Don't we invest in hypergrowth here?

LVGO / TDOC is no longer hypergrowth.

For LVGO, not continuing to go it alone when currently growing 100%+ is an incredibly weak move! Livongo was likely worried about competition, whether from TDOC getting into their space, or UNH, or CVS, etc. Accepting SHARES of TDOC is doubly weak. TDOC, therefore, just “acquired” (more or less) a weak company. I’m not surprised to see both LVGO and TDOC down, and I wouldn’t be surprised to see it continue.

Why would you continue to own this? Does anyone have an example of a merger where the combined company has continued in hyper growth mode?



Sounds like sour grapes to me? LVGO is still up a huge amount from a few weeks ago when these talks likely started. A lot of emotional selling going on here today.

TDOC reported 85% revenue growth this past Q. Is that not defined as hypergrowth anymore?


As a LVGO shareholder from the $20s, I don’t like this move. But TDOC grew 85% last Q even without LVGO, thanks to covid tailwinds. But in late 2019 its rev growth had slowed to <30%. Post-Covid what is the future for telehealth? If you believe some of the changes (like codes for reimbursement, inertia, mistrust) are permanent then telehealth should have a bright future and it would make sense to own TDOC. If you believe telehealth got a temporary boost then surely not. LVGO does offer something important that is lacking in TDOC’s arsenal, namely chronic disease management and ensuring better outcomes at lower costs.


Close of Date TDOC Price LVGO Price (1) 0.592*TDOC+11.33 (2) (2)/(1)
04.01.2020 162.53 27.80 107.55 3.87 (+287%)
05.01.2020 169.43 37.96 111.63 2.94 (+194%)
06.01.2020 173.62 59.27 114.11 1.93 (+ 93%)
07.01.2020 198.85 74.41 129.05 1.73 (+ 73%)
07.31.2020 237.63 127.25 152.01 1.19 (+ 19%)
08.04.2020 249.42 144.53 158.99 1.10 (+ 10%)
08.05.2020 215.05 136.59 138.64 1.02 (+ 2%)

As has been noted by a few others, the premium when the merger talks began was definitely much higher than 10% based on yesterday’s prices.

TDOC itself is a very fast grower. So, the merger may work out quite good for shareholders.

I have shares in both stocks.

(Apologies for the poor format - have forgotten the trick having not used this board for some time.)

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good insights Bear. I have an example of a merger that provides some insight into where this goes. Every company, every deal, every transaction is different, but my example is highlights a situation where the combined company continued to grow, after a time of sell off. I would concede this isn’t a story of hhhypergrowth™, rather, just your regular vanilla garden variety growth, so your Subject line question remains valid.

When AVGO acquired BRMC in the summer of 2015, it was widely considered a terrible business decision, mainly for BRCM (e.g. LVGO), who was right in the middle of the explosion of data center build outs based on the enormous growth in data and cloud business and was growing. Summary of the deal below:

Under the terms of the definitive agreement, Avago will acquire Broadcom for $17 billion in cash consideration and the economic equivalent of approximately 140 million Avago ordinary shares, valued at $20 billion as of May 27, 2015, resulting in Broadcom shareholders owning approximately 32% of the combined company. Based on Avago’s closing share price as of May 27, 2015, the implied value of the total transaction consideration for Broadcom is $37 billion.

From the time of this announcement (5/27/2015, share price around $148/share) to a few months later, in August 2015, shares fell 25% (to ~$111), and then traded in a narrow window (~$110-~$130) until early 2016. But then some dynamics that prompted the acquisition started to come to fruition and folks realized the acquisition actually made sense (and echoed much of what was shared in the companies press releases at the time of the announcement). Shares grew to $272 in late 2017, so a growth of ~2.5x from the bottom, in a little less than 2 years, but a pedestrian 1.8x growth from the time of the announcement of the acquisition in late May of 2015 (BRCM trades at ~$330 today). But to your point, is that hhhypergrowth? No, not by the standards of the companies followed on this board.

So in times like this, I often ask myself: “what would Saul do in this situation?”, relying on his knowledge base and posts to inform the answer. If I channel Saul on this, and if he owned LVGO, (he didn’t, to my knowledge), he might sell his LVGO position outright (independent of tax consequences), and redirect the proceeds into his highest conviction companies (ZM, CRWD, DDOG, if I recall), and would not lose a wink of sleep over this.


It seems like both companies have high revenue growth rates still. I am wondering if the merger is more about how they both saw each other encroaching on each other’s product and saw no other way around.

I’m selling my LVGO shares though partly because the ramp up time to learn how healthcare SaaS/telemedicine works is quite large, compared with typical SaaS companies where the rest of my investments are.

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Why would you continue to own this? Does anyone have an example of a merger where the combined company has continued in hyper growth mode?<

Sure, I am positive there are more examples but I will give you CSCO. Before 2000 they were buying up all kinds of companies and still growing at around 60% on their revenue. If I cared to go back from 2000 to 1990 they were probably growing faster and eating up companies.……

Lvgo is growing at 125 percent, Tdoc is growing at over 85%. What the company will be at the next few quarters is anyone’s guess because they will be merging these two companies. My thought is that they will be stronger together than they will be apart. This give LVGO access to a huge market that TDOC has captured and this gets TDOC a platform to manage different diseases. If you look at a chart of both of these companies you will see they have been pretty closely matched. So to say accepting shares of TDOC is weak? I just can’t understand that. I think together these companies are going to start rolling up this space and become a huge company. I am very happy to own these shares and bought (a lot) more today. We will see in a year who was correct. I could very well be wrong.



Why would you continue to own this? Does anyone have an example of a merger where the combined company has continued in hyper growth mode?

I think it’s a bit harsh to dismiss TDOC as a hypergrowth company; if someone was invested in both companies before the merger, I don’t see why he or she would be terribly upset by the move except that the share prices went down. There are certainly synergies here, besides combining data, adding the ability to cross-sell services and the option to add a “talk to a doctor about your glucose levels” button or something in the Livongo app. One of my issues with Teladoc is that there’s no continuity of care. I never saw a value proposition in having access to a doctor to prescribe Z-packs or ask them if you should go to the emergency department. Perhaps the added self-service or stay-at-home services like Livongo are what’s necessary to keep patients on the TDOC platform, rather than just switching over to a regular doctor’s services via Zoom or whatever.

Facebook integrated Instagram when both were growing fairly quickly and that seems to have worked out OK. I think there are few examples of companies merging when both are on similar footing in terms of revenue size and growth, so it’s hard to come up with any examples in the public market.

As a thought experiment, what if Zscaler and Crowdstrike decided to simply merge? They could provide endpoint and network security using a shared AI to detect intrusions. What if they simply combined both companies to trade under one ticker estimated to grow at 60%?


As a thought experiment, what if Zscaler and Crowdstrike decided to simply merge?

There’s a 100% chance I would sell at that point.



There’s a 100% chance I would sell at that point.

Why? Do you think it would be a weaker company? A merger generally results in shareholders pre-merger getting some appropriate amount of shares in the new entity, the product mix generally will increase (i.e. the merged company will have the products you had invested in, plus whatever the other company brings to the table), and often patent portfolios expand. The entire reason companies merge is to make a stronger entity.

There could be reasons to divest oneself, but I don’t see why it would be an automatic thing. One should evaluate the strengths and weaknesses of the newly merged entity. Yes?


FB buying Instagram… or google buying YouTube… etc are more akin to what is happening here…

A more near example is Twilio buying Sendgrid last year… irrespective of what people on this board thought and did (I sold TWLO too last year), today combined TWLO is stronger than ever and its stock has performed extremely well…

TDOC and LVGO management said so much that they were going to encroach each others’ turf (this was the reason fro TWLO / SEND merger too)… and rather agreed to join forces… the combined company is still a drop in the ocean in the vast health care market and right place and right time in accelerating tele-health segment of the market…

Yes, we prefer smaller independent companies to invest in but these guys have to play with their market realities… would you rather see these two companies fight it out and weaken each other OR combine and take a bigger share of the big health care pie… I prefer the latter…

And yes, dont think this doesn’t apply to cloud favorites FSLY and NET and DDOG etc… they all have realities of that market… think ZS and FSLY… I think at some point they will face each other squarely in the eye and will have to decide which one buys out the other… I have not an iota of doubt this situation (or something similar) will come within next two years…

At the end, like TWLO, this will be a good thing for both shareholders… and in this specific case, they may actually do even better combined than each individual…


Just a thought - what if, by merging, LVGO can offer their product directly to the consumer, who can have their diabetes and high blood pressure managed by TDOC? That would be a subscription based revenue stream…

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It really, really just smacks to me of a seedy insider trading deal. TDOC wasn’t a stock that met the criteria of this board, and LVGO really wasn’t either until recently. TDOC’s growth up until the March quarter report, while good (24% YOY), wasn’t close to the hypergrowth standards here; yet it doubled in price since March, reports one blowout quarter and then both it AND its acquisition target go parabolic in price just before the acquisition.



A lot of posts to catch up on today, as I was on the road for a lot of it. Just for disclosure, LVGO is (still) my largest position, and I’m holding for now, mostly for the same reasons that CloudAtlas put much more eloquently than I could, here, in his “rebuttal” post (#70310), to all the announcements of folks exiting LVGO:…

I’ll continue to hold while I learn more, and determine whether the new company is one I want to be invested in. Don’t want to make a rash decision as I would have a huge tax consequence if I exited my LVGO position, the likes of which I’ve never had to deal with before (a good thing! :grin:).

But of all the comments I read today about this deal, I’m most puzzled by this one from Bear:

LVGO / TDOC is no longer hypergrowth.

??? What ??? That really sounds like you just have an ax to grind with one of these companies, as it’s just flat out untrue!

TDOC growth the last 2 quarters went from 63% to 85%!!

LVGO growth the last 2 quarters went from 115% to 125%!!!

Those rates are the top echelon of any and all companies discussed here (except ZM, of course). Why would you state that this is no longer hypergrowth? Accelerating growth rates of 85% and 125% is the definition of hypergrowth! It’s exactly what we look for in companies. I’m not guaranteeing those rates will continue, but I’ll bet they’re going to continue to be very high! I thought we followed the numbers here, and those are the most recent ones for these companies, yes they have some COVID tailwinds working in their favor for the last 5 months, but so do ZM, CRWD, DDOG, and FSLY (maybe?). I conpletely understand folks getting out because the thesis has changed, it has(!), but I don’t feel there is a rush to get out, I’ll take my time to see if I want to stick with the new company, and I think I might, from what I’ve read so far. Combining 2 high growth, disruptive companies, with synergies and complementary business models, in a growing, massive industry ripe for disruption sounds like a pretty good recipe for success (if management is up to the task). I hope they are, I don’t know much about TDOC management, I only owned LVGO, but TDOC hasn’t done too shabby, either.

BTW, for Bert followers, he gave his thoughts on this subject to his Ticker Target subscribers tonight, and as always, well worth the price of admission, whether you agree with him or not, plenty of good info in his article to consider!


TDOC wasn’t a stock that met the criteria of this board, and LVGO really wasn’t either until recently. TDOC’s growth up until the March quarter report, while good (24% YOY), wasn’t close to the hypergrowth standards here; yet it doubled in price since March, reports one blowout quarter and then both it AND its acquisition target go parabolic in price just before the acquisition.

Interesting observation.

I sold TDOC early in Jan because its growth prospects seemed limited and it had run up considerably. At the same time I was looking to reduce the number of stocks I held. When COVID hit TDOC got a boost which IMHO was a one off. As for LVGO it had only a small share of the T2D population and so had significant growth ahead of it. Moreover INSURERS were reporting about $1000 in real annual saving per user.

I thought the merger made sense in terms of future opportunities for the merged company a point which was amplified for me in a comments made by the TDOC CEO in a publicized interview. I expressed my views in a post on the subject making the case that holding until the smoke cleared might be a useful tactic. (No reaction from the board)

Nevertheless by the end of the day I changed my mind and sold out of LVGO leaving me with a problem trying to figure out what to do with all that cash.

I changed my mind for the following reasons.

LVGO revenues would at least initially represent less than a third of the total, so whatever prospects there were for growth would be less material to the total.

The new company would be TDOC which I had already decided to exclude from my holdings.

LVGO revenue growth was likely to slow because as Saul pointed out they already had deals with many of the key insurers.

Behavior management while crucial for diabetes sufferers was less so for other medical problems and so expansion by diversification of service was somewhat problematic.

Maybe the clincher was a post by Bear who noted the obvious. The merged company was a different thing. It no longer met the basic growth criteria.

So its gone.

There must be new worlds to conquer.