Teladoc Health (TDOC -2.91%) may not exactly seem like a millionaire-maker these days. The company has disappointed investors with billion-dollar goodwill impairment charges and a slowdown in revenue growth. And these elements have pushed the possibility of profit farther off. As a result, the stock has lost more than 60% this year.
But that doesn't mean the story is over for Teladoc. During its earnings report on July 27, the company also offered a few signs that growth may be just ahead. Does this mean that, if you invest today, this beaten-down stock could help you become a millionaire? Let's find out.
The bad news...and the good
In the first quarter, Teladoc recorded a $6.6 billion noncash goodwill impairment charge. This indicates that the company overpaid when it bought Livongo in 2020.
Teladoc went on to record a second noncash goodwill impairment charge of $3 billion in the second quarter. That's due to the stock's decline since the company's first-quarter earnings report. At the same time, revenue growth slowed to 18% from 25% in the previous quarter -- compare both figures to triple-digit growth during the earlier days of the pandemic.
Teladoc says the current economic climate is weighing on business. Employers considering Teladoc plans for their employees are taking longer to decide and sign up, postponing revenue. Another headwind is the stronger dollar, which lowers the value of revenue from international clients.
In the second quarter, Teladoc reported a net loss per share of $19.22 -- mainly due to the impairment charge. That's compared to a loss per share of $0.07 in the fourth quarter of last year, so Teladoc has moved farther away from profitability.
Now, let's get to the good news. Teladoc's making progress in two important areas that could help it grow revenue over time: its number of paid members in the U.S., and its revenue per member. Both have climbed steadily from quarter to quarter over the past year. And they rose 8.8% and 12.6% year over year, respectively, in the second quarter.
The Livongo deal
It's true that some of Teladoc's woes stem from the purchase price it paid for Livongo, but that business may eventually pay off. Livongo brought strengths in the management of chronic conditions -- a big growth area for Teladoc. That's because chronic-care members often sign up for more than one program, and Teladoc says retention rates tend to be higher for those who are involved in multiple programs. Its number of chronic-care members has been on the rise over the past year.
Finally, Teladoc may not be signing up contracts quickly these days. But these potential deals in the pipeline have gotten bigger and bigger in terms of value. The company says it has twice as many multimillion-dollar deals in the pipeline as it did a year ago. If potential customers sign these deals, they'll offer revenue a big boost.
Let's get back to our question. Considering all of this, could Teladoc help make you a millionaire? Imagine you invest $10,000 in the stock today. Shares are trading for about $36, so you could buy 278 shares. Now, let's imagine that Teladoc returns to its prior peak of $294. Your investment would be worth $81,732. That's an enormous gain -- and could push you along on your road to wealth.
It's important to consider the performance of a portfolio of stocks as you work to gain wealth. Never rely on just one. That's risky -- and it's highly unlikely that only one stock will do the job.
Could Teladoc return to its highs?
Now, the question is: Could Teladoc actually return to its high of nearly $300? I wouldn't expect this to happen in the near term. Teladoc's troubles aren't over, and it's not yet clear when the economy will strengthen. The situation could continue to hurt the pace of new signups, which will impact revenue growth. And investors may not come running back to Teladoc right away.
That said, if Teladoc is able to make it through this rough patch without further impairment charges -- and if the company can maintain at least some growth -- better days may be ahead, due to the positive points mentioned above. Aggressive investors may consider taking a position in Teladoc today -- and waiting.
This beaten-down stock won't help you become a millionaire overnight. But if it recovers, the rebound may be big. And that could help grow your wealth over time.
