analytics.