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Tullman's Teladoc take

May 4, 2022
Illustration of a health plus being squeezed in a vise.

Illustration: Aïda Amer/Axios

On the heels of Teladoc’s stock plunge, the co-founder of Livongo told Sarah he is disappointed, like the rest of the market, in the telehealth leader’s results.

Driving the news: During a fireside chat with Transcarent CEO Glen Tullman at ATA2022, Sarah asked the executive what went wrong after Teladoc bought virtual chronic care company Livongo in a $18.5 billion deal — digital health’s largest ever.

  • "I'm hopeful they get it together," Tullman said. “I think it’s about execution and leadership."
  • Insider reported on integration challenges late last year, noting an exodus of 110-plus Livongo employees, with only a few of its senior leadership sticking around.
  • Besides Tullman, that included ex-Livongo CEO Zane Burke going to Quantum Health, and ex-Livongo president and chief medical officer Jennifer Schneider launching Homeward with backing from General Catalyst.

Flashback: Not only did the original vision for the combination make a lot of sense, but Livongo was crushing it ahead of its sale to Teladoc, Tullman recalled.

  • “On the day that they announced the merger, we also announced our earnings and what we announced for Livongo was profitability a year ahead of what we told the market, triple digit growth, margins in the 70% range,” he recalled.
  • “Every metric we had exceeded on dramatically, which is why Teladoc paid a premium, as they should have.”

Yes, but: Teladoc last week posted massive losses, lowered guidance, and posted a $6.6 billion impairment charge it linked to the acquisition.

  • That sent its stock spiraling downward by 48% on Thursday.

What they’re saying: Speaking to Teladoc’s tremendous loss in value, Jim Kramer commented last week:

  • “I think Livongo may have a lot to do with that charge. I’m not saying Livongo is worthless and Glen Tullman fooled Teladoc. I’m saying Livongo wasn’t worth near as much and Glen Tullman made a good deal."
  • Teladoc's market cap sat below $6 billion on Wednesday.

One silver lining: Transcarent.

  • The genesis of a consumer-directed company for all of health care has been bubbling since before the Teladoc-Livongo merger, Tullman says.
  • Livongo, he recalled, had great reception for its product, which focused on empowering those with diabetes, weight management and hypertension, but its clients began asking for more.
  • “We went looking for a broader solution that would really introduce this new thing called consumer-directed virtual care. That was the concept,” he recalled. That ultimately led it to Teladoc. "That idea didn’t go away. They didn’t execute on it.”

Yes, and: Tullman separately hinted Monday that Transcarent expects to be an active participant in the digital health consolidation wave.

Tullman’s bottom line: "At the end of the day they’re [Teladoc] a big player and a lot of people depend on them for services," Tullman said. "I want there to be a vibrant virtual care market. Whether they provide it or they don't, others will step into that role."

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