Shares of Teladoc Health Inc. took a hit in after-hours trading on Wednesday after the telemedicine company took a more than $6.5 billion writedown and lowered its full-year outlook.
Teladoc TDOC, -3.08% executives now expect full-year revenue of $2.4 billion to $2.5 billion and adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) of $240 million to $265 million Dollar. Their previous guidance called for revenue of $2.55 billion to $2.65 billion and adjusted EBITDA of $330 million to $355 million.
Shares lost more than 30% in after-hours trading, falling below $38 after the close, down 3.1% to $55.99. Shares have not traded below $38 in a regular session since March 2018.
Teladoc’s new guidance reflects trends executives are seeing in the market for direct-to-consumer mental health and chronic health services, such as spending. It also cited an “extended sales cycle as employers and health plans evaluate their long-term strategies” in the chronic disease market.
“Despite the revision of our 2022 outlook, we remain confident in our strategy and in the breadth and depth of our capabilities,” Chief Executive Jason Gorevic said in a press release.
Gorevic said on Teladoc’s conference call that about three-quarters of the cut in revenue prospects was related to the company’s online counseling product BetterHelp, while the remainder reflected new top-line expectations for the chronic care business.
In the first quarter, Teladoc posted a net loss of $6.67 billion, or $41.58 per share, compared to a loss of $200 million, or $1.31 per share, in the year-ago period. Teladoc’s loss last quarter largely reflected a $6.6 billion impairment related to goodwill.
Teladoc executives didn’t disclose much about the goodwill impairment in Wednesday’s press release, but approximately $12.8 billion of the $14.5 billion in goodwill on Teladoc’s books is from the 18th $.5 billion acquisition of Livongo in 2020, according to the company’s filings with the Securities and Exchange Commission.
“The goodwill impairment was triggered by the continued decline in Teladoc Health’s stock price, with the valuation and amount of the impairment driven by a combination of recent market-based factors, such as an increased discount rate and the decreased market multiples for a relevant peer group of high-growth peers digital healthcare companies, as well as updates to our projected cash flows in line with revised guidance released today,” Chief Financial Officer Mala Murthy said in the most substantive statement executives made during a conference call about the $6.6 billion charge Wednesday afternoon .
The company’s revenue rose to $565.4 million from $453.7 million, while analysts tracked by FactSet had expected $569 million.
For the second quarter, Teladoc is forecasting adjusted Ebitda of $39-49 million on revenue of $580-600 million, while FactSet consensus is forecasting adjusted Ebitda of $71 million and revenue of $615 million -dollars.
Teladoc shares were already down 39% this year and more than 70% over the past 12 months, while the S&P 500 index SPX was down +0.21%, down 12.4% and 0.3%, respectively.