Acquisition gives Teladoc an international footprint and significantly expands breadth of healthcare solutions
PURCHASE, NY, June 19, 2017 — Teladoc, Inc. (NYSE: TDOC), the nation’s first and largest telehealth platform, announced today that it has entered into a definitive agreement to acquire Best Doctors, the world’s leading expert medical consultation company focused on improving health outcomes for the most complex, critical and costly medical issues. Teladoc is creating a new paradigm for how patients access care by delivering a powerful connected care platform – a single solution for addressing a complete spectrum of medical conditions, from non-critical, episodic needs to chronic, complicated medical conditions. By leveraging the proven portfolio of healthcare solutions from both Best Doctors and Teladoc, members will have one simple, virtual, patient-centric way to resolve their healthcare issues, improving outcomes and reducing costs.
“Today is a big day for patients and the greater healthcare system. At Teladoc, our vision has always been to provide the central, trusted source for consumers to find resolution to the broadest array of healthcare needs, on their terms,” said Teladoc CEO, Jason Gorevic. “Now with Best Doctors’ network of world-renowned experts in over 450 specialties, global footprint, and exceptional analytic capabilities, we are taking a monumental step towards making that vision a reality.”
Best Doctors has redefined the standard for addressing high acuity, complex care cases with a patient-centric clinical model proven to drive better outcomes for hundreds of the most high-cost medical conditions. Using advancements in analytics, cognitive computing, and an award-winning patient-centric process, the company brings the brightest minds in medicine to provide answers to the most complex medical concerns for their millions of members. The Best Doctors global network consists of 50,000+ medical experts who are peer-rated in a Gallup-certified poll as the top 5% of physicians in more than 450 medical specialties. In every major region of the world, the suite of Best Doctors solutions plays an important role in population health management, with the ability to monitor, react and positively affect change.
“By combining data and analytics with a focus on nothing but the highest standard for care, we’ve successfully created a better way for patients and their families across the globe to get resolution to the most life-changing medical conditions,” said Best Doctors CEO, Peter McClennen, who will continue to lead Best Doctors as president of the new division of Teladoc. “Now aligned as one greater organization under Teladoc, the impact we can make together is tremendous, delivering a paradigm shift in care access that comes with a phenomenal patient experience, unprecedented outcomes and cost savings.”
This acquisition builds on Teladoc’s successful track record of acquiring and integrating companies with common purpose, complementary capabilities, and access to new markets. Teladoc will marry its award-winning technology, industry-leading engagement capabilities, and robust, scalable platform with Best Doctors’ world-renowned network of medical experts, analytics expertise, patient decision-support, and regional expertise on a global scale. The newly combined company offers a highly differentiated suite of virtual care delivery solutions for a broad range of market segments, spanning the full spectrum of employers to health plans and health systems. Furthermore, Teladoc will now develop and deploy global expansion plans, meeting a broader spectrum of care needs outside the U.S.
Transaction Summary
This transaction is expected to close in July 2017 subject to regulatory approvals and customary closing conditions. Under the terms of the agreement, the purchase price consists of $375 million cash and $65 million of Teladoc common stock. Teladoc has secured committed financing from Jefferies Finance LLC and Jefferies Group LLC for $360 million, which combined with the company’s cash on hand, will fund the entire cash portion of the transaction. Piper Jaffray & Co. and Jefferies LLC. acted as financial advisors to Teladoc on this transaction and Latham & Watkins LLP acted as Teladoc’s legal advisor. William Blair acted as exclusive financial advisor to Best Doctors and Ropes & Gray LLP acted as Best Doctors’ legal advisor.
Financial Reporting and Business Outlook
Best Doctors generated 2016 revenue of $92.2 million, and generated $23.7 million of revenue for the first three months of 2017. Best Doctors is expected to generate in excess of $100 million in 2017 revenues. Best Doctors generated $5.6 million of net loss and approximately $6.5 million of Adjusted EBITDA in 2016 and $2.1 million of net income and $2.2 million of Adjusted EBITDA for the first three months of 2017.
o Teladoc reiterates its previously communicated second quarter 2017 guidance and commitment to achieving adjusted EBITDA break-even in the fourth quarter of 2017 independent of incremental positive contributions from Best Doctors.
o As part of its second quarter earnings report, after the expected close of this transaction, Teladoc will provide an updated full-year 2017 financial outlook and guidance for the combined company after completing valuation and related purchase accounting considerations regarding Best Doctors.
Note: Results from Best Doctors reported net of divested businesses. Adjusted EBITDA is a non-GAAP measure. Because Best Doctors’ calculation of this measure may differ from similar measures used by other companies, investors should be careful when comparing Best Doctors’ non-GAAP financial measures to those of other companies. A reconciliation of GAAP to non-GAAP results has been provided in this press release below under the heading “Non-GAAP Financial Measures.”
Management Conference Call
Teladoc management will also provide additional details of the Best Doctors acquisition during a conference call today, Monday, June 19, at 5:30 p.m. Eastern Standard Time. Stockholders and interested participants may listen to a live broadcast of the conference call by dialing 877-201- 0168 or 647-788-4901 for international callers, and referencing participant code 39358429 approximately 15 minutes prior to the call. A live webcast of the conference call and supplemental presentation materials will be available on the investor relations section of the company’s website and an audio file of the call will also be archived for 90 days at ir.teladoc.com.
About Teladoc, Inc.
Teladoc, Inc. (NYSE:TDOC) is the nation’s first and largest telehealth platform. Recognized by MIT Technology Review as one of the “50 Smartest Companies,” Teladoc is forging a new healthcare experience with an innovative portfolio of virtual care delivery solutions. Currently, Teladoc serves more than 7,500 clients – from payers to providers to employers – and more than 20 million members who connect within minutes to Teladoc’s network of more than 3,100 board-certified, state-licensed physicians and therapists, 24/7. Teladoc’s services and solutions marry a highly engaging consumer experience with the latest in data & analytics, and a highly flexible technology platform. Teladoc has delivered more than 2.5 million medical visits for general medical, dermatology, counseling, psychiatry, sexual health, and tobacco cessation.
About Best Doctors
Founded in 1989 by Harvard Medical School physicians, Best Doctors is the world’s leading medical consultation company that connects individuals facing difficult diagnostic or medical treatment decisions with the best doctors, ranked by impartial peer review in over 450 subspecialties of medicine, to review their diagnosis and treatment plans. Best Doctors serves millions of members worldwide utilizing access to the brightest minds in medicine, analytics and technology to deliver improved health outcomes while reducing costs. A Best Doctors expert opinion led to a change or refinement of diagnosis in 37% of cases that the company reviewed, as well as a change or improvement of treatment plans in 75% of cases.