Teladoc stock falls more than 30% after it slashed earnings expectations, massive impairment charges

Shares of Teladoc Health Inc. In after-hours trading on Wednesday, after the telemedicine company incurred an impairment fee of more than $6.5 billion and lowered its full-year forecast.

Teladoc TDOC,
-3.08%
Executives now expect revenue of between $2.4 billion and $2.5 billion for the full year, along with $240 million to $265 million in adjusted earnings before interest, taxes, depreciation and amortization (Ebitda). Their previous forecast would have required $2.55 billion to $2.65 billion in revenue and $330 million to $355 million in adjusted Ebitda.

Shares were down nearly 37% in the post-closing trading session, falling below $38 after closing 3.1% lower at $55.99. Shares have not traded for less than $38 in a regular session since March 2018.

Teladoc’s new forecast reflects trends market executives see for consumer-oriented mental health and chronic conditions, such as rising advertising costs in the mental health market that are causing lower-than-expected returns on their marketing. spending. She also noted a “protracted sales cycle as employers and health plans evaluate their long-term strategies” in the chronic conditions market.

“Despite our revision of our 2022 forecast, we are confident in our strategy, along with the breadth and depth of our capabilities,” CEO Jason Gurevich said in a statement.

Gorevic shared on Teladoc’s earnings call that about three-quarters of the reduction in revenue expectations was related to the company’s online consulting BetterHelp product, while the rest reflected higher new expectations for the chronic care business.

In the first quarter, Teladoc reported a net loss of $6.67 billion, or $41.58 per share, while posting a loss of $200 million, or $1.31 per share, in the same period last year. Teladoc’s loss in the last quarter largely reflected a $6.6 billion impairment charge related to goodwill.

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Teladoc executives didn’t reveal much about the goodwill impairment fee in Wednesday’s press release, but approximately $12.8 billion of the $14.5 billion in goodwill on Teladoc’s books originated from Acquisition of Livongo for $18.5 billion in 2020According to the company’s filings with the Securities and Exchange Commission.

“The reason for the poor reputation has been the continued decline in the share price of Teladoc Health with the valuation and magnitude of impairment charges paid by a combination of recent market-based factors such as an increase in the discount rate and lower market multiples of related peer group of high-growth digital healthcare companies, as well as updates On projected cash flows consistent with revised guidance disclosed today, Chief Financial Officer Mala Murthy said in the more substantial statement that executives provided about $6.6 billion in fees during a conference call Wednesday afternoon.

The company’s revenue rose to $565.4 million from $453.7 million, while analysts tracked by FactSet expected $569 million.

For the second quarter, Teladoc Ventures adjusted Ebitda from $39 million to $49 million on revenue from $580 million to $600 million, while the consensus for FactSet is $71 million in adjusted Ebitda and $615 million in revenue.

Teladoc shares have already fallen 39% so far this year and more than 70% in the past 12 months, as have the S&P 500 SPX,
+ 0.21%
It fell 12.4% and 0.3%, respectively.

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