Shares of Teladoc, Purchase, N.Y., at last check were down 15% to $213.06, while Mountain View, Calif.-based Livongo Health was off 7.1% to $134.24.
Both companies have seen their shares rise due to the coronavirus pandemic as consumers seek more online services to satisfy social distancing and self-quarantine guidelines.
Under the terms of the agreement, unanimously approved by each company's board, Livongo holders will receive 0.592 share of Teladoc plus $11.33 in cash for each of their shares.
Upon the closing of the deal, Teladoc Health shareholders will own about 58% of the combined company, while Livongo holders will own about 42%.
Teladoc Health has about 2,727 employees, while Livongo Health has roughly 671.
The new company will be called Teladoc Health and will be headquartered in Purchase, located about 40 minutes drive north of Manhattan.
"This merger firmly establishes Teladoc Health at the forefront of the next-generation of health care,” Jason Gorevic, Teladoc Health's CEO, said in a statement.
Gorevic would be the CEO of the combined company.
The newly combined board will be 13 members, eight from Telaldoc and five from Livongo. Teladoc Health Chairman David Snow will take that role in the new company.
The combined company will have expected 2020 pro forma revenue of about $1.3 billion, representing year over year pro forma growth of 85%.
The transaction is expected to close by the end of the fourth quarter.