Why Teladoc Health Jumped Today

A good bounce for the broader market translated to a great gain for Teladoc Health.

Keith Speights
Keith Speights
Dec 26, 2018 at 4:10PM
Health Care

What happened

Shares of Teladoc Health (NYSE:TDOC) jumped 10.7% higher as of 3:13 p.m. EST on Wednesday. The virtual healthcare-services provider didn't announce any news, but its stock enjoyed a nice bump as the broader market rebounded.

So what

Teladoc Health tends to be more volatile than many stocks, in part because of its premium valuation. The bad news is that the stock can fall harder in an overall pullback; the good news is that Teladoc can experience a greater bounce when the overall market rises. 

Doctor with stethoscope, seen on computer monitor.

Image source: Getty Images.

It's also likely that some investors are realizing that the sell-off of Teladoc that began in November is way overdone. Teladoc Health's downturn started following reports that CFO Marck Hirschhorn sold a big chunk of his shares in the company and a short-seller published a report stating that the company's growth would taper off due to problems with its BetterHelp mental-health subsidiary.

Teladoc's downturn continued in December. Southern Investigative Reporting Foundation (SIRF) reported about an alleged affair between Hirschhorn and a Teladoc Health employee. The SIRF report raised questions about how Teladoc handled the issue.

But Hirschhorn's stock sale was planned months in advance and wasn't unusual. The potential problems with BetterHelp referenced in the short-seller's report weren't as significant as they were made out to be. Teladoc Health also responded quickly to the SIRF report, stating that it contained "several factual inaccuracies" and that "swift and appropriate disciplinary action" was taken in the incident in question. 

Teladoc Health stock still has a long way to go to get back to where it was before the sell-off began. However, it seems likely that over the long run, the issues raised in November and December will be only temporary distractions for the company.

Now what

The main thing for investors to watch with Teladoc Health now is how well the company executes on its strategic plan. Teladoc has made key acquisitions to establish a global presence. It's also hoping to benefit from a shift in the U.S. from fee-based reimbursement to value-based care.

Teladoc Health will probably continue to be relatively volatile compared to many stocks. But the company's long-term prospects appear to be as solid as ever.