Shares of Teladoc Health (TDOC 4.58%) went down in flames on Thursday, plunging as much as 47.8%. At 10:28 a.m. ET, the stock was down 46.3%.
The catalyst that sent the digital healthcare company plummeting was first-quarter financial results that were far worse than investors had anticipated.
Teladoc generated first-quarter revenue of $565.4 million, up 25% year over year. Unfortunately, the shocker was the bottom line, as the company reported a staggering loss per share of $41.58.
To put those numbers in context, analysts' consensus estimates were calling for revenue of $568.7 million and a loss per share of $0.60.
The culprit that fueled the cratering loss was a noncash, goodwill impairment charge of $6.6 billion, related to the company's $18.5 billion acquisition of Livongo Health in 2020. At the time, it was billed as the biggest digital health deal in history, spurred on by soaring pandemic-related adoption. Unfortunately, the growth spurt was short-lived, and most of Livongo Health's senior management team departed the company late last year.
Teladoc had warned in a regulatory filing back in February that it would likely take a big write-down on the deal, at the time estimated to be between $800 million and $4 billion. The impairment charge ended up being far bigger than initial estimates.
Teladoc Health is expecting anemic growth for the first quarter and the reset of 2022. Management is forecasting first-quarter revenue of $590 million at the midpoint of its guidance, which would represent roughly 17% growth year over year. Its full-year forecast wasn't much better, guiding for revenue of $2.45 billion, up about 21%.
There's a lot of bad news baked into Teladoc Health's stock price right now, and management will have a lot to prove going forward. Piper Sandler analyst Jessica Tassan summed it up nicely when she lowered the price target to $41 from $104 but maintained her overweight (buy) rating on the stock, according to TheFly.com. "Yes, the print was a disaster. Yes, it raises some real questions about credibility and brand equity. Yes, there is a price for everything. Ours represents 28.1% upside to pre-market levels."
Given the rampant uncertainty and tepid growth forecast, I certainly won't be adding Teladoc shares anytime soon.