Virtual health company, Teladoc Health Inc announced that it has entered into a definitive agreement to acquire rival, InTouch Health for $600 million in a stock plus cash deal.
The deal, which is expected to close in the second quarter of 2020, is comprised of $450 million in stock and $150 million in cash.
Creating a virtual care leader
With the acquisition, Teladoc Health said it was now positioned as the partner of choice for health systems seeking a single solution for their entire virtual care strategy, and the deal “establishes the company as the only virtual care provider covering the full range of acuity – from critical to chronic to everyday care – through a single solution across all sites of care worldwide.”
Jason Gorevic, Teladoc Health’s chief executive officer, said the acquisition of InTouch Health, a provider of enterprise telehealth solutions for hospitals and health systems, marked a bold leap forward in his company’s mission to transform how high-quality healthcare is accessed and experienced, making virtual care available for patients with even the most critical care needs.
“Bringing these companies together will make Teladoc Health the clear virtual care leader across every front door of healthcare, further accelerating the adoption and impact of virtual care for millions of people around the world,” Gorevic said.
A prepared statement said the newly combined entity will be uniquely equipped to meet the growing needs of the provider market with one single, integrated solution spanning both consumer and provider-to-provider applications.
With the acquisition, Teladoc Health can tap into the more than 450 hospitals and health systems with more than 14,500 physician users globally that have partnered with InTouch Health.
The Motley Fool website reported that initial estimates show that InTouch Health may have generated revenue of about $80 million in 2019, up more than a third compared to 2018. Furthermore, the website said the acquisition would add more than 30 percent to the $546 million to $550 million in revenue Teladoc’s management expected to record last year, although the company does not plan to add the potential additional revenue to its 2020 guidance until the deal closes.
Joseph M. DeVivo, chief executive officer at InTouch Health, said this was the perfect time to join with Teladoc Health and deliver to hospitals and health systems everywhere what they had been asking for “a single, enterprise solution to support their virtual care strategies and enable them to better engage with patients at every point along their healthcare journey. Whether it’s extending clinical capabilities, augmenting physician resources or supporting optimized outcomes, we are that trusted single partner to support them.”
Bloomberg reported that the deal is expected to expand Purchase, Teladoc’s reach into more specialized virtual discussions between physicians at a hospital or health system, facilitating consultations as well as care in areas that lack specialists such as neurologists or neuronatologists to treat strokes or sick babies.
Teladoc cashes in on rising demand for virtual health
Teladoc Health hopes it can cash in on the rising demand for virtual healthcare that is stemming from favorable reimbursement from the government, it was reported. In addition, the Centers for Medicare & Medicaid Services (CMS) is now moving toward modernizing Medicare to expand reimbursement for virtual care, telehealth coverage and care coordination.
Furthermore, a 2019 report by JPMorgan says 40 percent of hospitals surveyed reported planning to increase their budgets for telemedicine solutions, which makes investing in telehealth a good bet.
With an aging population and the increasing prevalence of chronic diseases, Teladoc Health is betting that the need for virtual care will continue rising and this will help improve patient outcomes.
Teladoc Health, the statement added, would be uniquely equipped to redefine the standard for where critical and specialty care can be accessed through a single virtual care solution that delivers longitudinal patient care – from the everyday to the most complex – anywhere, anytime. From stroke care to cardiology and more, this unmatched range of capabilities will enable clinicians to provide the best patient care both in medical facilities, as well as new locations such as home, transport, and retail.
Gorevic said: “With a continued focus on extending virtual care to new settings, expanding access and improving care coordination, our unmatched capabilities will extend both inside and outside the four walls of the hospital and empower care providers and patients alike.”
Before this deal, Teladoc’s telehealth provider segment only accounted for 10 percent of its annual revenue.
SVB Leerink analysts were quoted as saying that Teladoc Health had 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.”
Teladoc is one of the veterans of the telemedicine space, having been around for more than 15 years. You can read more about Teladoc and telemedicine in our ultimate guide to telemedicine – one of the greatest health innovations of the 21st century.