Home https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ Business https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ The deal with Livongo-Teladok reached months during the coronavirus pandemic

The deal with Livongo-Teladok reached months during the coronavirus pandemic



The founder of Livongo and the early investor is on his way to the meeting in Dallas.

Source: Hemant Teneja

The merger of Livongo and Teladoc, two of the largest publicly traded digital health companies, came together in less than three months and took place amid widespread blockades and quarantines of the coronavirus pandemic.

The deal, announced on Wednesday, brought together two additional players in a fast-growing market. Teladoc, which offers virtual medical advice for acute medical needs, has long planned to offer more services to patients with chronic diseases such as diabetes. Livongo, who specializes in distance learning for diabetes, among other chronic conditions, had also switched to telehealth.

“Our two companies were either on the path of convergence or in conflict,”

; Teladoc CEO Jason Gorevic told CNBC.

But reaching a deal during a pandemic was a major logistical challenge, which included a series of late-night Zoom talks and a very socially distant meeting in Detroit.

The two companies have been talking about a partnership for years. But talks escalated about three months ago when Glenn Tullman, Livongo’s chief executive, went for a social walk in Chicago with Andrew Turitz, head of Teladoc Development Corporation. This sparked a phone call between Tullman and Teladok CEO Jason Gorevich, who had known each other for years.

Gorevich initially embraced the idea of ​​a merger.

“I remember Jason calling us and saying, ‘You’re on a scale, we’re on a scale, so let’s merge the companies,'” Tullman recalled.

Tullman, whose company was exploring other possibilities in space, was intrigued. But it was also a busy time for both companies, given the record number of people seeking virtual care during the pandemic. So they agreed to a series of late-night augmentation sessions to discuss it, which usually took place around 9 p.m.

In the end, however, it became clear that they would have to meet.

The original plan was for the two CEOs – along with Livongo board member Hemant Teneja – to meet in Chicago. But shortly before the meeting, Governor Cuomo added Illinois to the list of restricted states, meaning that Gorevic, a New Yorker, will have to be quarantined for several weeks after returning home.

So instead, they checked into a hotel about forty-five minutes from Detroit Airport, a medium-sized location. All agreed to take all recommended precautions before their meeting and to wear masks during the flight.

Tullman even brought Livongo-branded masks, which he shared with Taneja.

When they arrived at the hotel, they ordered delivery. No one shook hands, which felt a little awkward, and they found their seats 6 feet on either side of the room. To avoid exposure, they alternated to renovate and touch the markers so they could paint on the whiteboard.

At this hotel in Michigan a few weeks ago, details of one of the biggest deals in 2020 were ironed out as they sought to create a $ 37 billion virtual healthcare company, the largest of its kind to date. After a series of conversations with their bankers, which often lasted into the night, they were ready to announce the deal to the public.

Transition to consolidation

For both companies, the time was right for greater consolidation, and both contractors felt they were entering it out of a position of strength rather than weakness. Livongo and Teladoc have seen record growth in recent months as consumers look for alternatives to traditional medical care for bricks and mortar.

According to Tullman, the transition to virtual healthcare was inevitable, but the pandemic accelerated it for years. With consumers worried about seeking care in person, they found alternatives to chatting with a provider via text, phone call or video, which helped Livongo and Teladoc attract new customers. Despite his philosophical adaptations, Tullman says only about 25% of the companies of two customers currently overlap.

Jason Gorevich, CEO, Teladoc

Scott Mill CNBC

The deal also means competitors will have to contend with a new digital health hippopotamus combining remote sensing and telemedicine.

However, experts say, the market opportunity may be large enough for everyone. On the telemedicine front, AmWell – one of Teladoc’s biggest competitors – recently applied for a confidential initial public offering after raising $ 194 million in funding. Omada Health, Livongo’s largest private competitor, recently acquired a virtual physical therapy company to expand beyond diabetes and hypertension. All this is fueled by the demands of their clients: health insurance plans and self-insured employers.

“Buyer’s preference for simplicity is growing,” said Sean Duffy, CEO of Omada Health.

Either way, investors say, this is a key point for digital health.

“It was a major blow to thinking about the future when we are not in the world of Kovid and there is a shift to the average, which means more care for bricks and mortars,” said Michael Ian, a health technology investor at Omers Ventures.

“So it’s a brilliant move for these companies to split up now,” he said.


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