What happened

Shares of Teladoc Health (TDOC -2.75%) traded up nearly 10% on Monday after the company announced it would acquire InTouch Health for $600 million in cash and stock. The deal would add 14,500 doctors at 450 hospitals to Teladoc's platform, helping to fuel growth at the telecare expert.

So what

Teladoc on Sunday announced plans to buy InTouch for $150 million in cash and $450 million in stock. The deal, which is expected to close before midyear, would add a company that grew sales by 35% in 2019 to the Teladoc portfolio.

A doctor sitting in front of two computer monitors while chatting remotely with a patient.

Image source: Getty Images.

The deal isn't cheap, priced at more than seven times InTouch sales. In a statement announcing the buy, Teladoc said the deal would give it exposure to the entire care spectrum, from critical to chronic to everyday health. The company cited J.P. Morgan research claiming that 40% of surveyed hospitals intend to increase their telemedicine budgets, with healthcare facilities and insurers seeing telemedicine as a cost-effective way to boost the amount of coverage they provide.

"Bringing these companies together will make Teladoc Health the clear virtual care leader across every front door of healthcare, further accelerating the adoption and impact of virtual care for millions of people around the world," CEO Jason Gorevic said in a statement.

Now what

Teladoc has been an impressive performer since its 2015 IPO, with its shares up more than 228% since that time. Most of that appreciation was based on the company's success making inroads with employers who offer telemedicine as an added benefit to their workers.

The InTouch deal marks Teladoc's assault on the hospital and healthcare market, a huge opportunity for growth. Aging demographics and tight government budgets are creating opportunities and challenges for healthcare stocks. Teladoc's deal for InTouch is another step toward the company making sure it is a key part of the solution to those challenges.