Teladoc Health Inc. announced Sunday it will acquire Goleta-based InTouch Health, the leading provider of enterprise telehealth solutions for hospitals and health systems, for $600 million in cash and stock.
The deal will position New York-based Teladoc Health as the partner of choice for health systems seeking one solution for their virtual care strategy, according to a news release by Teladoc Health.
The combination is expected to expand delivery of virtual clinical care both outside and inside the hospital, as well as strengthen Teladoc Health’s long-term revenue growth.
The acquisition will establish the company as the only virtual care provider with a wide range of services across sites worldwide, according to Teladoc Health.
“Today marks a bold leap forward in Teladoc Health’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,” Teladoc CEO Jason Gorevic said in a statement.
“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.”
InTouch Health is expected to generate 2019 revenues of about $80 million, an increase of about 35 percent over the previous year.
The acquisition includes roughly $150 million in cash and $450 million of Teladoc Health common stock. The transaction is expected to close by the end of the second quarter of 2020.
UC Santa Barbara graduate Yulun Wang founded InTouch Health in 2002.
The company provides an award-winning, integrated suite of technology, software, purpose-built devices and a secure network offering a high-quality managed experience for global healthcare providers.
It has partnered with more than 450 hospitals and health systems, according to the company. InTouch Health works with more than 14,500 physicians globally.
InTouch Health CEO Joseph DeVivo will continue at the helm of the company as they work toward closing the deal, he said.
“The Teladoc Health management team shares our bold vision for the future of virtual care and enabling a better experience for patients,” DeVivo told Noozhawk. “Our plan is for our footprint in Goleta to remain intact as we work together under the Teladoc Health umbrella.”
Wang also is the brainchild of the World Telehealth Initiative, a nonprofit created in 2018 to leverage his company’s advanced medical technology in the service of the world’s most medically underserved communities.
“There will be no foreseeable impact on the World Telehealth Initiative,” DeVivo said. “Both InTouch Health and Teladoc Health have similar missions of meeting patients where they are and expanding access to care. We will continue to support this mission as we come together.”
Demand for virtual healthcare services within the provider market is poised for significant growth, as favorable reimbursements increasingly equip hospitals and health systems to take advantage of virtual care, according to Teladoc’s press release.
Virtual care will increasingly be adopted to improve patient outcomes as populations age and the prevalence of chronic diseases increases.
About 40 percent of hospitals surveyed reported planning to increase their budgets for telemedicine solutions, according to research conducted by JPMorgan last year.
By 2021, 61 percent of hospital revenue is predicted to come from managed and value-based care models, according to L.E.K. Consulting’s survey in 2018.
Virtual care will be a crucial strategy to improve consumer engagement, ensure consistent quality and manage healthcare’s rising costs, Teladoc Health said.
The new entity will be uniquely equipped to meet the growing needs of the market with an integrated solution spanning both consumer and provider-to-provider applications, according to a press release.
“Now is the perfect time for us to join together with Teladoc Health and deliver to hospitals and health systems everywhere what they’ve 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,” DeVivo said in a statement. “Whether it’s extending clinical capabilities, augmenting physician resources or supporting optimized outcomes, we are that trusted single partner to support them.”
Teladoc Health’s stock shares (TDOC) rose 12.69 percent Monday to close at $95.97 per share.