Telehealth provider MDLive is being acquired by Cigna's health services subsidiary Evernorth, the two companies announced this morning.
The deal is expected to close sometime in Q2. The terms of the deal were not disclosed, although Cigna said that it would share additional information regarding the acquisition during its Investor Day event scheduled for March 8.
WHY IT MATTERS
MDLive is among the largest telehealth vendors in the U.S., and delivers services including urgent care, dermatology, therapy and psychiatry via its network of certified clinicians. Over the years, it's marketed its 24/7 virtual care services directly to consumers, while also partnering with health systems, employers and payers (including Cigna) to either extend hospital care or provide virtual care as a member benefit.
As of a $50 million equity investment (plus $25 million debt financing) announced in September, the telehealth company said that its virtual visits had nearly doubled during the first half of 2020. As its total bookings grew more than 300%, the company also highlighted substantial volume growth among individual areas such as behavioral health (more than 500% year-over-year visit growth) and dermatology (350% year-over-year visit growth) through July.
Analysts pegged the company's valuation at more than $1 billion as of that funding. Roughly around the same time, the company's leadership was also floating the idea of going public in the opening months of 2021.
Those plans now appear to have been nixed in favor of the M&A, a move that Cigna's Evernorth hopes will form the backbone of an end-to-end virtual care offering for its customers. COVID-19 has increased customers' appetite for virtual offerings, Evernorth CEO Tim Wentworth said in a statement.
By integrating MDLive's virtual platform, Evernorth believes it can build a connected care delivery model that not only is more convenient, but could more quickly identify patients' needs, more easily facilitate specialist or behavioral health referrals, and broadly reduce costs.
"With the opportunity to serve millions more people, and with more personalized ways to deliver care, we will have an even greater impact on our customers, clients and partners," Wentworth said in a statement.
"Combining MDLive's platform and strong network for virtual providers with our comprehensive care solutions, we will be better positioned to optimize the care journey to improve affordability and accessibility, and to deliver superior support to health plans as they advance their own care delivery models for the future."
For MDLive, the exit is also an opportunity to expand its business. Charles Jones, chairman and CEO of MDLive, said in a statement that the deal would support MDLive as it develops and deploys new services for its target markets. Further, the deal opens up access to Evernorth and Cigna's U.S. clients as new opportunities for growth.
"Becoming part of the Evernorth portfolio is an opportunity for MDLive to join an organization that complements our work, and has been a longtime partner and investor in our business," Charles Jones, chairman and CEO of MDLive, said in a statement.
"With this transaction, Evernorth will gain an industry-leading platform, and a passionate and pioneering workforce that made virtual care a reality, and an essential and lifesaving service during the COVID-19 pandemic."
THE LARGER TREND
Founded in 2009, MDLive had collected a number of funding rounds over the years for a lifetime raise just shy of $200 million, according to CrunchBase. Cigna has stood among the ranks of its investors for some time, notably gaining a position among the telehealth company's advisors as part of a 2018 round.
Today's deal stands as the latest example of major payers opening their checkbooks to bring connected healthcare services under their wing. Take Cigna rival UnitedHealth Group, It reportedly purchased digital pharmacy DivvyDose in September, while its Optum healthcare services business purchased virtual behavioral care company AbleTo and post-acute care management platform naviHealth in April.
It's little surprise that payers like Cigna are also viewing telehealth in a new light post-COVID-19. Teladoc Health, the public market's go-to virtual care provider, recently outlined a year of knockout growth in its quarterly earnings call.
Doctor On Demand, another major telehealth provider, sang much the same tune when announcing a $75 million Series D over the summer, while consumer telehealth brands like Hims & Hers (and supposedly Ro) have looked to leverage their momentum on the public markets.
