My thoughts on the $LVGO and $TDOC merger and what it means for shareholders of each company.

(Thread)

I have always been very bullish on $LVGO. I won’t go over the reasons why in detail, but you can see them in the thread below, which I posted a few weeks ago. I am a $LVGO shareholder, and it occupies a ~3% stake in my portfolio. https://twitter.com/ztinvesting/status/1284214945153011714

$TDOC, on the other hand, I have always had questions about. I am not a shareholder. I‘m bullish on telemedicine as a whole, but I have always felt that the end game here was individual doctors and hospitals offering telemedicine visits, rather thsn people using $TDOC.

With companies like $ZM emerging, any doctor can easily offer telehealth services. Since people become familiar with their doctors and trust them more, they are more likely, IMO, to schedule a $ZM visit with their home doc than switching to $TDOC.

Regarding the merger, as a $LVGO shareholder, I am very disappointed. The company was posting incredible growth metrics, seemed to have plenty of optionality, and had a great management team. I certainly did not feel that $LVGO needed this type of merger to survive.

Thus, this raises a serious question: why? If $LVGO really had the market opportunity that they stated, if they really could expand into all these different markets (diabetes, mental health, obesity etc), why merge with a company that provides little value and is growing slower?

Sure, $TDOC might provide $LVGO with access to a larger customer base. But I don’t see why they would value that a giving up control of their company. This makes me question if $LVGO ‘s future was really as bright and open as they claimed it was.

For $TDOC shareholders, on the other hand, I actually don’t think this is a horrible move. It erases the trust issue when it comes to telehealth; if $LVGO provides assistance with my diabetes and I need to see a doctor, the logical conclusion is now $TDOC.

Furthermore, for $TDOC shareholders, this gives you access to a faster growing company and is certainly a net-positive for your balance sheet.

While this again raises questions about the truthfulness of $TDOC ‘s future outlooks, it creates a digital healthcare powerhouse that at least has more of a moat.

Overall, I don’t think this is the end of $LVGO ‘s story. By merging with $TDOC, $LVGO has clearly created the dominant player in digital healthcare. As a $TDOC shareholder, I’m not sure I’d be selling, but I’m still not sure this makes me that much more bullish on $TDOC.

For $LVGO, I am very disappointed. I have not sold yet. There is plenty of time before the merger, and I want to see this new company begin to materialize first. But in 15 minutes, $LVGO went from one of my highest conviction holdings to maybe a planned sell.

Would love to hear everyone’s thoughts. Obviously a lot to process and just wanted to get a conversation started.