UPDATE: Oct. 30, 2020: Teladoc has completed its $18.5 billion acquisition of Livongo following overwhelming shareholder approval, the virtual care giant announced Friday.
Under the terms of the merger, Livongo shareholders will receive 0.5920 times shares of Teladoc, plus cash of $11.33 for each Livongo share. Teladoc shareholders will own about 58% of the combined company, and Livongo shareholders about 42%. Livongo stock stopped trading prior to Friday's open.
- In a Thursday meeting, shareholders of virtual care behemoth Teladoc and chronic care management player Livongo approved the massive $18.5 billion merger between the companies, based on preliminary voting results.
- During a special meeting held Thursday morning, Teladoc shareholders approved Teladoc's charter amendment and share issuance as part of the Livongo acquisition with more than 99% in approval. In a separate meeting, Livongo shareholders approved the merger agreement, also with more than 99% of votes in approval, Teladoc said in a Thursday release.
- Teladoc, which reported third quarter results Wednesday, now expects the acquisition to close on Friday, according to a filing with the SEC. The timing of the deal was relatively fast, especially for healthcare, with a planned closing less than three months after being announced as the companies likely look to capitalize on COVID-19 tailwinds and a Wall Street bullish on digital health.
Thursday's preliminary approval was not a surprise, though Teladoc and Livongo have yet to file the final vote results with the SEC.
The goal of the merger, according to executives from both companies, is to offer an end-to-end virtual care offering with a broad variety of services through one touchpoint. The combined entity could be more attractive to potential payer and employer clients than other rivals, analysts say.
The new company expects joint 2020 revenue of $1.3 billion, an estimated growth of 85% over last year, and expects revenue growth of 30% to 40% over the next two to three years.
After the merger closes, several of Livongo's top executives, including CEO Zane Burke and President Jennifer Schneider, will depart the company, along with Livongo's CFO and SVP of Business Development.
The combined company's board will consist of eight directors from Teladoc, including CEO Jason Gorevic, and five from Livongo, including founder Glen Tullman.
Teladoc also released its third quarter earnings Wednesday. The Purchase, New York-based vendor reported revenue of $288.8 million in the quarter, up almost 110% compared to the third quarter of 2019. Total visits in the quarter were 2.84 million, more than triple the same time last year and slightly up sequentially.
However, Teladoc did operate at a loss of $35.9 million in the quarter. About $16 million of that loss was due to transaction costs from acquiring Livongo, the company said.