Dive Brief:
- Teladoc Health has signed a definitive agreement to acquire virtual preventive care provider Catapult Health for $65 million, the telehealth vendor said Wednesday.
- The deal, which is expected to close in the first quarter, will help Teladoc catch members’ health conditions early and funnel patients toward the telehealth vendor’s other offerings, including therapists and primary care providers, according to a press release.
- Catapult clinicians will also be able to directly enroll eligible members in Teladoc’s chronic condition management programs for diabetes, hypertension, pre-diabetes and weight management — a key area of investment for the telehealth vendor, executives said last month at the J.P. Morgan Healthcare Conference.
Dive Insight:
Catapult offers a virtual annual exam, where patients use an at-home diagnostic kit to collect a blood sample, check their blood pressure and provide other screening information to a nurse practitioner.
The company has hundreds of employer customers and more than three million covered lives, according to a press release. The overlap between the two companies’ client bases is “relatively small,” according to a Teladoc spokesperson.
Under the all-cash deal, which also includes up to a $5 million additional contingent payment to Catapult, the preventive care company will operate as a wholly owned Teladoc subsidiary after the acquisition closes. Catapult’s team members will also continue to work at the company after the deal, according to the spokesperson.
The purchase will help connect patients to Teladoc programs and close gaps in care, the telehealth vendor said. Chronic condition management is one area of interest for the company — and Teladoc has recently inked other partnerships in a bid to drive enrollment.
In January, Teladoc joined an Amazon marketplace that aims to surface digital health benefits programs for consumers, allowing eligible users to find and enroll in Teladoc’s diabetes, hypertension, pre-diabetes and weight management programs.
Nearly 1.2 million people were enrolled in the telehealth vendor’s chronic care management programs at the end of September, a 5% increase year over year, according to a securities filing.
“This is a very competitive, fast-moving space,” Teladoc CFO Mala Murthy said at JPM in January. “So how do we continue to invest in differentiation, in innovation, as it relates to chronic care and our other products? And also how do we invest in things that will allow us to continue to make strides in enrollment? There’s no shortage of recruitables.”
The latest deal comes as Teladoc has focused on cutting costs and restructuring its business, particularly after new chief executive Chuck Divita took the helm last year. The company grew significantly during the COVID-19 pandemic amid a larger shift to virtual care, but its stock price has since declined.
Though the acquisition should help expand Teladoc’s offerings, there’s still more to learn about the long-term value of the Catapult integration — given the telehealth vendor’s “choppy M&A history,” according to a Wednesday note from analysts at Leerink Partners.
Teladoc acquired chronic condition management company Livongo for $18.5 billion in 2020, and later had to record significant non-cash goodwill impairment charges related to the declining value of the purchase.
In the third quarter, Teladoc reported a $33.3 million net loss on revenue of $640.5 million, compared with a $57.1 million loss on $660.2 million in revenue during the same period last year.
The company will release fourth-quarter earnings on Feb. 26.
