Teladoc’s $18.5 billion acquisition of Livongo was the first of a series of deals to come, as healthcare companies look to bundle together more services to help employers combat rising healthcare costs. Now, health benefits company Accolade is planning to buy telehealth startup PlushCare for $450 million in its second significant acquisition this year.
The deal would give Accolade’s users access to virtual primary care and mental health consultations, along with its existing care navigation services.
“It’s a logical next step in our path to help employers move away from spiraling healthcare costs and poor clinical outcomes,” Accolade CEO Rajeev Singh said in a phone interview. “From our perspective, the one element of the care delivery journey we knew was really important — whether we built it, bought it or partnered for it — was primary care.”
Plymouth Meeting, Penn.-based Accolade built a service to help employees better understand their health benefits. It uses its technology and on-call health assistants to help people find a primary care physician, or answer questions they might have about a bill.
The company was valued at $1.2 billion when it went public last year, and in January, Accolade acquired a second-opinion startup, putting it toe-to-toe with competitors like Grand Rounds. Accolade’s acquisition of PlushCare makes that even more true, since Grand Rounds recently struck a merger with Doctor on Demand.
San Francisco-based PlushCare gives users a care team that they can message between visits. From the beginning, the startup set out with the idea of looking to build the same types of relationships people have with their in-person primary care physician. Its services are covered by some insurers, including Aetna, Cigna and Humana, and it also has a cash pay option.
The idea was to bring Accolade’s repository of data to primary care physicians, so they can know what doctors a patient has seen, what medications they’re on, what their deductible looks like, and what other benefits their company offers, Singh said.
“All of those things are things that primary care providers haven’t had in their bag before,” he said.
While some patients might choose to use PlushCare as their only primary care physician, he emphasized that the deal was intended to supplement, not replace, their existing doctor.
“…Many times, we will be augmenting the primary care relationship they have on the ground, and the care teams they have on the ground,” he said. “Unlike a lot of other companies in the heath tech space, we’re not prognosticating that brick and mortar care is going away.”
Accolade plans to acquire PlushCare for a total of $450 million, including $340 million in stock, $40 million in cash and up to $70 million in milestone payments. Last year, PlushCare brought in about $35 million in revenue.
Accolade expects the deal will boost its total addressable market to more than $200 billion as it expands telehealth to its customer base and grows PlushCare’s consumer membership. Its stock jumped more than 7% on the acquisition news.
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