Insights

Why Teladoc Stock Plunged Today

What happened 

Shares of Teladoc Health (NYSE: TDOC) fell 17% on Thursday after the telemedicine provider’s second-quarter financial results were dented by a massive impairment charge. 

So what

Teladoc’s revenue rose 18% year over year to $592.4 million. This growth was driven by a 20% rise in access fees revenue, to $518.7 million, and a 7% increase in visit fees, to $66.7 million.

Teladoc continues to add new customers even as more people are returning to traditional healthcare locations. Its U.S. paid membership grew by 9% to 56.6 million. People are also using its telehealth platform more often, with visits in the U.S. up 32%, to $3.6 million.

However, Teladoc was forced to take a non-cash goodwill impairment charge of $3 billion. Teladoc acquired digital health company Livongo for $18.5 billion in late 2020. The plan was to combine Teladoc’s virtual care platform with Livongo’s chronic condition management tools. However, Teladoc has written down the value by nearly $10 billion since the deal was completed, suggesting that it drastically overpaid for Livongo.

All told, Teladoc reported a net loss of $3.1 billion or $19.22 per share. Yet even after accounting for the impairment charge, the company’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) sank 30% to $46.7 million, due mainly to higher advertising and marketing expenses. 

Now what

Teladoc expects its full-year financial results to come in at the lower end of its previously issued guidance. That forecast includes revenue of $2.4 billion to $2.5 billion and adjusted EBITDA of $240 million to $265 million.

Still, CEO Jason Gorevic believes Teladoc can overcome its near-term challenges and deliver on the promise of its virtual and chronic care solutions. “While we continue to see increased uncertainty in the macroeconomic backdrop, we remain confident in our ability to execute against our strategy to deliver a unified care experience that we believe only Teladoc Health has the breadth and scale to achieve,” Gorevic said.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Teladoc Health. The Motley Fool has a disclosure policy.

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