Digital Health Chronicles: Teladoc and Livongo, the giant merger

Despite the troubled global health situation, 2020 is a busy year for digital health worldwide. In these chronicles, Alcimed highlights major events that are going to shape the digital health efforts for the coming years.

August 5, 2020: Teladoc Health and Livongo announced their merger which will allow for the creation of  a new standard in healthcare delivery, access, and experience. The transaction values Livongo at approximately $18.5 billion. According to Piper Sandler, the combination gives the companies a joint enterprise value of about $37 billion, representing one of the largest deals of the year for a US company – actually the third-largest deal – and even mentioned as the biggest digital health deal of all time.

 How did this merger happen? What are the chances for it to succeed? And what will be the impact for e-health?

Teladoc and Livongo: two digital health service companies

Telehealth has been one of the massive growth stories during COVID-19, due to the lockdown and the preference for telemedicine to avoid risk of exposure. Stunningly, the deal occurred amid the pandemic, while businesses were in a frozen state and business leaders could not even meet in the same place.

Livongo is a digital health management company which provides coaching services helping and empowering people with chronic conditions – initially diabetes – to live better and healthier lives thanks to a data-based health monitoring platform and coaching program.  Livongo is now also proposing offers in hypertension, weight management, diabetes prevention, or behavioral health.

Teladoc Health is a multinational telemedicine and virtual healthcare company proposing services such as telehealth, medical opinions, or artificial intelligence-based care services. Teladoc Health notably uses telephone and videoconferencing software as well as mobile apps to provide on-demand remote medical care.

Telehealth has been one of the massive growth stories during Covid-19, due to the lockdown and the preference for telemedicine to avoid risk of exposure. Stunningly, the deal occurred amid the pandemic, while businesses were in a frozen state and business leaders could not even meet in the same place.

The two companies are American with a US-centric perimeter, and such an integrated company of this size has yet to take its chance in Europe.

A merger of complementary services to become a giant in digital health

This merger makes a lot of sense as it is the result of two highly complementary leaders in virtual care and chronic condition management, enabling a proactive engagement model for patients and perfectly positioned to unlock the full potential of virtual care. Also, chronic conditions are one of the leading drivers of medical expenditures in the US with growing prevalence of chronic diseases.

Thus, this merger has a compelling strategic rationale:

• Combining two complementary pioneers that redefine virtual care
• Creating a seamless continuum of virtual care across one single platform
• Changing the healthcare access and experience
• Combining clinical expertise with deeper and more comprehensive consumer health insights
• Joining two leaders in patient behavior change

Telehealth in pandemic times: an opportunity to improve patient management

This merger is happening at a time when the full potential of telemedicine becomes obvious. COVID-19 brutally ended many face-to-face medical appointments and the public health crisis for sure acted as a catalyst for the telehealth industry, which has been growing steadily over the years. To illustrate, in France, the number of teleconsultations went from 70,000 in 2019 to more than 1 million just in April 2020 and went back again to 160,000 in August 2020, still close to 30 times more than the previous year.

After the lockdown, most non-emergency appointments still have been carried out remotely via telephone or video conference. In many countries, the triggers to maintain this level of development for virtual care in post-COVID settings are debated. More flexible regulation, more caregivers to administer and economic incentives are generally considered the key requirements.

Teladoc and Livongo merger: what impact on e-health?

Blending together telemedicine and virtual care represents a step forward in digital end-to-end services towards patients and healthcare professionals. The emergence of a massive leader in that field with a strong consumer-centric vision could transform the consumer experience to be more accessible and user-friendly.

This deal will transform the delivery, access, and experience of care bringing benefits across the stakeholder’s chain:

• Patients with personalized and technological care improves health outcomes and consumer experience
• Healthcare professionals with a platform to simplify the follow-up of their patients
• Private payers (insurance, mutualists, employers) with a full range of integrated virtual care services improving access with better outcomes at lower costs

Blending together telemedicine and virtual care represents a step forward in digital end-to-end services towards patients and healthcare professionals. The emergence of a massive leader in that field with a strong consumer-centric vision could transform the consumer experience to be more accessible and user-friendly. Awkwardly, one of the consequences could be over-diversification of channels to deliver care to patients. While the “Telongo” merger is a first of its kind in its size and impact, the virtual care space gets crowded with many teleservices around the world struggling to differentiate. Thus, we can expect that helping patients and healthcare providers navigate these new waters will be key to success.

More is still certainly to come as the combined companies mentioned that it would not be their last acquisition. Many consider a “platform” model as the future of healthcare delivery. This platform would be a one-stop shop where patients and providers could have access to a range of products and services, targeted to meet their personal needs and conditions. Beyond teleconsultation and remote monitoring, one could imagine integrating the delivery and execution of diagnostic tests, home-delivery of drugs, digital therapies, e-prescription management… Permanent access to health, at the tip of your finger, from the comfort of your home, at all time.

About the authors

Benjamin D., Great Explorer in Digital Health in Alcimed’s Life Sciences team in France
Benjamin L., Project Manager in Alcimed’s Life Sciences team in France