Special Dividend
As previously
disclosed, on August 5, 2020, Livongo Health, Inc. (Livongo) entered into an Agreement and Plan of Merger (the Merger Agreement) with Teladoc Health, Inc. (Teladoc) and Tempranillo Merger
Sub, Inc., a wholly-owned subsidiary of Teladoc (Merger Subsidiary). Upon the terms and subject to the conditions of the Merger Agreement, Merger Subsidiary will merge with and into Livongo (the Merger), with
Livongo surviving as a wholly-owned subsidiary of Teladoc. A definitive joint proxy statement/prospectus was filed with the Securities and Exchange Commission (the SEC) by Teladoc on September 15, 2020, in connection with,
among other things, the Merger Agreement.
Livongo has conditionally set October 29, 2020 as the record date for the special dividend
(the Special Dividend) of $7.09 per share on Livongos common stock contemplated by the Merger Agreement. The closing of the Merger and the other transactions contemplated by the Merger Agreement remains subject to certain
approvals by Livongo stockholders that will be sought at Livongos special meeting scheduled for October 29, 2020, certain approvals by Teladocs stockholders that will be sought at Teladocs special meeting scheduled for
October 29, 2020 and the other closing conditions set forth in the Merger Agreement. It is anticipated that, prior to the closing of the Merger, Livongos board of directors will declare the Special Dividend, conditioned upon the closing
of the Merger and the other transactions contemplated by the Merger Agreement, and that the dividend will be paid on or around November 3, 2020 to Livongo stockholders of record on the October 29, 2020 record date.
For U.S. federal income tax purposes, the Special Dividend is intended to be treated, and will be reported by Livongo, as a distribution by
Livongo within the meaning of Section 301 of the Internal Revenue Code of 1986, as amended. Assuming this intended treatment is respected, the Special Dividend will be treated as a dividend for U.S. federal income tax purposes to the extent
paid out of current or accumulated earnings and profits (E&P) of Livongo. To the extent the amount of the Special Dividend exceeds Livongos current and accumulated E&P, the excess will first be treated as a tax-free return of capital, causing a reduction in the holders adjusted basis in its Livongo common stock. If such basis is reduced to zero, any remaining portion of the Special Dividend will be taxed as
capital gain, which would be long-term capital gain if the holder has held the Livongo common stock for more than one year at the time the Special Dividend is received.
The process of determining current and accumulated E&P requires a final determination of Livongos financial results for the year and
a review of certain other factors. Based on Livongos current estimate of its current and accumulated E&P, it expects that none of the Special Dividend will be paid out of its current or accumulated E&P, and thus Livongo expects that
the Special Dividend will be treated as a tax-free return of capital (to the extent of a holders adjusted basis) and that none of the Special Dividend will be treated as a dividend for U.S. federal
income tax purposes. Livongo stockholders should review the definitive joint proxy statement/prospectus that was filed with the SEC by Teladoc on September 15, 2020, which provides additional details regarding U.S. federal income tax
considerations related to the Special Dividend, and consult their tax advisors regarding any alternative characterization of the Special Dividend, including as consideration received in the Merger in exchange for their shares of Livongo common
stock, and as to the tax consequences of the Special Dividend in their particular circumstances.
Combined Company Leadership
On October 15, 2020, Teladoc and Livongo announced the combined company leadership upon the consummation of the proposed Merger between Livongo
and Teladoc, which will be led by Jason Gorevic, as Chief Executive Officer and a member of the Board of Directors for the combined company as previously announced on August 5, 2020. The combined company leadership will include Arnnon Geshuri,
Chief Human Resources Officer, Mala Murthy, Chief Financial Officer, David Sides, Chief Operating Officer, Dan Trencher, SVP, Corporate Strategy, Drew Turitz, SVP, Corporate Development, Adam Vandervoort, Chief Legal Officer, Stephany Verstraete,
Chief Marketing & Engagement Officer, and Yulun Wang, Head of Research & Development (interim).
Teladoc and
Livongo also announced the following officers will be departing the combined company over the course of time after the consummation of the Merger: Michelle Bucaria, Chief Human Resources Officer of Teladoc, Zane Burke, Chief Executive Officer of
Livongo, Jennifer Schneider, President of Livongo, Lee Shapiro, Chief Financial Officer of Livongo, and Steve Schwartz, SVP, Business Development of Livongo.
As noted above, the completion of the Merger remains subject to customary closing conditions, including the adoption of the Merger Agreement
by Livongo stockholders and the approval by Teladocs stockholders of an amendment to Teladocs certificate of incorporation to increase the number of authorized shares of Teladoc common stock and the issuance of Teladoc common stock in
the Merger. Livongo continues to expect the merger to close in the fourth quarter of 2020.
Cautionary Note Regarding Forward-Looking Statements
This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995,
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements generally include statements regarding the potential transaction between Teladoc
and Livongo, including any statements regarding the expected timetable for completing the potential transaction, the ability to complete the potential transaction, the expected benefits of the potential transaction (including anticipated synergies,
projected financial information and future opportunities) and any other statements regarding Teladocs and Livongos future expectations, beliefs, plans, objectives, results of operations, financial condition and cash flows, or future
events or performance. These statements are often, but not always, made through the use of words or phrases such as anticipate, intend, plan, believe, project, estimate,
expect, may, should, will and similar expressions. All such forward-looking statements are based on current expectations of Teladocs and Livongos management and therefore involve estimates
and assumptions that are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the results expressed in the statements. Key factors that could cause actual results to differ materially from those
projected in the forward-looking statements include the ability to obtain the requisite Teladoc and Livongo stockholder approvals; uncertainties as to the timing to consummate the potential transaction; the risk that a condition to closing the
potential transaction may not be satisfied; the risk that the anticipated U.S. federal income tax treatment of the transaction is not obtained; litigation relating to the potential transaction that have been or could be instituted against Teladoc,
Livongo or their respective directors; the effects of disruption to Teladocs or Livongos respective businesses; restrictions during the pendency of the potential transaction that may impact Teladocs or Livongos ability to
pursue certain business opportunities or strategic transactions; the effect of this communication on Teladocs or Livongos stock prices; transaction costs; Teladocs ability to achieve the benefits from the proposed transaction;
Teladocs ability to effectively integrate acquired operations into its own operations; the ability of Teladoc or Livongo to retain and hire key personnel; unknown liabilities; and the diversion of management time on transaction-related issues.
Other important factors that could cause actual results to differ materially from those in the forward-looking statements include the effects of industry, market, economic, political or regulatory conditions outside of Teladocs or
Livongos control (including public