Teladoc Health and Livongo announced their merger this week, bringing together two digital health powerhouses. This is the largest digital health deal in history, ringing in at a purchase price for Livongo of $18.5 billion and creating a combined entity worth $38 billion. This deal eclipses Amazon’s acquisition of PillPack and Google’s $2.1 billion bid for Fitbit.

The Digital-First Future For Healthcare Is Here To Stay

This merger signals the beginning of a new era in digital health. It solidifies that healthcare is on a permanent path toward a digital-first future and that care delivery settings are evolving quickly. Providers must adapt to this digital-first future to win. Health plans and employers must tap into these digital-first offerings to reap the benefits of lower medical spend for members and employees. Payers, including health insurers and the government, must incentivize a more proactive model, including permanent reimbursement parity for virtual care and the coverage of digital health tools to provide a more continuous and engaging care plan for members.

Both Teladoc Health and Livongo have been gobbling up smaller startups in recent years, increasing their breadth of capabilities in virtual care and digital patient engagement. Notable acquisitions include Teladoc Health’s purchase of InTouch Health, which was made official last month, and Livongo’s acquisition of myStrength in 2019. Independently, both companies have been incredibly successful amid the pandemic. Stock prices for both were at 52-week highs as the merger was announced[i].

“Livongo has a lot to bring to the table, as it relates to the consumer experience, artificial intelligence, data science, and the one-to-many model we have. Teladoc has been effective at creating a unique experience in one-to-one interactions” Zane Burke, CEO of Livongo

Why The Calculus Works: Unlocking The Potential Of Digital Health

The deal makes sense because each entity brings complementary capabilities that enable a proactive engagement model for patients. Virtual care alone is not the answer for effective chronic care management and, more generally, for ongoing patient engagement. A focus on care alone, waiting for patients to experience symptoms, is reactive and leads to higher medical spend. Chronic conditions are the leading drivers of medical expenditures in the US, and we are facing growing prevalence of these conditions. Nearly 147 million people live with a chronic condition, and 40% live with two or more chronic conditions. Each year, 90% of the $3.5 trillion in annual medical spend in the US is attributable to chronic and mental health conditions[ii].

The combined entity will enable their clients, including providers, health insurers, and employers, to offer a much broader set of services and capabilities across an individual’s health journey. This will enable individuals to be empowered participants in their healthcare, improving health outcomes and lowering medical spend across the industry.

Independently, each entity brings its own digital health talent, leading medical experts, services, and capabilities. Here’s a quick rundown of what each vendor brings to the table:

  • Teladoc Health leads with a focus on virtual care. This includes virtual care delivery for primary care, acute needs, chronic conditions, and mental health. Teladoc Health’s experienced medical staff, the Teladoc Health Medical Group, and clinicians across the globe can leverage the Teladoc Health platform to connect with their own patients. As Livongo patients’ care needs escalate and require services, the combined entity may now provide a seamless transition for patients to get the care they need, when they need it.
  • Livongo leads with proactive patient engagement. Livongo focuses on supporting individuals with chronic conditions, including diabetes, prediabetes, hypertension, weight management, and behavioral health. Its Applied Health Signals platform turns data into actionable insights, enables personalization, and deploys proactive nudges to drive behavior change. This platform includes data collected from its own proprietary cellular-enabled devices (note: not Bluetooth). Furthermore, myStrength closes the gap on mental health engagement by providing coaching, cognitive behavioral therapy, and analysis of passively collected data, such as keystroke cadence for early deterioration detection.

What’s Next?

The combined entities have noted that this is not the end of their acquisition journey. Other areas of digital health continuing to gain popularity include digital therapeutics, remote diagnostics, remote patient monitoring, and self-triage, just to name a few.

These digital health components are growing in importance as multiple health insurers, including Aetna and Humana, report a “meaningful decline in medical utilization.” Lower-than-expected medical claim spend in Q2 comes as 28% of US residents continue to delay care into July, and potential high-cost claims loom in the not-so-distant future[iii]. Cancers are going undetected. Chronic conditions are worsening or going untreated. Providers and health insurers should look to these emerging digital health components, including remote diagnostics, to engage patients and members now to drive improved outcomes and combat potential high medical spend.

Questions? Reach out over inquiry. Want more? Forrester clients can check out our healthcare team’s digital health research here.


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[iii] Base: 249,170,916 US residents; Source: US Census Bureau, “Week 11 Household Pulse Survey: July 9-July 14,” July 22, 2020.