Livongo is a relatively new company that was founded in 2008 that is devoted to chronic disease management, specializing in diabetes. Livongo was recently acquired by another health company called Teladoc after they realized the potential of Livongo. Livongo grew very quickly since its founding in 2008 and before its merger with Teladoc, the company was worth $14.2 billion. Teladoc and Livongo both have high hopes for the merger however, investors have had a mixed opinion about the companies since the news hit the media.
Before the merger, Livongo had its Initial Public Offering (IPO) on July 25th, 2019. It’s IPO price was supposed to open at $28 but raised to $40.51 at the time of the open on the first day. This often happens when a company goes public due to the large amount of hype around it. Livongo’s stock was roughly stagnant until April 2020. As Livongo began to gain life-long customers and build a good reputation, investors started to notice the potential of this company as there is a huge unaccounted for market of people who have chronic diseases. Livongo jumped from roughly $40 in April 2020 all the way up to $140 in August 2020.
(Company logos)
On August 4th, 2020, Teladoc announced a huge merger deal with Livongo. Teladoc bought out Livongo for $18.5 billion. The deal just executed in the market on October 31, 2020. Each investor who owned a share of Livongo received .5920 shares of Teladoc and an additional cash payment of $11.33. Investors had mixed feelings about the merger and it reflected in the stock price as both dropped throughout the course of August. However, in the long term, investors see large potential with this merger and now Teladoc has almost fully recovered from its initial hit in August. As October 31st, investors can no longer invest solely in Livongo and must consider consider the other aspects of Teladoc before investing.
(Future of the companies together)
Going forward in the future, Teladoc hopes to take a strong hold in the medical field and hopes the acquisition of Livongo can help them do that. In reality, Livongo had just scratched the surface of the potential they have and could expand to millions of Americans and to other countries as well. It remains yet to be seen if Livongo and Teladoc can integrate properly. Historically, mergers have had more failures than successes, however, if both companies can pull it off, the potential behind it is massive. The merger will likely have the most impact on Teladocs stock in the future and only time will tell if the merger was really successful.
I think that it is so cool how companies collaborate for the success of both. Teladoc definitely knew what they were doing when they acquired Livongo. For Teladoc to see their potential and merge initially really goes to show how geared these companies are towards achieving greater heights.
The point you made about how there is an unaccounted for market of people with chronic illnesses is very interesting. There are a limited amount of companies that cater to people with chronic illnesses, making for a relatively uncompetitive and untapped market. I have severe food allergies, and I know that I would like some type of program that helped manage my allergies like this company is offering for diabetes. There are barely any out there. As a potential consumer if they ever branch out, I know I would be happy to see a new company like this grow. I bet it will do well.
I was a little interested/confused what exactly Livongo does. I understand that they are involved in treating chronic diseases, but I feel like there has to be a unique product they sell for another company to want to absorb them. I also found it weird how the two companies merging decreased stockholder’s confidence in the stock. I feel like it should be the other way around as there is now more room for failure.