Actions of Santé Teladoc (NYSE: TDOC) lost ground on Friday after the telehealth specialist announced the completion of its merger with Livongo Health, the healthcare tech company best known for its diabetes monitoring platform.
Investors didn’t like the merger when it was first announced in August, selling both Teladoc and Livongo shares on the news, so it’s no surprise to see Teladoc shares turn back a once the agreement is concluded. Also today, tech stocks fell sharply after big tech companies, especially Apple, Alphabet, Facebook, and Amazone declared his income last night. While the numbers were generally better than expected, investors still sold all four except Alphabet, indicating that there could be a bubble in tech stocks after much of the sector posted mind-blowing returns this year.
Teladoc shares were down 7.3% as of 11:10 a.m. EDT, after losing as much as 9.2% earlier in the session. At the same time, the Composite Nasdaq was down 2.6%.
The deal to buy Livongo was almost entirely in stock. Livongo shareholders received 0.592 Teladoc shares plus $ 11.33 in cash for each Livongo share they owned. Based on these terms, it is difficult to argue that Teladoc overpaid Livongo as it used its own shares, but the deal, which came after both shares soared the previous month, seemed to indicate a bubble in the shares. high-tech technology.
In this morning’s announcement, Teladoc touted the combination of “market leaders in virtual care and applied health signals,” and Jason Gorevic, CEO of Teladoc, said, “Teladoc Health and Livongo were founded with the same mission: to create a new kind of health care experience, one that enables people all over the world to live their healthiest lives. Today’s news dramatically accelerates our ability to make it a reality for the tens of millions of consumers and healthcare professionals we serve around the world. ”
Teladoc reported strong third-quarter results earlier this week, including a 109% jump in revenue to $ 288.8 million.
Investors appeared to be heating up with the merger earlier this month when health stock rose after the company announced the first major sale of the merged company, listing Guidewell Health as a new client. While there are clear synergies within the now merged company and a number of justifications for the deal, Teladoc’s valuation remains a question mark, especially given the response to big tech profits.