Teladoc Health’s (NASDAQ: TDOC), stock continued to fall, and it became one of Wall Street’s worst performing companies. The stock price fell by more than 17.30% during the pre-market after falling 3% Wednesday.
Continued fall from grace
Teladoc has experienced a dramatic fall in recent years. It is the largest telehealth provider in the US. The stock fell from a high of $307,40 in 2021 down to $7 today. Its market capitalization has dropped from more than $50 billion in 2021 to only $1.5 billion today.
Teladoc Health is in a bad way after a spectacular run during the Pandemic, when most people used telehealth.
Its annual revenue at the time jumped from $553,000,000 in 2019 to $1,09 billion by 2020 and $2.03 Billion in 2021.
The company began to grow and made its largest acquisition. Livongo Health was acquired for over $18 Billion. It was the goal to be the largest player in the industry of telehealth, which is viewed as the next generation of healthcare.
This acquisition was a disaster as the company had to take a large impairment charge which increased its loss by over 13 billion dollars in 2022.
There are indications that the telehealth sector, which was hailed as a growth industry in recent years, isn’t growing at all as quickly as expected. Instead, people prefer to visit hospitals more often.
Teladoc’s not the only winner of pandemic that is in decline. Zoom Video’s stock has fallen from a high of 590 dollars to only $60. PayPal’s stock fell from $324 down to $65, while Novavax went from $308 to $12.
Earnings trend remains weak
Teladoc Health continues to publish weak financial results. It announced on Wednesday that the company’s quarterly revenue fell by 2% to $642 millions in the second half of 2012.
This revenue drop is an indication that Cathie wood, the third largest investor in this company, does not see a strong market.
The second quarter saw a net loss of over $837,000,000. This was a huge drop from its $220 million loss in 2023’s four quarters. This was due to a $790m goodwill charge.
The company’s Betterhelp division is not performing well either. Betterhelp helps users find qualified therapists for areas such as mental health or marriage.
About 35,000 therapists are qualified and it has assisted over 4.8 millions people. The revenue of the company continued to fall, and reached $265 million during the second quarter. According to the new CEO:
While we had a solid performance in our Integrated Care segment overall results were impacted by the continued headwinds within the BetterHelp segment. “We are focused and urgently tackling the tasks ahead to create greater value for the entire company.”
Teladoc Health retracted its entire forward guidance. Teladoc Health also retracted its comprehensive forward guidance. The company expects its revenue to grow between -1% and 2% annually, while the adjusted EBITDA will range between 14,5% and 16 %.
Cash raise needed?
Investors are concerned that Teladoc Health could need cash in order to continue its business as it faces increasing losses.
The balance sheet of the company makes me believe it won’t need to raise any cash. The company ended last quarter with more than $1.16 Billion in cash equivalents. This is down from $1.12 Billion in December.
The management will work to repair the company and these funds should be sufficient to get it to the next years. One solution is to sell the Betterhelp division, which has been struggling for years.
Betterhelp’s valuation could be at least $1 Billion because the company has more than 400,000 users who pay and it made $754 Million in six months.
Betterhelp’s divestiture would allow the company to focus more on the integrated care division, which currently has 92.4 millions users. This is an 8% growth from 2023. The division is poised to expand in the next few years.
Teladoc Health stock price analysis
TradingView TDOC Chart
In my previous article about TDOC I stated that the stock was oversold to an extreme degree and that there was a high probability of a recovery. This was a wrong outlook as the stock continued to plummet after it reported earnings.
On the weekly chart we can see the stock continues to make lower highs and lower lows. The stock has also been below both the 25-week and 50-week moving averages. This indicates that bears have control.
It has also formed a chart pattern of a falling wedge, which is a bullish signal. The wedge chart pattern indicates that the stock could rebound in the next few weeks, even though the outlook is generally bearish. It is also one of Wall Street’s most heavily-shorted stocks with a 20% short interest.
The post Teladoc Health – Here’s Why This Cathie Wood Stock is Imploding could be updated as new information becomes available
