The Teladoc (TDOC) and Livongo (LVGO) merger highlights the most important driver in digital healthcare valuations: simple counting metrics that exhibit an outsized growth rate. For Livongo the metric is membership growth, for Teladoc the metric is visit growth, and for Tabula Rasa Healthcare the metric is PACE growth.
If you are a HCIT or Digital Healthcare company and do not like your valuation, do not like your positioning with the street, or are considering an IPO, then work on changing the narrative or setting the narrative correctly. If your narrative fails to provide investors with an ability to track member growth or lives growth or something simple with high growth then gaining or justifying that outsized valuation may be a bridge too far.
