The biggest provider of online healthcare is getting much bigger. Teladoc Health is buying chronic care provider Livingo Health in a $18.5 billion deal, paying a 10% premium. Together, they’ll boast pro forma revenue of roughly $1.3 billion.
The deal comes as the pandemic has spurred a boom in online care and consultations. Patients staying at home shy away from visiting their doctors at their offices and are visiting them virtually instead.
The consultancy McKinsey sees growth mushrooming. U.S. telehealth companies generated revenue of roughly $3 billion before COVID-19, but it sees up to a quarter trillion dollars of U.S. healthcare spending becoming virtualized.
Just two days ago, the sector got a big boost from President Donald Trump’s move to expand telehealth access to 57 million Americans in under-served rural areas.
Investors took profit on the high-flying shares Wednesday morning, sending them lower. Livongo shares had risen nearly 6-fold this year as of Tuesday and Teledoc’s had tripled.
The companies expect to close the deal by the end of this year.