Teladoc Health stock rises following Catapult Health acquisition

Investing.com -- Shares of Teladoc Health (NYSE:TDOC) climbed 5.8% Wednesday after the company announced its definitive agreement to acquire Catapult Health, a provider of virtual preventive care services. The $65 million all-cash transaction is aimed at enhancing Teladoc Health’s integrated care strategy and expanding its suite of healthcare solutions.

The acquisition is part of Teladoc Health’s strategic objectives outlined at the 43rd Annual J.P. Morgan Healthcare Conference. These goals include growing membership, deepening impact on healthcare outcomes, expanding internationally, and advancing mental health services. Catapult Health’s VirtualCheckup, which allows members to conduct at-home wellness exams and receive personalized health action plans, is expected to complement Teladoc’s existing offerings.

Teladoc Health’s CEO, Chuck Divita, expressed enthusiasm for the acquisition, stating that Catapult Health’s capabilities will significantly advance the company’s strategy by providing more members with convenient wellness and preventative care. The move is anticipated to deliver better health outcomes and value for customers.

Catapult Health, known for its high Net Promoter Score and cost savings for employers and health plans, will become a part of Teladoc Health’s Integrated Care segment post-acquisition. The transaction, which includes up to $5 million in additional contingent earnout consideration, is expected to close in the first quarter of 2025, subject to customary closing conditions.

In response to the acquisition, BofA analyst Allen Lutz commented that although the acquisition is small, it "expands the value proposition." Lutz raised his price target for Teladoc Health to $11.50 from $10.50 while maintaining a Neutral rating.

The acquisition is strategically significant for Teladoc Health, as it seeks to improve early detection of health conditions and integrate Catapult Health’s members into its chronic condition management programs. With Catapult Health’s trailing twelve-month revenue of approximately $30 million as of the third quarter of 2024, the deal also represents a financial investment aimed at enhancing Teladoc Health’s market position in virtual care services.

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