Teladoc (NYSE: TDOC) inventory has cratered by over 46% and counting in pre-market buying and selling in the present day following a disastrous first-quarter earnings name. The New York-based telehealth firm reported bigger than anticipated losses for the opening interval of 2022, with a $6.6 billion non-cash goodwill impairment cost being blamed as the primary wrongdoer.
Let’s take a better take a look at among the particulars. Teladoc shareholders would possibly wish to brace themselves…
What occurred throughout Teladoc’s earnings?
Teladoc reported an adjusted loss per share of $41.58 in opposition to analyst expectations of a lack of solely $0.55, on income of $565.4 million versus an anticipated $568.9 million. In complete, the corporate misplaced $6.67 billion all through the course of the primary quarter.
This was largely pushed by a non-cash goodwill impairment cost, one thing that firms typically file on their steadiness sheets when an asset has misplaced all inherent worth. Teladoc declined to reveal precisely what incurred this cost, however a lot of the goodwill attributed to the agency was a results of the 2020 acquisition of digital well being administration platform Livongo for $18.5 billion.
It wasn’t all dangerous information although, as income did enhance by 25% year-over-year. This, nevertheless, is unlikely to present the corporate or its shareholders any main respite as its inventory continues to tumble. Teladoc was already down over 40% year-to-date earlier than in the present day’s cataclysmic drop and is a good distance off highs seen through the COVID-19 pandemic.
What about Teladoc’s 2022 outlook?
One main cause behind the present sell-off may very well be the revisions made to Teladoc’s steerage for the remainder of 2022. CEO Jason Gorevic defined that,
“Whereas we proceed to see sustainable development throughout our suite of services and products, we’re revising our 2022 outlook to mirror dynamics we’re presently experiencing within the direct-to-consumer psychological well being and persistent situation markets.”
Gorevic went on to quote rising promoting prices and an elongated gross sales cycle as causes for revision however reiterated his perception and confidence within the firm transferring ahead.
As lately as February, firm administration revised its steerage upwards to 31% for compound annual development charge (CAGR). Now, solely a fiscal quarter later, that determine has been introduced down to only 23% for 2022 — a stark distinction certainly. Income expectations of $2.55 billion to $2.65 billion have been minimize to $2.4 billion to $2.5 billion, whereas EBITDA estimates have been additionally slashed.
Is Teladoc a purchase?
Proper now, Teladoc’s inventory seems to be in freefall. Whereas we’re definitely in a really reactionary interval relating to the inventory market and earnings calls, a fall-off flirting dangerously with the 50% barrier must be taken very severely. The query that buyers have to ask themselves is whether or not or not Teladoc was merely overvalued, or has the underlying investing thesis modified considerably?
The corporate stays unprofitable, and the whole telehealth business seems to be sliding following the hovering highs of the previous couple of years. Its market management is to be admired, however being unable to capitalize on that place by way of profitability is one thing that’s prone to concern buyers the longer it goes on.
An financial downturn, such because the one we’re presently experiencing, may have dramatic results on the quantity individuals are keen to pay for healthcare. Teladoc outlined this in its final annual 10-Ok report. Whereas it’s definitely too quickly to say whether or not or not Teladoc will bounce again from this, it could be clever to proceed monitoring the state of affairs and to evaluate your earlier thesis on the corporate in mild of latest occasions and the present realities of the market.