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Buy Teladoc
Teladoc and Livongo
Synergies
- Scale is important to capitalize on the opportunity that Covid is creating with changing preferences of consumers, doctors, and politicians.
- Data analytics and predictions. More scale means more data for machine learning models, which can then produce better predictive power for the patient. More illnesses being prevented rather than treated.
- SaaS applications can gather user data immediately, observe usage patterns, infer behavior patterns.
- All in one health solution. To the consumer, cross selling services simply feels like “whatever my health needs are, they can help”
- International expansion
Risks
- The synergies between companies merging is frequently over-estimated. Integrating and executing is harder than it looks. It may seem like Teladoc and Livongo are a good fit together, but we have no idea if the mechanics of combining the two will turn out good for shareholders.
- People like going to their local doctor. Lots of skepticism that Telemedicine will catch on in a post-covid world.
- You can’t do everything remote. Most times you need to see a doctor is because you need something physically done. Overall market of Telemedicine could be over estimated.
- Competition could come out of nowhere suddenly, such as from Amazon or Apple.
Overall, I think this is a good bet. There are a lot of smart people on Twitter like Puru Saxena who sold Livongo on the merger because they thematically like growth stocks and the new combined company will be a much slower grower. But I am trying to look at what the future will look like, and I think in 5 years Telemedicine will be much bigger than it is today. Lots of smart people also disagree with me on that- saying that Telemedicine will stay niche. My bet is that there is a lot more possible innovation and efficiencies that can be explored in a world with pervasive telemedicine than there can be without.
Imagine your doctor calling you up and saying that based on blood-test monitoring they have been doing over the last year, they think you are at risk of developing a rare form of cancer within the next 15 years, and that if you start a particular medication now along with a slight change in diet, you will have a 90% chance of never developing the cancer. Obviously I'm imaging something that is much more science-fiction than reality right now, and there would be huge privacy implications of something like blood monitoring, not to mention the logistics of how to administer that remotely. But my point is, the future will often surprise us in ways we can't predict. The best we can do is make little bets and enjoy the ride.
X (formerly Twitter)
Puru Saxena (@saxena_puru) on X
Took a fair bit of heat when I sold all my $LVGO shares at $157 (pre mkt).
$LVGO closed almost THIRTY points lower at $128.
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