Teladoc Health reported a historic loss of $13.7 billion in 2022, mostly from a write-off related to the plummeting value of its Livongo acquisition.
By comparison, in 2021, Teladoc posted a net loss of $429 million.
The telehealth company pulled in $2.4 billion in 2022 revenue, up 18% from $2 billion in revenue the prior year, executives reported during its fourth-quarter earnings call Wednesday.
The virtual care company was hit with noncash goodwill impairment charges of $13.4 billion in 2022 to write down the value of its Livongo acquisition in 2020. In the first quarter of 2022, Teladoc took a $6.6 impairment charge and a $3 billion hit in the second quarter.
The company logged a net loss in the fourth quarter of $3.8 billion, or $23.49 a share, which was mostly attributable to a continued write-off of the Livongo deal.
Companies opt for impairment when the value of assets or goodwill on their books is no longer fully recoverable.
Teladoc shelled out $18.5 billion for the digital chronic condition management company, a record in digital health. When Teladoc acquired Livongo, it touted the deal as key to its strategy to create one app for primary care, chronic care and other virtual care services.
"The goodwill impairment charge reflects the overall operating environment, including the lower rate of growth reflected in our guidance today, and overall financial market conditions, including decreased market multiples," Mala Murthy, Teladoc's chief financial officer, told investors during the call Wednesday.
The goodwill write-off has no impact on the company's financial position or its ability to invest in the business going forward, Murthy said.
The company's stock dropped 10% in Thursday morning trading. Shares of Teladoc have fallen by more than half over the past year, according to MarketWatch.
Fourth-quarter revenue grew 15% year over year to $638 million, primarily driven by strong growth in Teladoc's direct-to-consumer virtual mental health service. The BetterHelp business revenue grew 29% to $277 million in the fourth quarter.
The company's quarterly revenue outpaced Wall Street expectations, with a consensus estimate of $633 million.
Teladoc executives also reset expectations on its 2023 guidance, which fell short of analysts' expectations. The company forecast revenue of $610 million to $625 million for the current quarter, falling short of the $652.7 million consensus estimate. Teladoc 's full-year 2023 revenue guidance between $2.55 billion and $2.68 billion was also weaker than the $2.71 billion analysts had forecast, according to Barron's.
Revenue increased by 6% to $357 million for the Teladoc Health Integrated Care segment, which primarily consists of the company's business-to-business distribution channels for employers, health plans and providers. That business includes general medical services, specialty medical, chronic condition management, mental health and enabling technologies and enterprise telehealth solutions for hospitals and health systems.
For the full year, integrated care revenue grew 6% to $1.4 billion, and BetterHelp revenue jumped 41% to $1 billion.
"At this point, BetterHelp is over a $1 billion business. I don't think you're going to see it return to the type of hyper-growth that this business has seen over the past few years where it grew well over 100% in the past few years," Murthy told investors. "But we do think, importantly, that there remains a long runway for growth in this market. If you think about virtual therapy, it's still under-penetrated and a lot of the structural issues are on access and costs aren't getting addressed in other places."
CEO Jason Gorevic said Teladoc enabled over 22 million visits across specialties last year and 500 million digital health interactions.
"That breadth and scale is unrivaled in the industry and gives us a strong foundation on which to expand," he said.
Management indicated a slowdown for BetterHelp's growth in 2023, with a forecast of low double-digit to mid-teen percentage growth in that segment.
Gorevic told investors that, going forward, Teladoc would take a more balanced approach to focus on profitability rather than revenue growth.
"With the more balanced approach, we will pursue growth in a more focused way with the goal of expanding our margins consistently over the next several years, as we march toward GAAP profitability while still achieving attractive and sustainable top-line growth rates," he said.
In January, Teladoc Health laid off 6% of its non-clinician workforce, or 300 employees. Executives attributed the cutbacks to the elimination of redundant roles born out of mergers and a companywide restructuring aimed at increasing profitability.
"Given the current operating environment as well as the larger scale at which we now operate, you should expect us to balance growth and margin with an increased focus on efficiency going forward," Gorevic told investors Wednesday.
Gorevic was bullish on Teladoc's long-term growth, noting a growing desire from clients to shift away from point solutions and toward multiproduct integrated, virtual and digital platforms.
"At the same time, we're seeing clients increasingly focused on demonstrated results. Teladoc Health has been at the forefront of the adoption curve, and we believe that our scale, breadth of product offering and proven outcomes will enable us to maintain and expand our position in the market," he said during the call.
SVB Securities also is bullish on Teladoc. The firm upgraded the virtual care company to outperform from market perform.
SVB Securities analyst Stephanie Davis wrote in a research note that the worst is over and says the company has offered achievable guidance for 2023, Barron's reported. She noted there are “no tears left to cry" in the research note.
The company's 2023 guidance “marks a reset to achievability,” with “a healthy level of macro conservatism baked into the outlook,” especially for BetterHelp, Davis wrote.