What happened
Shares of Teladoc Health (TDOC 2.46%) 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.
So what
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.
Image source: Getty Images.
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.
Now what
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.
