Shares of virtual healthcare provider Teladoc Health (TDOC +5.72%) tumbled nearly 5% in early trading Friday before turning around and climbing back into the green. The company announced this morning that CEO Jason Gorevic is departing the company "effective immediately," to be replaced by current CFO Mala Murthy as acting CEO.
As of 11:10 a.m. ET, Teladoc shares are up about 0.2%.
NYSE: TDOC
Key Data Points
Teladoc's CEO has left the building
Teladoc gave no clear explanation for why Gorevic, who has led Teladoc since June 2009, is leaving. The fact that he's leaving "effective immediately," and with no apparent plan for succession -- the company's board is only now hiring an executive search firm to search for a successor -- certainly added to investor worry.
While the board attempted to allay concerns, thanking Gorevic "for his many achievements" and lauding interim CEO Murthy with praise for being "a seasoned industry leader," there's no indication (yet) that the board thinks her a sufficiently qualified replacement to serve as CEO long term.
Is Teladoc stock a sell?
In short, Teladoc -- a stock that has never earned a profit and reported a mind-boggling $13.7 billion net loss just two years ago (which is quite a lot for a company with a market capitalization of $2.4 billion!) -- is now effectively rudderless. So is it time to take a cue from the CEO and abandon ship?
Not necessarily.
In fact, while Teladoc is technically "unprofitable," the company did generate $339 million in positive free cash flow last year -- nearly twice the cash profits produced in 2022, the year of the massive $13.7 billion "loss."
Debt levels are moderate -- about $472 million net of cash on hand -- and while free cash flow levels this year might not approach last year's numbers, at a projected $212 million, the company's price-to-FCF ratio of only 11.2 looks very reasonable to me.
Long story short: This ship is sound. All Teladoc stock needs to succeed is a great new captain.
