Dive Brief:
Mergers and acquisitions should play an “important role” in Teladoc’s future business strategy, the virtual care firm’s CEO said Wednesday.
“We’re going to make investments not just for the short term, but things that we think are going to start to increase that [total addressable market], start to increase the scope and range of what we can do. And we think that’s the right place to deploy our capital,” CEO Chuck Divita said at the Goldman Sachs Global Healthcare Conference.
The telehealth company has already completed two acquisitions this year, scooping up preventive care firm Catapult Health in February and virtual mental health provider UpLift last month.
Dive Insight:
Teladoc plans to be balanced on capital spending between investments within the firm — like spending on data and analytics and improving customer engagement with its suite of virtual care products — and external growth, including M&A, CFO Mala Murthy said Wednesday.
Potential targets for M&A would focus on tuck-ins that could improve patient engagement, buys that would “expand the aperture in terms of services” and international additions, Murthy said. Expanding the firm’s reach in other countries has been a priority for the telehealth vendor.
“It’s always going to be strong strategic rationale, and it has to make sense for us in terms of driving our top-line growth on a sustained basis,” Murthy said. “That’s essentially what we’d be looking for.”
Teladoc has already made acquisitions under Divita’s tenure as CEO, which began a year ago.
Buying Catapult, which offers a virtual annual exam with an in-home diagnostic kit, should allow Teladoc to catch members’ health conditions early and funnel them toward its other offerings, like chronic condition management programs, executives said earlier this year.
Meanwhile, the UpLift deal aims to speed the company’s ability to accept insurance coverage for care delivered by its direct-to-consumer mental health segment, BetterHelp. The unit has struggled recently, and its adjusted earnings before interest, taxes, depreciation and amortization was cut in half in the first quarter.
Cost is one barrier to getting customers to subscribe to the service, an area where accepting insurance could help, management said.
