Cigna https://www.cigna.com has announced that it entered into a definitive agreement to acquire MDLive, https://www.mdlive.com, a privately held telemedicine company. Credit Suisse https://www.credit-suisee.com published the note Telemedicine Industry: Everyone Wants a Piece of the “Tele-Pie”: Our Thoughts on CI/MDLIVE Transaction.
The announcement underscores the ongoing “consolidation theme” for the digital health space and the validation of the telehealth value proposition viewed by payers. By way of background, Cigna has been a leading investor in MDLive since the 2009 launch of MDLive and currently partners with MDLive on various telehealth services including urgent care, behavioral, and dermatology services.
TDOC and AMWL currently have minimal to no exposure with Cigna. The analysts recently have had quick conversations with some telehealth companies and other industry stakeholders.
Some industry participants see this as the “beginning of a trend” in terms of the further consolidation in the space. The analysts note, that ANTM works in a very close partnership with AMWL (in addition to being an investor in AMWL) and AET/CVS has been a long term partner for TDOC. In fact, some reports in the past have even flagged UNH as a potential buyer for AMWL.
Credit Suisse however has been skeptical as to an insurer owning a large telehealth player as related to the “conflict of interest” concern. However, with the CHNG/UNH deal announced earlier this year and now the Cigna/MDLive announcement, this does not seem to be a major hurdle for these transactions (upside opportunity for owning these assets likely outweighs any business falloff related to the “conflict of interest”.)
A quick review of MDLive’s Enterprise (i.e., payers and employers) business represented 93% of the company’s revenues (health systems and DTC made up 3% and $% of overall revenues respectively). The bulk of the Enterprise business is coming from health plans (i.e., +80% of total revenues).
MDLive’s notable health plan clients include Cigna, Aetna, HCSC, Humana, etc., while the company’s notable employer clients include Auto Zone, LabCorp, Walgreens, the NFL, Hyatt, etc. Just in the past year, MDLive’s U.S. membership has increased from 50 million members to +60 million with growth coming from 1) expansion into existing clients and 2) members from net new clients.
In addition to the urgent care, behavioral health, and dermatology businesses, MDLive has launched in earnest a virtual primary care product which has been rolled out with a number of customers, including Cigna.
As noted, MDLive currently works with Aetna/CVS on Telebehavioral services. For example, with AET/CVS deeply partnering with TDOC in the other areas, it remains to be seen if AET/CVS will continue to partner with MDLive once it is owned by their competitor.
MDLive also works with some blues plans (including HCSC). In terms of TDOC’s direct-to-employer customers, the analysts note that these customers are directly contracting with TDOC outside of the health plan channel given TDOC’s leadership in the space and the value of their breath of services.
For a copy of the report Telemedicine Industry: Everyone Wants a Piece of the “Tele-Pie”: Our Thoughts on CI/MDLive Transaction, to ask questions, provide feedback, or provide news, email Jailendra Singh at jailendra.singh@credit-suisse.com or call 212-325-8121.