Health tech could see more acquisitions after Teladoc-Livongo deal

Jason Gorevic, CEO, Teladoc

(This story is for CNBC Pro subscribers only). 

The health technology sector had a big shock on Wednesday as Teladoc and Livongo Health announced a merger worth about $18.5 billion, creating a major player in an industry whose growth has been accelerated by the coronavirus pandemic. 

The deal, negotiated in part while wearing Livongo-branded facemasks in a Detroit hotel, is one of the more high-profile deals in the space, as startups and more established players jockey for position in an expanding market. Shares of both companies fell sharply after the announcement, but both have made significant gains in the past year.

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Health tech companies tend to be wary of deals because of previous struggles for large deals, but the industry could be ripe for further consolidation, said Stephanie Davis, a research analyst at SVB Leerink.

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