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Why Teladoc and Livongo Health Stocks Fell on Thursday

By Daniel Sparks – Updated Oct 29, 2020 at 12:52PM

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Triple-digit revenue growth apparently wasn't enough to send shares higher when the two companies reported earnings on Wednesday.

What happened

Shares of telehealth companies Teladoc Health (TDOC 6.47%) and Livongo Health (LVGO) both fell sharply on Thursday. The stocks declined as much as 5.8% and 5.4%, respectively, but by noon EDT, they were only down about 1%.

Their decline follows the two growth stocks' earnings reports on Wednesday afternoon. Since there is a pending merger between the two companies, their stocks generally move in the same direction. Investors may have been disappointed with Teladoc's worse-than-expected loss per share.

A woman chatting virtually with a doctor.

Image source: Getty Images.

So what

Teladoc's third-quarter revenue rose 109% year over year to $288.8 million, driven by a 206% increase in total visits. The telehealth platform provider's loss per share was $0.43, wider than a loss of $0.28 in the year-ago quarter and worse than analysts' average forecast for a loss of $0.32.

Livongo Health's third-quarter revenue soared 126% year over year to $106.1 million, leading to an adjusted profit per share of $0.16, easily beating a consensus analyst forecast for $0.05.

Now what

Both companies' management teams seemed upbeat about the momentum they are seeing and expectations for the future.

"We are seeing significant market success and consistent growth in member visits throughout all of our commercial channels," said Teladoc CEO Jason Gorevic in the company's earnings release. "With the addition of Livongo later this year, we will be creating a new category of whole-person virtual care that will transform how people live healthier lives."

Livongo executive chairman Glen Tullman said, "We remain very confident in Livongo's continued growth, and we believe that joining with Teladoc Health ... will build on Livongo's success and dramatically accelerate our mission of empowering people with chronic conditions to live better and healthier lives." 

The merger is expected to close sometime during the current quarter, though there's always a chance something unexpected could derail it.

Daniel Sparks owns shares of Livongo Health Inc. The Motley Fool owns shares of and recommends Livongo Health Inc and Teladoc Health. The Motley Fool has a disclosure policy.

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